SAN JOSE – Demand for semiconductor devices will continue unabated through 2009, Semiconductor Industry Association said yesterday in a Webcast annoucning its annual forecast.

A strong wave of consumer demand for electronic products will push sales to $321 billion in 2009, a compound annual growth rate of 9%. Total worldwide sales were $227.5 billion last year.

The new forecast projects sales will reach $248.8 billion in 2006, an increase of 9.4%, followed by increases of 10% to $273.8 billion in 2007, 10.8% to $303.4 billion in 2008, and 5.8% to $321 billion in 2009.

“Consumer purchases of a broad range of electronic products continue to grow as the leading driver of demand for semiconductors,” said SIA president George Scalise. “Traditional consumer electronics products, such as digital cameras, digital televisions, and MP3 player players now account for nearly 20% of all semiconductor consumption. The newest, most advanced consumer electronics products tend to have high semiconductor content. Consumers are also the principal buyers of cellphones which drive another 20% of semiconductor sales. When consumer purchases of automobiles, personal computers and other electronic products are taken into consideration, consumers account for more than half of all semiconductor consumption.”

Unit sales of cellphones are expected to increase by more than 20% in 2006 to more than 1 billion units. With an average semiconductor content of $41 per unit, the cell phone market is now the second-largest consumer of semiconductors, after PCs. Other rapidly growing product segments include digital cameras with projected 11% unit growth, MP3 players with projected 35% unit growth, digital televisions with projected 56% unit growth, and PCs with projected 10% unit growth.

“Consumer purchases of electronic products have also taken on increased importance as a driver of technology advances for the semiconductor industry,” said Scalise. “The highest-performance – and most expensive – PCs on the market today are not designed for corporate use, but for gaming enthusiasts who demand theatre-quality sound and graphics, which in turn require extremely high-performance microprocessors, graphics processors, and large amounts of the highest-performance memory available.

“Full-featured cellphones, with cameras, MP3 capability, TV access, and other new features, are also driving advances in chip technology,” Scalise said. “Consumers, who purchase the vast majority of cellphones, are demanding more and more features that in turn are increasing the semiconductor content.

This is true even in developing markets, he said, reporting that in China nearly 90% of all GSM handsets have color screens, while more than 60% have cameras, and about half have MP3 capabilities. "Next year we expect to see cellphones with GPS capabilities," features that require flash memory, DSP circuits, RG chips and image-sensing devices.

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