Trade group revises chip-sales forecast

Strong sales of cell phones, PCs, digital televisions and digital cameras prompted the Semiconductor Industry Association (SIA) to revise its annual chip sales forecast upward by 6 percent for 2005, to a record $226 billion. Previously, the trade association predicted sales in 2005 would be relatively flat--totaling about $213 billion--following a record sales year in 2004.

The original 2005 forecast, issued in November of 2004, was based on concerns that high energy prices and lingering excess inventories in a few segments of the industry would dampen sales, the SIA said in its report. In fact the only product category that is expected to remain flat is the one for analog devices used in communications, computer, consumer, automotive and industrial applications. The report predicts the Asia-Pacific region will continue to be the fastest-growing market and is projected to reach 46 percent of the worldwide market in 2008. The SIA said it now expects chip sales to reach $246 billion in 2006, $273 billion in 2007 and $309 billion in 2008.