Gartner predicts 20 percent growth for chip industry in 2010

Global chip sales will reach US$276 billion this year after falling 9.6 percent last year

The global chip industry will rebound sharply from the global recession and post 20 percent year-on-year growth in 2010, market researcher Gartner said Thursday.

The growth forecast is slightly higher than others have predicted but is in step with bullish forecasts for the global semiconductor industry this year. Strong demand for a variety of chips has contributed to strong earnings growth at chip makers from microprocessor giant Intel to memory chip king Samsung Electronics.

Strong growth in PCs and memory chips will be primary drivers for semiconductor revenue to reach US$276 billion this year, up from $231 billion last year, Gartner said in a statement. Worldwide chip revenue declined 9.6 percent last year.

"We have seen clear evidence that the semiconductor industry is poised for strong growth in 2010," said Gartner analyst Bryan Lewis, in the statement.

Gartner expects 20 percent more PCs to be produced this year than in 2009, a major boon for chip makers. DRAM makers will benefit from a 55 percent rise in revenue this year, making the chip segment the fastest growing "by far," the market researcher said. Most DRAM chips are used in PCs.

The full-year chip industry growth target is slightly higher than that of in-house forecasters at Taiwan Semiconductor Manufacturing (TSMC), the world's largest contract chip maker. TSMC last month said it expects the global semiconductor market to grow 18 percent this year, after contracting 9 percent last year, due mainly to strong PC and mobile phone sales.

The company plans to spend a historical-high $4.8 billion on new factories and production lines this year to keep pace with fast chip industry growth, and to make up for slower spending during the recession.

Samsung, the world's biggest memory chip maker, predicted last month that strong PC sales will raise chip revenue 10 percent to 20 percent this year and that prices of DRAM and NAND flash memory chips will remain strong.

Gartner warned Thursday that a correction might be needed for the chip industry in the near term in order to head off an inventory glut. The researcher said that according to the data it tracks, there is a need to re-balance chip sales with system sales.

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