SIA sees better prospects

The good news is that the SIA is no longer flirting with calling a recession and has upscaled its earlier 2007 growth forecast to 3% from Spring’s 1.8%. Global chip sales this year are now expected to reach $257.1bn against 2006’s $247.7bn. The SIA says it has also noted short term improvements in microprocessor sales, after a year in which both Intel and AMD have been under intense scrutiny by Wall Street. Looking towards 2010, the SIA is now forecasting $276.9bn sales in 2008 (up 7.7% sequentially), $296.2bn in 2009 (up 7%) and $321.5bn in 2010 (up 8.5%). Overall, that implies average growth of 7.7% over the next three years, some way below that experienced during earlier ‘upticks’. If sales are not growing as fast as some would like, one reason may lie in the SIA’s identification of the most attractive emerging markets – South America, Eastern Europe and Asia. Unit sales in these territories are rising quickly, but all three are also held back by the fact that retailers must price goods relatively cheaply. Meanwhile, cost pressures in the US market are intense. “Today, a typical pc sells for less than 30% of the price of a comparable unit in 1995, but today’s model is 100 times more powerful,” said SIA president George Scalise. “We can expect to see similar cost and performance improvements in other silicon intensive consumer products in the years ahead.” The degree of such cost pressure was recently shown in the US when Toshiba priced next generation HD-DVD players at $100 through Wal-Mart, albeit for a fixed time.