IC market to grow 26% in 2003, says report

The UK-based market research firm projected that the worldwide semiconductor will grow by 3.6% in 2002 over 2001, a slight improvement over its 0.2% growth forecast issued last January.

It also remains unchanged in its view that 2003 will be the year of recovery, with growth estimated at a "blistering" 26.4% over 2002. In 2004, the IC market will grow 33.1% over 2003, said Malcolm Penn, chairman and CEO of Future Horizons.

"We expect a 2002 year-end market value of $144 million, with no real respite in the second half of the year," he said in a statement. "The industry is currently in a period of profitless prosperity, and the last two quarters will continue to be a very tough ride."

Worldwide IC unit shipments grew "significantly" in the first half of 2002, but there was also pressure on average selling prices (ASPs) for ICs, Penn said. "The industry is currently running like crazy to keep up with increased unit demand, and getting nothing back in return by way of increased revenues or margin," he said.

There is more bad news. "Almost all semiconductor firms now see a reduction in their capital expenditure plans for 2002, which will have a negative impact on 2003/04 available industry capacity," according to Future Horizons.

Unless the current economic uncertainty triggers a double dip in the recovery process, Future Horizons sees a slow IC recovery "operating in a tightening excess capacity situation, with a world economy slowly gaining momentum."

Its forecast calls for a return to mobile phone handset double-digit unit growth in 2003 and a modest improvement in PC unit growth to 6.5%. This should result in a real growth in semiconductor units of 11.2% in 2003, increasing to 18.9% in 2004 in line with the overall world economic recovery.