Semiconductor Industry Association Forecasts Semiconductor Recovery for 2002-2004; Annual Forecast Reveals Chip Market to Total $218 Billion in 2004.

Business Editors/High-Tech Writers

SAN JOSE, Calif.--(BUSINESS WIRE)--Nov. 7, 2001

Spurred by sales of personal computers, wireless communications solutions and consumer products, the global semiconductor industry will recover from the inventory build that occurred in 2000 and the weak end-market equipment demand in 2001. The industry will begin to recover in the 4th quarter of 2001 and continue with slow growth throughout 2002. It will then return to a traditional growth pattern with 21 percent consecutive increases in sales for 2003 and 2004, the Semiconductor Industry Association (SIA) reported today.

Releasing its annual semiconductor forecast on Wednesday, the SIA projected that while global semiconductor sales would decrease 31 percent this year to $141 billion, the industry would conversely report growth of 6 percent in 2002 to $150 billion, 21 percent growth in 2003 to $181 billion, and 21% in 2004, totaling $218 billion worldwide.

At the SIA Annual Forecast and Award Dinner 2001 held in San Jose, Calif., Texas Instruments' Chief Operating Officer and Executive Vice President Rich Templeton delivered the annual forecast address, which stressed how important integrated circuits have become in our world. "From a simple idea to make electronic components that were less expensive and easier to assemble, semiconductors have grown to become pervasive throughout business and private life." He added, "With vision and tenacity, we will continue extending the reach of semiconductors into daily life -- with corresponding expansion of this industry."

Semiconductor product categories that will lead this expansion include digital signal processors (DSPs), Analog, MOS Logic, microprocessors, Flash and microcontrollers.

"History shows that through upturns and downturns, this industry has always grown over the long-term, and while the exact timing and shape of the coming recovery is hard to predict, recovery is certain," concluded Templeton.

World Markets

Americas Market: The Americas will decrease 43 percent this year to $36 billion and then grow 4 percent next year to $38 billion, 21 percent to $46 billion in 2003, and increase another 21 percent in 2004 to become a $56 billion market.

Europe Market: The communications-dominated Europe market will decrease 29 percent this year to $30 billion, grow 1 percent next year to $31 billion, increase 20 percent in 2003 to $37 billion, and grow 20 percent in 2004 to reach $44 billion.

Japan Market: The Japan market will decrease 26 percent this year to $35 billion, grow 4 percent next year to $36 billion, 20 percent in 2003 to $43 billion, and increase 20 percent in 2004 to total $52 billion.

Asia Pacific Market: The Asia Pacific market will be the fastest growing over the next three years. This region's sales will decrease 23 percent this year to $39 billion, grow 14 percent next year to $45 billion, 23 percent in 2003 to $55 billion, and a 21 percent increase in 2004 to $67 billion.

Semiconductor Product Categories

Analog: The $23 billion global analog market, a key component of the telecommunications market, will grow in-line with the industry during the next three years. The sector will decrease 23 percent this year, grow 9 percent in 2002 to $26 billion, 20 percent in 2003 to $31 billion, and increase 18 percent to $36 billion in 2004.

Discretes: Discrete components will decrease 27 percent this year to $12.3 billion. The worldwide discrete market, which includes diodes, power transistors, rectifiers, thyristors and other discrete categories, will again decrease 3 percent next year to $11.9 billion. In 2003, growth will resume to 16 percent to $14 billion and increase another 15 percent in 2004 for a $16 billion discretes market.

DRAM: The $12 billion global DRAM market will demonstrate its historical volatility during the next three years. The DRAM market will decrease 60 percent this year, and then turn around and grow 16 percent next year to $13 billion, 44 percent in 2003 for a total of $19 billion, and then grow 54 percent for a $29 billion DRAM market in 2004.

Digital signal processors (DSPs): DSPs are one of the fastest growing segments of the global microcontroller market and are expected to be an $8 billion market by 2004. This year, the DSP sector will decline 34 percent to $4 billion; however, it is expected to turn around and grow 16 percent in 2002 to $5 billion, 33 percent in 2003 to $6 billion, and in 2004, the DSP market is expected to grow 29 percent.

"For DSPs -- something very dear to my heart," said Templeton, "the key drivers will be wireless and wired communications as well as a host of emerging digital consumer applications and portable information devices."

Flash Memory: Growth in flash memory devices will be led by 2.5G cellular deployment, digital photography and automotive applications. Characteristic of the volatility of the memory market, Flash will decrease 27 percent this year to $7.8 billion, after an incredible year of 133% growth in 2000. The flash memory sector will then grow 5 percent next year to $8.1 billion, 23 percent in 2003 to $10 billion, and increase 25 percent to $12 billion in 2004 -- making it one of the fastest growing product line in this forecast according to Templeton.

MOS Logic: This year's $25 billion global logic market, which is being driven primarily by communications and application specific products such as display drivers for flat panel displays, will decrease 28 percent this year. This market will turn around and grow 6 percent next year to $26 billion, 21 percent in 2003 to $32 billion, and 19 percent to $38 billion in 2004.

Microcontrollers: The global microcontroller market, driven by consumer and automotive applications, will experience a decline in 2001 before it sees growth again. It is forecasted that this sector will decrease 17 percent to $10 billion in 2001, and then have solid growth of 11 percent to $11 billion in 2002, 28 percent to $14 billion in 2003, and 17 percent to $16 billion by 2004.

Microprocessors: Microprocessors can be most frequently found in personal computers, servers, information appliances and embedded applications. This year the microprocessor market will decrease 28 percent to $23 billion, but then grow 7 percent in 2002 to $25 billion, 16 percent in 2003 to $29 billion, and in 2004, increase 10 percent to become a $31 billion market.

Optoelectronics: Future growth in the optical storage market will be driven by a rapid shift to CD-Read/Read and Write and DVD-ROM. In 2001, this market will decrease 22 percent to $7.6 billion, increase .1 percent next year to $7.7 billion, but then grow 15 percent in 2003 to $9 billion and grow 20 percent in 2004 to $11 billion.

About the SIA

The SIA is the leading voice for the semiconductor industry and has represented US-based manufacturers since 1977. SIA member companies comprise more than 90 percent of U.S.-based semiconductor production. Collectively, the chip industry employs a domestic workforce of 284,000 people.

For one year, a webcast of the SIA Semiconductor Forecast press conference may be viewed at http://www.webevents.broadcast.com/cahners/sia2002forecast/home.asp

To download the slides of this forecast or for additional information about the SIA, go to www.sia-online.org.