Worldwide growth in chip revenue could be higher than originally expected this year due to strong demand and an increase in the number of chips used in various electronics products, a group said Tuesday.

Global chip revenue in 2006 could rise 10.1 percent over last year to US$250 billion, according to World Semiconductor Trade Statistics (WSTS), which supplies its data to industry trade groups around the world, including the Semiconductor Industry Association. The figure is higher than its earlier projection of 8 percent growth, and would also beat the 6.8 percent increase from last year.

"The WSTS foresees a continuation of the growing demand enhanced by increasing semiconductor content for electronic products such as PCs, digital consumer appliances and mobile communications within a challenging but generally healthy world economy," it said in a statement.

The upward revision could mean higher prices on some products for users since production lines at chip factories around the world are already running close to full capacity. Currently, prices of dynamic RAM (DRAM) memory chips and NAND flash memory are both on the rise. Memory chip makers have limited their new factory spending in recent years, and diversified into building a variety of new chip products to combat sales volatility in DRAM. Although the goal of chip makers is always to reduce prices by increasing output, the result of their controlled spending and product diversification has been more stable prices in recent years.

Strong growth this year will be followed by double-digit growth over the next two years as well, WSTS said. Revenue in the global chip industry will accelerate next year to 11 percent, and to 12.8 percent in 2008.

Asia-Pacific will be the largest and fastest-growing regional market, outpacing global growth with a rise of 12.4 percent in 2006 and 12.8 percent the year after. In 2008, chip revenue in the region will rise 15 percent to $150.7 billion, according to WSTS.

-Dan Nystedt, IDG News Service

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