IDC: Semiconductor industry set for 2004 boom

The firm said in a statement the semiconductor market will grow at 18 percent in 2004. This growth will be driven by stronger-than-expected cellular phones and PC shipments. The technology analyst predicted that unit shipments of both product groups will grow in double digits in both 2003 and 2004 which will drive a healthy growth cycle for over half the semiconductor industry. Over the next five years to 2008, IDC expects the worldwide semiconductor market to grow at a compound annual growth rate of 12.5 percent, rising from US$160 billion in revenue in 2003 to US$282 billion in 2008.

China--which currently accounts for over a quarter of the US$60 billion demand for semiconductors in the Asia-Pacific region, will be responsible for half the regional demand by 2008. The mainland will benefit from the pressure on original equipment manufacturers and chip suppliers to increase profit and revenue, which has led to a trend in outsourcing, said IDC.

"As a result of this ongoing trend, China has become a fertile ground for disruptive innovation as its low-cost suppliers naturally aspire to move up market," said Mario Morales, vice president of IDC's semiconductor research at.

"IDC expects these emerging Chinese semiconductor companies to play a key role in shaking up the competitive ranks among original equipment manufacturers, original design manufacturers and semiconductor suppliers over the next five years."

Other IDC findings include:

• Mobile phone shipments surpassed 530 million units in 2003 while PC shipments is expected to grow by 11 percent to over 152 million units. IDC expects double digit growth in units for both markets in 2004.
• The Asia-Pacific region has become the dominant region for PC and mobile phone demand and production, with China accounting for the bulk of this region's growth.
• Capital spending for suppliers will grow strongly in 2004 after a few years of decline.
• Suppliers will focus on 2.5G cellular technology, wireless local area networks, broadband and mobile infrastructure.