SAN JOSE -- After plunging 31% in 2001, chip revenues will begin a slow recovery in 2002, growing 6% to $150 billion, followed by a 21% increase in 2003 to $181 billion, according to a new forecast released today by the Semiconductor Industry Association here. The annual SIA forecast shows chip revenues growing another 21% in 2004 to $218 billion (see geographic and product forecast tables below).
The SIA's U.S. industry consensus forecast is based on the assumption that the recovery will begin in the fourth quarter of 2001, following more than a year of inventory corrections. The 2001 downturn will end up pushing semiconductor revenues down to $141 billion this year, a 31% drop from a record high of $204 billion in 2000.
Inventory corrections after a false buildup in key electronics markets--in particular cellular phones--were blamed for much of the chip industry's problems this year. Many of last year's growth forecasts would have been closer to being correct if "we probably would have not had the inventory build that occurred in 2000," said George Scalise, president of the SIA. "However that was the major impact on what occurred this year," he told journalist during a press conference here after releasing the forecast.
When asked if the inventory problem has been finally worked out, chip executives at the press conference said most of the oversupply of ICs had been worked down but "there is still probably a little more to go," added Rich Templeton, chief operating officer and executive vice president of Texas Instruments Inc.
However, Scalise said the consensus in the U.S. chip industry is that inventory corrections will be completed by the end of the fourth quarter. He also said the clear start of sequential growth in chip revenues had probably been pushed back by one month after the deadly terrorist attacks in the United States on Sept. 11. The result could be a damping of growth in the fourth quarter by one percentage point, he said.
"It probably also moved out by may be one month the point where we would actually have sequential month-to-month growth. Originally, we thought that would happen in October and we now think it could still be in October, but it is more like November based on what we have seen so far," he said.
The new SIA industry forecast is similar to but slightly more optimistic than a worldwide consensus forecast released by WSTS last month. The World Semiconductor Trade Statistics (WSTS) group, currently based in Austria, is calling for only a 2.6% increase in chip sales to $142.4 billion in 2002 followed by 18.5% growth in 2003 and a 15.1% rise in 2003 (see Oct. 25 story).
The U.S.-based SIA trade group historically uses the WSTS consensus forecast for the basis of its own forecasts but the segments are modified to reflect and American industry view of market trends.
The new SIA forecast significantly downgrades the near-term outlook for chip growth compared to the group's mid-year forecast issued last June. Five months ago, the SIA predicted that semiconductor revenues would fall 14% to $175 billion in 2001 and then jump 20.5% in 2002 to $211 billion and climb another 25% in 2003 to $265 billion (see June 6 story).
The hardest hit region of the world this year--the Americas--will suffer a 43% drop in chip sales to $36 billion in 2001, according to the new SIA forecast. The sharp drop in 2001 and relatively slow growth next year will push the Americas chip market down below semiconductor sales in the Asia Pacific region. In fact, the Asia Pacific region will remain the world's largest chip market for the next four years.
How chip sales will play out by region
| Market |
2001 |
2002 |
2003 |
2004 |
| Americas |
$36 billion
(-43%) |
$38 billion
(+4%) |
$46 billion
(+21%) |
$56 billion
(+21%) |
| Japan |
$35 billion
(-26%) |
$36 billion
(+4%) |
$43 billion
(+20%) |
$52 billion
(+20%) |
| Asia Pacific |
$39 billion
(-23%) |
$45 billion
(+45%) |
$55 billion
(+23%) |
$67 billion
(+21%) |
| Europe |
$30 billion
(-29%) |
$31 billion
(+1%) |
$37 billion
(+20%) |
$44 billion
(+20%) |
| World total |
$140.7 billion
(-31.2%) |
$149.5 billion
(+6.3% |
$181.1 billion
(+21.1%) |
$218.3 billion
(+20.5%) |
| Source: SIA autumn 2001 forecast |
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