Chip market to grow 23 percent next year

Echoing comments by Intel execs, research firm sees chip sales bottoming out early next year
Written by Matthew Broersma, Contributor

The semiconductor market will grow 23 percent next year, buoyed by this year's inventory slashing and renewed consumer demand, according to US technology market forecaster Semico Research.

The company says that the worldwide semiconductor market will hit $193bn (about £140bn) next year, up 23 percent from 2001. After a flat first quarter next year, the market will grow sequentially in the high single digits for the following three quarters, Semico president Jim Feldhan told ZDNet UK.

The industry will continue to grow through 2004, hitting $302bn before another cyclical slump in 2005, Feldhan said.

The return to growth is down to a reduction in the large inventories that have plagued chip makers since the slowdown hit.

"Our belief is that inventories will be absorbed this year and any remaining inventory will be obsolete," Feldhan said.

However, Semico expects the real key to be increased consumer spending on high-tech products. Feldhan said that tax reductions by the US government could help stimulate spending there.

Executives of Intel, the largest semiconductor company, have gone out on a limb in recent weeks, predicting that growth could return late this year.

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