COMMERCIAL NEWS

San Francisco, CALIF. — Global semiconductor sales are expected to rise 37 percent this year to a record $205 billion, and will reach $319 billion by 2003, according to an annual report issued by a leading industry trade group.

Sales of chips for data networking, broadband, wireless, optoelectronics and continued strong demand for personal computers will spur the gains, the Semiconductor Industry Association (SIA) said in its influential annual forecast.

Chip sales are forecast to rise another 22 percent to $249 billion next year, the SIA added.

“The PC is still a major growth driver, but for much of the industry there are faster growth opportunities associated with the new information-based economy,” Wilfred Corrigan, chief executive of chipmaker LSI Logic, said in a statement given at the group’s annual forecast and award dinner.

Other executives in the chip industry agreed. Intel Corp.’s †(INTC: Research, Estimates) President and CEO Craig Barrett said in a presentation broadcast on the Internet that sales of its networking, communications and wireless chips were growing roughly 50 percent or more a year, much faster than sales of its personal computer† microprocessors.

“Overall, our business growth is strong,” Barrett said on the live Internet broadcast.

The industry group raised its mid-year forecast, made in June, when it said worldwide chip sales would rise 31 percent in 2000 to $195 billion. And analysts have said the world is just at the beginning – perhaps no more than 20 percent complete – of the buildout of next-generation communications networks that combine voice, data, video and a wireless.

Corrigan said the growing variety of communication opportunities in markets distributed around the globe would help moderate future semiconductor boom and bust business cycles that have affected the industry over the years.

“While traditionally there have been two dominant markets around the world, in this forecast, we see a broadening of product demand coming from all geographic regions,” SIA president George Scalise said.

While the Americas will remain the world’s largest market, Asia-Pacific is the fastest growing region, the group said.

Ten years ago, the two largest markets – the United States and Japan – made up about 75 percent of the world market for semiconductors. Today, the two biggest markets – the United States and Asia-Pacific – account for less than 60 percent of the worldwide market.

In the Americas, chip sales should rise 34 percent this year to $64 billion and 21 percent next year to $77 billion. The group sees the market reaching $96 billion in 2003.

The European market will grow 33 percent this year to $42 billion and 21 percent next year to $51 billion. It is expected to reach $66 billion in 2003.

Japanese sales should increase 42 percent this year to $46 billion and 22 percent next year to $56 billion, touching $72 billion by 2003. In the Asia Pacific region, sales should gain nearly 41 percent this year to $52 billion, 24 percent next year to $65 billion and should hit $85 billion by 2003.

Sales of flash memory chips, which retain their data when the power is turned off and are used widely in cell phones, are forecast to more than double to $23 billion in 2003 from an estimated $10 billion this year.

Sales of digital signal processors, or DSPs, used in mobile phones, are forecast to more than double to $13 billion by 2003 from $6 billion this year. Texas Instruments Inc (TXN: Research, Estimates), Lucent Technologies Inc. † (LU: Research, Estimates) and Motorola Inc. †(MOT: Research, Estimates) are among the biggest makers of DSPs.

Sales of logic devices, which include programmable logic chips that can be reprogrammed with software rather than be replaced, are forecast to rise to $56 billion during the next three years from $34 billion this year.

Also, dynamic random-access memory chips, or DRAMs, should see sales rise 68 percent to $52 billion in 2003 from $31 billion this year. DRAMs are the most common memory found in personal computers.

Sales of microprocessors – Intel’s main business – are expected to rise 11 percent this year to $30 billion and to $38 billion in 2003.

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