Chip sales to grow in 2010, iSuppli says

After a decline this year, semiconductor sales should grow through 2012, the company said

Worldwide semiconductor sales will grow in 2010 as chip sales gain steam in response to stabilizing economies, analyst firm iSuppli said on Wednesday.

Semiconductor sales could grow by 13.8 percent on a year-over-year basis to reach US$246 billion in 2010. Chip revenue will keep growing through 2012 and could reach levels of 2007, after which chip revenue skid began. Chip sales could total $282.7 billion in 2012; sales tallied close to $273.4 billion in 2007.

However, global chip sales will decline in 2009, albeit at a lower rate than iSuppli first projected. The analyst firm predicted year-over-year global chip sales would decline by 16.5 percent in 2009. Earlier in the year, iSuppli projected a 23 percent drop. Chip sales in 2009 will total US$216 billion, compared to $258 billion in 2008.

Chip sales have "gained clarity" as economies stabilize and supplies improve in key markets after an unstable first quarter, iSuppli said in a statement. Semiconductor sales and inventory levels in the PC and mobile-handset markets -- which account for a majority of semiconductor sales -- improved in the second quarter, iSuppli said. Major vendors have also increased their outlooks for PC and mobile-handset sales, which has given more clarity to project overall chip sales for the year.

"Semiconductor shipments rebounded as inventories were replenished and modest forward-looking purchases were made," said Dale Ford, senior vice president, market intelligence services for iSuppli, in a statement.

Intel CEO Paul Otellini last week said that its chip shipments were stabilizing as PC shipments start to take off. Otellini's comments were stronger than conservative outlooks provided for an expected PC industry recovery from companies like Advanced Micro Devices and Dell earlier in the year. The companies said that PC shipments would grow as users look to buy new PCs with Microsoft's upcoming Windows 7 OS, which is due next month, and as companies look to refresh PCs.

The global economy was partly boosted in the second quarter by worldwide economic stimulus efforts, especially in China, iSuppli said. China's stimulus efforts resulted in a massive increase in consumer purchasing, which benefitted worldwide economic conditions, iSuppli said. The U.S. stimulus effort -- the American Recovery and Reinvestment Act -- has a lesser effect as it wasn't implemented on a wide basis, iSuppli said. An economic stimulus package of $787 billion to spur economic activity was passed in February by Congress and signed into law by President Barack Obama.

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