Soaring demand for mobile phones, whose sales are expected to reach one billion this year, has led the Semiconductor Industry Association to raise its forecast of worldwide semiconductor sales to a 9.8% increase to $249.6bn in 2006.
The SIA has also upped its forecast for future years and predicts that the industry will grow by 11% in 2007, 12% in 2008, and 4% in 2009 when the value of the industry’s output will reach $323bn. The new forecast projects an average compound annual growth rate of 9.2% from 2005 through 2009.
SIA president George Scalise said it was remarkable for an industry of this size to sustain growth in the range of 8% to 10% annually. With both inventory and capacity in balance, conditions are favorable for continued semiconductor industry growth, he said.
What has led the SIA to up its 2006 forecast from its November prediction of a 7.9% increase to $245bn has been stronger than expected growth in key end markets for semiconductors, most notably cell phones, where 3G is a booming sector.
Scalise said it believed approximately one billion cell phones would be sold worldwide in 2006 and, with an average semiconductor content of $41 per unit, the segment is now second only to personal computers in terms of total chip consumption.
He said that other major drivers of demand, which would show double digit growth this year included PCs, digital cameras, digital television, and MP3 players.
Analog products are expected to be one of the fastest-growing segments of the market in 2006, with growth driven by strong demand from wireless communications and industrial and medical equipment applications. The sector is expected to grow 17.3% this year to $37.4% and show a CAGR of 11.1% to reach $48.6bn by 2009.
Microprocessor sales are projected to grow by 4.3% to $36.4bn in 2006 and show a 7.1% CAGR to reach $46bn billion by 2009.
When it comes to a DRAM sector suffering from over-capacity, sales are expected to rise by 9.1% to $27.9bn in 2006 and to show CAGR of 6.4% to reach $32.8bn in 2009.
The boom in flash memory is set to continue with sales this year projected to grow by 20% to $22.3bn and show a 13.7% CAGO to reach $31.1bn in 2009.
The figures confirm good prospects from major cell phone suppliers Texas Instruments and Qualcomm and point to the continuing problems of the industry’s biggest company Intel.
In the mobile space, its XScale application processors won a significant order from Research In Motion but have not made enough inroads to compensate for a falling market share in microprocessors.