Sunny days forecast for PCs, chips

Fueled by double-digit growth, the global markets for PCs and chips are set to enter 2004 not with a whimper, but with a bang, iSuppli says.

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The marketplace for PCs and chips is set to enter 2004 not with a whimper, but with a bang, according to market researcher iSuppli.

Global markets for computers and for chips used in cell phones and PDAs (personal digital assistants) are all set to bounce back to life next year, continuing a revival observed in recent months, the market research firm said Monday. The PC sector, for instance, is once again witnessing double-digit growth, iSuppli said.

PC shipments are expected to grow 11.4 percent this year--the first double-digit growth in two years. And the market is seeing revenue rise for the first time since the boom period of 2000, with growth expected at 12.1 percent, the research firm said.

The iSuppli study points to further growth in 2004, with PC shipments likely to see a 14.3 percent rise and revenue a14.8 percent increase. Looking further ahead, it expects revenue to grow during the 2002 to 2007 period at a compound annual rate of 11.1 percent, while shipments are forecast to increase by 10.7 percent. Between 1998 and 2002, by comparison, PC revenue fell by 3.5 percent on a compound basis, and shipments rose only 8.6 percent.

The upturn is being driven by corporate IT purchases as well as strong interest among consumers, particularly a preference for notebooks because of falling prices and Wi-Fi compatibility. In emerging markets like China, consumer sales are on the increase, iSuppli said.

"Contrary to some perceptions, corporations are spending money on IT and that trend will continue over time," Joe D'Elia, a research director at iSuppli, said in a statement.

With many of their PCs four years in age or older, D'Elia said, corporations are finding it less expensive to buy new hardware than to continue to pay the costs of maintaining and repairing their elderly systems. The current trend has been somewhat hidden because corporate computing upgrades aren't tied to a specific, time-sensitive event such as the year 2000 changeover, which drove the last big PC replacement cycle, he said.

Gartner, meanwhile, recently said it expects worldwide PC shipments to reach 164.3 million units in 2003, a 10.9 percent increase from the previous year's numbers. But Gartner thinks the uptake among business buyers remains low, except in Europe.

The rising PC market, coupled with increased demand for wireless devices, is boosting global chip sales as well, according to iSuppli.

Revenue growth in this sector will touch $208.8 billion in 2004, up 17 percent from $178.4 billion in 2003, the market research firm said. The year 2003 will end with sales growth of 13.9 percent, compared with a meager 1.6 percent growth last year. The segments that will see fast growth in 2004 are flash memory and dynamic RAM.