SIA: Cell Phones to Drive Chip Sales

Driven by demand for cell phones and other consumer electronics in the Asia-Pacific region, semiconductor sales will continue to grow at a 9 percent rate, reaching US$321 billion by 2009, a trade group said Thursday.

That figure represents a large step up from worldwide semiconductor sales of $227.5 billion in 2005, according to the annual sales forecast from the Semiconductor Industry Association (SIA).

The SIA report suggests that future demand for semiconductors will shift from expensive desktop and notebook PCs to low-cost consumer electronics and cell phones. PCs are still the largest consumers of semiconductors, but they are growing at a meager 10 percent.

The SIA’s forecast justifies complaints from PC and processor vendors that the growth of computer sales has been dropping. Both Dell and Intel have blamed slumping sales rates for their failure to reach earnings targets in recent quarters.

Other sectors are catching up fast. Cell phones are the second-largest market for semiconductors, growing faster than 20 percent in 2006 to a rate of 1 billion units per year. Smaller sectors are growing even faster, with digital televisions growing at 56 percent, MP3 players growing at 35 percent and digital cameras growing at 11 percent.

"Traditional consumer electronics products, such as digital cameras, digital televisions and MP3 players, now account for nearly 20 percent of all semiconductor consumption," SIA President George Scalise said in a release. The cell phone market accounts for another 20 percent.

Many of the customers buying those items live in the Asia-Pacific region, which is expected to account for 48.2 percent of worldwide semiconductor sales by 2009, the report said.

Consumer demand for advanced features is pushing the industry toward faster technology growth. PC vendors are adding high-quality sound and graphics cards to gaming desktop PCs, and cell-phone vendors are adding cameras, MP3 players, TV access, color screens and GPS tracking.

The SIA report breaks the semiconductor industry into nine categories. By 2009, the largest will be metal oxide semiconductor logic devices at $78.8 billion, followed by analog power management devices at $48.6 billion, dynamic RAM at $44.2 billion and PC microprocessors at $41.9 billion. Smaller sectors include flash memory, optoelectronics, discrete radio frequency and power transistors, microcontrollers and digital signal processors.

-Ben Ames, IDG News Service (Boston Bureau)

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