Chip Market Set For Double-Digit Growth

Next year's semiconductor market is expected to surge thanks to chip use in the communications, consumer electronics, and computer industries, a new report says.
LONDON — The 2006 semiconductor market is set to achieve double-digit percentage annual growth over 2005, according to Advanced Forecasting, a market research company.

The market is expected to turn upwards in mid-2006 driven by IC use in the communications, consumer electronics, and computer industries, Advanced Forecasting (Saratoga, Calif.) said.

Wafer fab manufacturing capacity utilization reached 89 percent in the second quarter of 2005, up from an 86 percent minimum point in the first quarter of 2005. Foundries are running now at 83 percent utilization, significantly lower than their 99 percent level one year ago, and partially due to an increase in foundry capacity of 35 percent installed during the last year. The manufacturing capacity utilization increase is set to continue, driving ASPs upward and improving IC revenues, thus fueling the 2006 upswing.

“Already IC units have increased 14 percent since January 2005, from 8.39 billion to 9.53 billion, which is a 24 percent increase from their 7.7 billion peak in 2000 and an 80 percent increase from the 5.3 billions minimum point of the 2001 recession,” said Rosa Luis, director of marketing and sales for Advanced Forecasting, in a statement. “At the same time, IC revenues declined 2.5 percent since January 2005, forcing overall ASP to decline.”

“The focal point is that IC units are strong and strengthening,” emphasized Luis, based on the month-to-month growth rate which accelerated in July to 4.1 percent. The first half of 2005 is similar to the equivalent increases during the robust 1999 and 2000 years — growth of 14 percent and 16 percent, respectively.”

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