Chips in line for 10% CAGR.

San Jose -- Global semiconductor sales are projected to grow at a compound annual growth rate of nearly 10% from 2005 through 2008, with consumer products emerging as a major growth driver, SIA (sia.org) president George Scalise said during an online press conference in November.

Worldwide sales of microchips are set to increase 6.8% in 2005 to $228 billion, with yearly increases to a projected $308 billion in 2008. Scalise added that to date in 2005, growth of cellphones and PCs is stronger than anticipated, up 21% and 15%, respectively. Meanwhile, digital TVs are up 65%, MP3 players up 58% and digital cameras are up 16%.

The biggest surprise in end-market demand this year, according to the SIA, is that the cellphone market is up from its 10% forecast, due to stronger-than-anticipated demand from emerging markets in India, Latin America and Africa. The SIA also noted that almost 75% of unit growth in PCs is coming outside the established markets of the U.S., Western Europe and Japan.

For 2006, Scalise forecasts 7.9% growth, finishing the year at $245 billion.

"Demand is solid across the board, in all market and product segments," Scalise reported. "The main surprise for us this year is that energy prices have not had as much effect as predicted, perhaps because consumers are shopping around for cheaper gas or driving less to offset increasing gas costs." If energy prices stabilize, Scalise believes the SIA can stop worrying about any adverse effects to the industry.

Scalise also praised the industry's operating improvement measures, rebounding from $15 billion in excess inventory in 2000 to have almost no concerns with inventory management now. Capital investment and capacity are being managed much more efficiently, he said.