Semiconductor industry will grow 10 percent in 2010

The worldwide semiconductor market is set to end the year declining 11.6 percent to 219.7 billion, however it is expected to bounce back in 2010 when sales grow 10.2 percent to $242.1 billion. According to the Semiconductor Industry's Association's (SIA) annual forecast, the industry will post 8.2 percent growth in 2011, when revenue tops $262.3 billion.

The forecast is higher than the SIA's previous projections. Earlier this year, SIA said that chip sales would drop 21.3 percent to $195.6 billion. SIA President George Scalise says that the brighter outlook reflects an improved global economy. The outlook also reflects better-than-expected PC and cell phone sales. Those end market segments, which account for about 60 percent of semiconductor demand, are expected to stay healthy in 2010 and 2011.

The SIA released its annual forecast on the heels of strong third-quarter growth for the chip industry. Worldwide sales of semiconductors in the third quarter increased nearly 20 percent to $61.9 billion, compared to second quarter sales of $51.7 billion. However, third quarter 2009 sales were down from 10.1 percent from the third quarter of 2008. Chip sales in September reflected historical patterns. Sales increased because original equipment manufacturers (OEMs) and electronics manufacturing services providers are building equipment that will be sold during the holiday season.

Semiconductor sales is likely to stay strong in November before slowing down in December and the first quarter of next year. Over 88 percent of buyers surveyed by Purchasing magazine say that they expect their purchase orders for semiconductors to be the same in November as they were in October, while only eight percent said they would decline and four percent said they would increase.