SIA Forecast: Microchip Industry Will Reach $321 Billion in 2009

SAN JOSE, Calif.--(BUSINESS WIRE)--The Semiconductor Industry Association (SIA) today released its annual forecast of global semiconductor sales, projecting that the industry will continue to ride a strong wave of consumer demand for electronic products, driving sales to $321 billion in 2009. The SIA forecast projects a compound annual growth rate of 9 percent for the forecast period, 2006-2009. Total worldwide microchip sales in 2005 amounted to $227.5 billion.

The new forecast projects that sales will reach $248.8 billion in 2006, an increase of 9.4 percent, followed by increases of 10 percent to $273.8 billion in 2007, 10.8 percent to $303.4 billion in 2008, and 5.8 percent to $321 billion in 2009.

“Consumer purchases of a broad range of electronic products continue to grow as the leading driver of demand for semiconductors,” said SIA President George Scalise. “Traditional consumer electronics products, such as digital cameras, digital televisions, and MP3 player players now account for nearly 20 percent of all semiconductor consumption. The newest, most advanced consumer electronics products tend to have high semiconductor content. Consumers are also the principal buyers of cell phones which drive another 20 percent of semiconductor sales. When consumer purchases of automobiles, personal computers, and other electronic products are taken into consideration, consumers account for more than half of all semiconductor consumption.”

Unit sales of cell phones are expected to increase by more than 20 percent in 2006 to more than 1 billion units. With an average semiconductor content of $41 per unit, the cell phone market is now the second-largest consumer of semiconductors, after personal computers. Other rapidly growing product segments include digital cameras with projected 11 percent unit growth, MP3 players with projected 35 percent unit growth, digital televisions with projected 56 percent unit growth, and personal computers with projected 10 percent unit growth.

“Consumer purchases of electronic products have also taken on increased importance as a driver of technology advances for the semiconductor industry,” said Scalise. “The highest-performance – and most expensive – PCs on the market today are not designed for corporate use, but for gaming enthusiasts who demand theatre-quality sound and graphics, which in turn require extremely high-performance microprocessors, graphics processors, and large amounts of the highest-performance memory available.

“Full-featured cell phones, with cameras, MP3 capability, TV access, and other new features, are also driving advances in chip technology,” Scalise continued. “Consumers, who purchase the vast majority of cell phones, are demanding more and more features that in turn are increasing the semiconductor content. This is true even in developing markets. Today in China, nearly 90 percent of all GSM handsets have color screens, while more than 60 percent have cameras, and about half have MP3 capabilities. Next year we expect to see cell phones with global positioning satellite (GPS) capabilities. The addition of these features requires high-performance flash memory, DSP circuits, RG chips, and image-sensing devices.”

MOS logic devices continue to be the largest product sector. The forecast projects that sales of MOS logic devices will grow at a compound annual growth rate of 8 percent through 2009, driven by digital consumer products, wireless, and programmable products.

DRAM sales are projected to be the fastest-growing segment with a compound annual growth rate of more than 14 percent in 2006-2009. DRAM sales are expected to be especially strong for the remainder of 2006 and in 2007 as PC makers add memory to accommodate the Windows Vista operating system.

Digital signal processors (DSPs) are the second-fastest growing market segment, with sales projected to grow at a 13 percent compound annual rate through 2009. DSP sales are driven by continuing strength in the cell phone market and new consumer applications, such as high-definition camcorders.

Analog product sales, driven by industrial, wireless, and other portable electronic applications, are forecasted to grow at a compound annual rate of 11 percent through 2009.

The new forecast breaks out NAND and NOR flash for the first time. Sales of NAND flash are projected to grow at compound annual rate of 11 percent through 2009. Growth of NAND flash is driven by replacement of hard drives in consumer applications such as MP3 players and the requirements of portable storage media in applications such as digital photography. Laptop computers with pure NAND drives are projected to account for up to 25 percent of the laptop market by 2009.

Major Semiconductor Product Categories

Discrete products are projected to grow by 8.8 percent to $16.6 billion in 2006 and to $19.9 in 2009, a compound annual growth rate (CAGR) of 6.9 percent. Discrete components include power transistors and radio frequency (RF) transistors that are found in wireless consumer products.

Optoelectronic device sales are projected to grow by 12.3 percent to $16.7 billion in 2006 and to $22.1 billion in 2009, a CAGR of 10.4 percent. Optoelectronics devices include image-sensors that are used in camera phone and digital still camera applications.

Analog sales are projected to grow by 16.8 percent to $37.3 billion in 2006 and to $48.6 billion in 2009, a CAGR of 11.1 percent. Analog is one of the most ubiquitous products, including power management solutions used in all electronic devices.

Microprocessor sales are projected to decrease by 5 percent to $33.2 billion in 2006 and grow overall to $41.9 billion in 2009, a CAGR of 4.7 percent. Microprocessors are the engines of personal computers and are used in embedded control applications.

Microcontroller sales are projected to grow by 3.5 percent to $12.5 billion in 2006 and to $15.3 billion in 2009, a CAGR of 6.1 percent. Microcontrollers are used in a wide variety of end-use applications, including automotive and process control systems.

Digital signal processor sales are projected to grow by 12.8 percent to $8.6 billion in 2006 and to $12.3 billion in 2009, a CAGR of 12.7 percent. DSPs are the engines of wireless communications devices.

MOS logic device sales are projected to grow by 4.6 percent to $60.3 billion in 2006 and to $78.8 billion in 2009, a CAGR of 8.1 percent. MOS logic includes standard logic, standard cell, field programmable logic devices, and a broad range of application-specific devices.

DRAM sales are projected to increase by 29 percent to $33 billion in 2006 and to $44.2 billion in 2009, a CAGR of 14.6 percent. The major application for DRAMs is in personal computers. DRAMs are also increasingly used in handsets.

Flash memory sales are projected to grow by 10.4 percent to $20.5 billion in 2006 and to $25.7 billion in 2009, a CAGR of 8.4 percent. NAND Flash is growing faster than NOR – NAND sales are projected to grow by 10.7 percent to $11.7 billion in 2006 and to $16.3 billion in 2009, a CAGR of 11.3 percent. Flash memory devices are used cell phones, digital still cameras, and a broad range of other applications.

Regional Market Forecast

The forecast projects growth in all regional markets. The Asia-Pacific region will continue to be the fastest-growing market and is projected to reach 48.2 percent of the worldwide market in 2009.

About the SIA

The SIA is the leading voice for the semiconductor industry and has represented U.S. semiconductor companies since 1977. Collectively, the chip industry employs a domestic workforce of 225,000 people. More information about the SIA can be found at www.sia-online.org.