Tuesday, February 19, 2008

Predicting Semiconductor Industry Growth

The semiconductor industry has been experiencing relatively balanced growth over the past few years, and In-Stat anticipates that this will continue throughout their forecast period.

In-Stat says there will be some variation in growth rates among the end-use segments in terms of semiconductor consumption, but they all will track close enough to the average that none can be said to be the driver in the sense that the computer and communications segments have been drivers in the not too distant past.

In-Stat expects worldwide semiconductor revenue to grow by 2.4 percent in 2008 to $261.9 billion. The consumer segment will lead 2008 growth at 5.9 percent and the consumer and communications segments will gain share while the computer segment share declines over the forecast period.

The computer segment, whose share has been trending downward since 2000, is expected to remain the largest segment by a wide margin, although by 2012 its share is forecast to be 41.8 percent -- well below the 50 percent plus levels of the 1990s. Declining MPU prices have joined DRAM price gyrations as a significant factor in computer segment annual growth.

The communications segment has stabilized at slightly over 20 percent of all semiconductor revenue and In-Stat expects that the trend toward wireless, in everything from computer networking to telephony, will allow the communications segment to maintain this level.

The third ranked consumer segment has experienced the strongest growth over the past 5 years and this growth will slow slightly, but will remain above the average, and that the consumer segment share will break through the 20 percent level in 2008. However, it is not expected to surpass the communications segment before 2013.

The traditional industrial markets are increasingly seeing standard computer and communications hardware replace custom hardware, but any losses here are balanced by growth in medical products. Accordingly, the industrial segment share is expected to be more or less flat over the forecast period, again according to In-Stat's market assessment.

The automotive segment share is also forecast to remain essentially flat. There are many opportunities for semiconductors in high-end vehicles, but these are relatively low volume. The much-hyped impending growth of the automobile markets in China and India will be concentrated in low-priced vehicles with little semiconductor content.

The dominant semiconductor supplier in the automotive sector is still Freescale, which just announced that it replaced its CEO following reports of lower revenue, and continued heavy losses in some key BUs.

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