Recovery Is Forecast for Chip Industry in 2003

After suffering its worst-ever downturn in 2001, the semiconductor industry is poised for double-digit growth next year, according to two forecasts released Wednesday.

The Semiconductor Industry Assn. projected that global chip sales would grow nearly 20% to $169 billion in 2003. The forecast, based on a survey of its members, also predicted sales to grow 22% in 2004, but leveling off in 2005 for a compounded annual growth rate of 8% to 10%.

Meanwhile, independent research firm Gartner Inc. pegged a more conservative growth rate of 12% in 2003, powered by next-generation cell phones and a pickup in demand for desktop computers, a sector that drives more than half of all chip sales.

“The long-awaited recovery is underway,” said Jerry Sanders, chairman of Advanced Micro Devices Inc. in Sunnyvale, Calif., the second-largest maker of computer microprocessors. “Unfortunately, it doesn’t feel much like a recovery.”

Sanders said at a news conference that the industry is heading into a period of slower growth after the go-go years leading up to the late 1990s.

“This represents a sea change for the industry,” Sanders said. “Clearly, we can no longer rely on a rising tide to lift all boats.”

Gartner’s forecast stems from a more cautious outlook of the electronics industry, according to Richard Gordon, Gartner’s principal analyst, who said the trade group’s numbers were “awfully aggressive.”

Both groups estimate sales growth between 1% and 2% this year after a 32% decline in chip sales in 2001.