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Boom in chip sales has several more years

The growth of the worldwide semiconductor market will keep going until the year 2003, or so says an industry trade group.

The growth of the worldwide semiconductor market will keep going until the year 2003, or so says an industry trade group.

The midyear forecast released today by the Semiconductor Industry Association (SIA) said the world semiconductor market would grow by an annual compound rate of 20 percent through 2003.

The report attributes the growth to the increasing pervasiveness of the Internet and wireless communication products that expand many semiconductor product segments.

The group said growth will explode out of the gate and then gradually slow down. The industry will grow 31 percent in 2000 with revenues of $195 billion and 25 percent in 2001 with $244 billion in sales. SIA expects the trend to slow in 2002 with sales of $279 billion, a 14 percent increase, and wind down further in 2003 with $312 billion in sales, a 12 percent gain.

Some analysts believe that those estimates are low. David Wu, a semiconductor analyst at ABN Amro, believes the industry could grow by 40 percent this year. "Demand is booming," he says.

The America's market will remain the world's largest in the next four years, with the Asia Pacific market--not including Japan--following close behind and the European market taking third.

Leading the charge will be strong sales in PCs, wireless phones, wireless devices, set-top boxes and other consumer products.

PC demand will bump microprocessor sales from $32 billion in 2000 to $42 billion by the end of 2003. The same holds true for DRAM chips. SIA predicts the market will grow to $50 billion in 2003 from $29 billion in 2000, showing some volatility along the way. For example, the DRAM market will expand by 44 percent in 2001 but only 5 percent in 2002.

But some analysts do not put much weight into forecasts that reach father ahead and try to predict volatility. "Anyone who can see that far ahead would not be working for a living," said Wu.