WSTS cuts 2005 chip market growth figure to 1.2%

LONDON — The World Semiconductor Trade Statistics (WSTS) data collection group has cut its forecast for global chip market growth in 2005 to 1.2 percent, the European Semiconductor Industry Association (ESIA) said Tuesday (Nov. 2). Lackluster growth of 1.2 percent replaces a previous prediction of 8.5 percent and is to be followed by 3.0 percent annual growth in 2006 and 11.4 percent annual growth in 2007, according to ESIA.

For 2004 WSTS maintained its forecast at 28.5 percent annual growth to $213.78 billion.

The latest forecast replaces one made in May 2004 when WSTS said global chip would grow 28.4 percent to $213.6 billion in 2004, followed by 8.5 percent growth in 2005, a 0.7 percent decline in 2006 and 9.5 percent growth in 2007. (see June 1 story).

As a result of chip market activity in the third quarter of 2004 and widely predicted sales collapse in the fourth quarter due to inventory correction WSTS has opted to cut its 2005 growth forecast and increase those for 2006 and 2007.

Although the next downturn is now set to hit the market earlier it would be a moderate one, ESIA said. Chips designed for use in telecommunications, digital consumer and automotive applications will drive the growth of the market during the forecast time frame.

This year will be a very good year for Europe, at comparable levels to the historical peak year 2000. The market is valued at $39.2 billion, meaning a 21.2 percent growth over the previous year. Furthermore, the European market share will remain stable in the coming years, this despite ongoing shifts in production and continuing strong increases of the Asia Pacific region.

Growth for 2004 has been driven in all regions by the good performance in memory products, optoelectronics, particularly image sensors used in digital still cameras and mobile phones and application specific logic ICs for use in communications and automotive.

All the major regions of the world would grow strongly in 2004 although Asia-Pacific with forecast annual growth of 42.1 percent is set to eclipse Europe and the Americas region, both at 21.2 percent and Japan at 18.5 percent annual growth. The Americas region is expected to contract over the next two years with falls of 1.5 percent and 1 percent over the next two years.

In contrast, Asia-Pacific is expected to continue leading the market with growth of 2.8 percent and 4.9 percent in 2005 and 2006, respectively, ESIA said. Europe is expected to grow 0.2 percent in 2005 and 2.2 percent in 2006, maintaining global market share at 17.9 percent and 17.8 percent. Asia-Pacific is expected to consolidate its leadership with a 42.3 percent of the market in 2005 and 43.1 percent market share in 2006.