Worldwide semiconductor industry on track for 11% growth in 2003

AUGUST 18--Following a strong second quarter in 2003 and cautious optimism about the onset of the usual seasonal uptick in demand, the worldwide semiconductor market appears to be continuing its recovery, according to Gartner Inc. (Stamford, CT; www.gartner.com).

Aug 18th, 2003

AUGUST 18--Following a strong second quarter in 2003 and cautious optimism about the onset of the usual seasonal uptick in demand, the worldwide semiconductor market appears to be continuing its recovery, according to Gartner Inc. (Stamford, CT;www.gartner.com). The worldwide semiconductor market is forecast to reach $173 billion in 2003, an 11.2% increase over the 2002 worldwide semiconductor revenue of $156 billion.

"Noteworthy improvements in market conditions during the last few weeks confirm that the industry is continuing its recovery as expected and is about to enter a more accelerated growth phase. This observation is in line with our long-standing assumption of a three-phase recovery in the market," said Richard Gordon, research vice president for Gartner's semiconductor research group. "While many industry watchers have been revising down their forecasts recently, we have been predicting growth of around 10% for 2003 since the fourth quarter of last year."

Gartner analysts said that in front-end semiconductor manufacturing, silicon demand is increasing, overall wafer fab utilization now exceeds 80% and foundry wafer pricing has firmed up. In packaging and assembly, overall utilization rates continue to increase on a monthly basis and leading-edge capacity has become tight as the demand for advanced packaging solutions grows.

"It is becoming increasingly likely that the long-awaited corporate PC replacement cycle will be characterized by incremental increases in IT spending spread over a more prolonged timeframe than we have seen in the past," Gordon said. "While this trend would underpin a sustained semiconductor recovery, it may act to temper headline annual revenue growth. Excess capacity in the telecommunications sector also remains a concern that could postpone the return and inhibit the level of telecommunications industry capital spending in the medium to long term."

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