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Record chip sales in 2005

Citing stronger than expected chip sales, the Semiconductor Industry Association (SIA) has revised its annual forecast for global IC sales to a record US$226 billion in 2005.

Citing stronger than expected chip sales, the Semiconductor Industry Association (SIA) has revised its annual forecast for global IC sales to a record US$226 billion in 2005. The organisation has also projected a compound annual growth rate (CAGR) of 9.8% for the global industry through 2008. It added that global chip sales could grow to US$309 billion by 2008. Originally, SIA had predicted flat sales for 2005.

"Higher sales have been driven by better than expected demand in a number of important markets, including personal computers and wireless handsets. Our cautious forecast issued in 2004 was based on concerns that high-energy prices and lingering excess inventories in a few segments of the industry would dampen sales in 2005. Those fears have not materialised and economic growth has remained strong," says SIA president, George Scalise.

The SIA is not the only industry group projecting a strong demand for semiconductors. Last month, the World Semiconductor Trade Statistics (WSTS) also raised its near-term chip forecast, calling for the IC market to grow 6.3% to US$226.5 billion in 2005, compared to a dire forecast last November of only 1.2% year-over-year growth.

Whether the improved predictions of both organisations hold true remains to be seen. The outlook for capital spending remains bleak and companies continue to cut jobs because of lacklustre results. Though acknowledging some spot shortages and oversupply, SIA officials say the demand in the second-half of the year will improve.

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