Semico lowers 2002 chip forecast to 6%

Semico lowers 2002 chip forecast to 6%
SANTA CLARA, Calif. -- During a conference here today, Semico Research Corp. lowered its overall semiconductor forecast for 2002, but noted that the market will rebound and recover in 2003 and 2004.

Originally, in May, Semico predicted that chip sales would bounce back from the severe 2001 recession with 17% growth in 2002 (see May 3 story ). In 2001, the worldwide IC market fell by a staggering 31% over 2000, according to Semico.

But today, the Phoenix-based market research firm lowered its overall forecast, saying that the worldwide semiconductor market will grow only by 6% in 2002.

And as expected, Semico also projected 30% growth for the IC industry in 2003 (see Sept. 3 story ). The IC market also looks strong in 2004, but the industry is expected to enter into a downturn in 2005, said Jim Feldhan, president of Semico, during a presentation today.

Feldhan also put a sobering spin on the outlook, saying that worldwide semiconductor sales will not reach their peak levels of 2000 until 2004. "It won't be until 2004 before we get back to the same level as we were in 2000," he said. "Then, we're back in a downturn in 2005," he told the audience at the conference.

In an interview with SBN before the event, Feldhan also expressed some concerns about the worldwide IC market in 2002. "Prices did not firm up like we thought," he said.

On the other hand, IC unit growth is expected to hit a healthy 11% in 2002, he said. And in 2003, the market could reflect the events of 2002, he said. "We will see a flat first quarter of 2003," he said during a keynote address. "Then, things will accelerate in the second half of next year."

What will drive the market in 2003? While the PC and cellular-phone upgrade markets will propel demand, China will also remain a bright spot. "If we look into the next decade, China will become the next golden economy," he added.

Others agreed--at least to some extent. The IC growth in 2003 will depend upon several factors, said Ron Leckie, an analyst for Infrastructure Inc., a market research firm.

"It really depends upon pricing for ICs," Leckie said. "And if corporate spending comes back, then we could see 30% in 2003," he told SBN.