World Semiconductor Trade Statistics (WSTS) has stated that chip sales are still likely to see 28% growth this year, hitting $213 billion, slightly down on its earlier $214 billion forecast.
However, the group said that, while the first half of 2004 had actually been better than expected signs of an industry-wide slowdown are already apparent.
Next year’s growth rate is likely to be just 1.2%, well down on the 8.5% it had previously forecast.
However, this earlier than expected slowdown could presage a soft landing for the industry, with the inevitable downturn coming sooner than previously forecast but likely to be less severe.
WSTS now expects 2006 to show growth of 3%, up on its original forecast of a 0.7% drop in sales, while 2007 is likely to see a return to double-digit growth.
The chip industry has always been cyclical, with rapid expansion inevitably followed by wrenching contractions. The post-2000 slump was the deepest ever.
While the industry had been seeing a steady return to growth in the last year or two, things began to unravel this summer, with mounting concerns over inventory levels culminating in a string of firms delivering lower than expected financial results.
