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IDC: Healthy Year Ahead

Online staff -- Electronic News, 12/31/2003

Following the economic recovery in the second half of 2003, market analyst firm IDC is forecasting a growth rate of 18 percent in 2004 for the semiconductor industry.


And over the next 5 years, the semiconductor market will grow at a compound annual growth rate of 12.5 percent, rising form $160 in revenue in 2003 to $282 billion in 2008, according to IDC.

Driven by strength in mobile phones and PC shipments, average selling prices have stabilized and capacity utilization rates have increased. IDC expects unit shipments to grow in double digits in 2003 and 2004 for both mobile phones and PCs, ensuring a healthy growth cycle for over half the semiconductor industry, the company said.

IDC sees particular strength in China as the largest consumer of mobile phones and the second largest consumer of PCs. That nation will continue to drive growth in these areas of the semiconductor industry, IDC said. In addition, pressure on OEMs and chip suppliers by investors to increase profits and revenue has been driving an industry trend towards outsourcing, according to IDC.

"As a result of this ongoing trend, China has become a fertile ground for disruptive innovation as its low-cost suppliers naturally aspire to move up market," said Mario Morales, vice president of semiconductor research, in a statement. "IDC expects these emerging Chinese semiconductor companies will play a key role in shaking up the competitive ranks among original equipment manufacturers over the next five years."

Morales noted that mainland Chinese semiconductor demand now represents over a quarter of the $60 billion total for Asia/Pacific and will account for almost half of the entire region by 2008.