Chip revenue forecast reduced for next two years

The Semiconductor Industry Association (SIA) revised its predictions of growth in revenue from semiconductors for 2003 on Wednesday, slashing their prediction by nine percent without providing details in a press release.

Last November, the SIA predicted revenue from chip sales would grow 19.8 percent in 2003, but the group cut its estimate of 2003 revenue to US$154.9 billion, reflecting growth of 10.1 percent over 2002 revenue. In 2004, the organization now predicts semiconductor revenue will grow 16.8 percent to US$180.9 billion in 2004, down from predictions of 22 percent growth to revenue of US$206 billion made in November.

Revenue from memory chips will drive growth over the next few years, the SIA said. The group predicted DRAM (dynamic RAM) revenue will grow 43 percent, while flash memory for cell phones, smart phones, and personal digital assistants will grow 25 percent in 2004. The forecast for next year also assumes growth in IT spending is just around the corner.

Major semiconductor companies have been cautious about their outlook for the rest of the year. Intel Corp. narrowed its guidance for its second-quarter revenue last week to stay within its previously predicted range, slightly above seasonal trends. But Texas Instruments Inc. issued a revenue warning on Tuesday that second-quarter revenue growth would be lower than expected due to, among other things, the effect of severe acute respiratory syndrome (SARS) on sales of wireless chips in Asia.

Despite the concerns about SARS, the SIA believes semiconductor revenue will grow 12.1 percent to US$57.3 billion in 2003 in the Asia Pacific market, which excludes Japan. Semiconductor revenue in the Americas is expected to decline 2.1 percent to US$30.6 billion in 2003, as more and more PC and cell phone manufacturing is moved to Taiwan, Malaysia, or China from the Americas, the SIA said.

European revenue growth is expected to hit 11.8 percent in 2003, up to US$31.1 billion. The strongest growth in 2003 is forecast to occur in Japan, where revenue should soar 17.5 percent to US$35.8 billion, the SIA said.

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