Semiconductor industry to grow in 2003

Based on turnaround figures in 2002, 2003 expected to show 20% growthGeorge Scalise, president of the Semiconductor Industry Association (SIA), has reported that the group expects the semiconductor industry to grow 20% in 2003, adding that 2002 was a year of "healing"."We feel that 2002 was the recovery year for the semiconductor industry for this cycle that we've been through -- the most difficult cycle the industry has ever experienced," Scalise said on a conference call, noting 2002's four quarters of sequential growth. "There are two elements to this, I think, beyond the demand side. We have now cleared the inventory out of the system and that allowed us to growth the business faster than would have been otherwise possible, and the second is supply and demand is in better balance and therefore there is some pricing power in segments of the market."The industry group found that global semiconductor sales reached $12.5 billion in December 2002, bringing total revenue for the year to $140.7 billion, up from the 2001 level of $138.9 billion. The year's final quarter capped off 2002's revenue growth with a 1.9% sequential rise to $37.6 billion from $36.9 billion. "The last part of calendar year and the first part of the calendar year is our traditionally weakest market time," Scalise said. "I should point out that last year was an anomaly in that regard because of the excess price pressure on DRAMs during the downturn created an opportunity for some price improvement in the first quarter that allowed us to have a stronger first quarter than would necessarily be the case. I don't necessarily expect that to be the case this year, so we would think with this normal pattern this first quarter will be flat to slightly down." Still, Scalise said that setting aside political affects, SIA believes the next few years will be a much better than the industry has been accustomed to. "As we look at the forecast, it's our view that 2003 will be a year of growth," he said. "The current forecast for the year 2003 calls for a sales increase by about 20 percent to $169 billion for the year. That goes on to another 22 percent growth to $206 billion in 2004, and then we expect it to flatten out as we go into 2005 when we have the traditional cycle rounding out at that point."Underlying SIA's optimism is its projection that IT hardware spending will begin to grow in 2003 for the first time since 2000. Software spending began its comeback in mid-2002.Source: Electronic News