the Semiconductor industry Association (SIA, San Jose) is forecasting solid growth over the next two years, with a compounded annual growth rate (CAGR) of ~7.7%, resulting in a $321B market by 2010. “As we look at the overall conditions for the market today, we don’t see any excess inventory of any consequence that’s going to have any impact on the industry,” said SIA President George Scalise in a webcast today. “Supply and demand continue to be in very good balance, with demand or capacity uti
lization running in the 90% range. All in all, I think we are looking at a period where we’re going to have solid growth with a number of the product areas doing exceptionally well.” The archive of the webcast will be available for viewing starting tomorrow.
 |
| George Scalise, SIA president |
Scalise said September sales are up ~5.9% YoY. “Looking at the year-to-date data, although we’ve seen some challenging competitive conditions on pricing, overall we’ve seen solid growth in many of the major product areas,” he said.
The overall forecast growth for 2007 is predicted at 3.8%, up from the 1.8% that was forecasted in the SIA June update. “We now see sales for 2007 to come in in the vicinity of $257B. By the end of the forecast period, we expect that sales will reach ~$321B with a compounded annual growth rate over the time of 7.7%,” Scalise said.
Growth is expected toward the lower end of the growth range that we are experiencing at this time. “We’ve said over the last few years that we expect the industry to grow in the 8-10% range. We’re going to be at 7.7% throughout this period. More recently, we’ve been closer to 10%,” he said.
 |
| In 2008, PCs will continue to grow at ~11% per year, although handsets will see a small slow down to ~8%. 1.2 billion cell phone units are expected to being shipped in 2008. |
The SIA sees solid growth across the board for all of the product areas, with flash being the exception, growing at 20% compounded annual growth rate (CAGR). The others are all growing within range of the 7.7% compounded rate for the entire group. The demand for flash is being driven by MP3 players, along with cell phones. “Looking at the growth for this year and what the demand drivers are, once again we can see that the PC is the largest demand driver, going at about 11-12% in unit volume during this year. Along with that, cell phones are going to have a very solid year growing at about 12% as well.” The other consumer products that are
going to be important factors in the demand for this period will be digital TV sets along with MP3 players, with digital TVs growing at ~50% during this year. “The PC plus the rest of the computer products are the major demand driver for about 40% of the overall demand for semiconductors,” Scalise said.
Going on to 2008, PCs will continue to grow at ~11% per year. Handsets will slow down a little bit. “We’ll see growth in the range of about 8% in the coming year, but nonetheless will still be at about 1.2 billion units being shipped in cell phones in 2008. Digital TVs are also falling off rather significantly from the 50% rate we have seen over the last few years, down to about 18%. Again, I think with the Olympics coming on in China, there’s every reason to believe this 18% could bounce back up to something a bit higher as the year unfolds.
“Looking at capital spending, it looks like we’re not only in a good range, but we’re very solid throughout the period,” he added. “Capital spending will be about 16% of sales, and we look at this piece of the overall spending — this does include all the assembly and test equipment — we’ll be in the 20% range, which is where we like to be to keep a balanced supply and demand available.”