The mid-year SIA forecast calls for chip sales to drop 14% to $175 billion in 2001 compared to $204 billion in 2000. Last fall, before the industry slipped into its steep recession, the SIA predicted that chip sales would grow 22% in 2001.

In releasing the new SIA forecast at a luncheon here, chip executives tried to put the best spin on a terrible year by focusing more attention on 2002 and the next couple years. In fact, the SIA said worldwide semiconductor sales could reach $1 trillion by 2010.

"Despite the sales decline brought on by the excess inventory this year, the semiconductor market is still projected to grow from $149 billion in 1999 to $283 billion in 2004," said Kirk Pond, president, CEO and chairman of Fairchild Semiconductor International Inc. "The industry has a 17% compound annual growth rate for the past 40 years, and we expect that to continue for the foreseeable future despite periodic cycles."

The new revised SIA outlook for 2001 is similar to one released by the World Semiconductor Trade Statistics (WSTS) group last week (see May 29 story). The WSTS forecast shows a 13.5% drop in worldwide chip sales in 2001, but the global chip group said revenues would grow only 13.9% in 2002 vs. the SIA's prediction of a stronger 20.5% increase.

The SIA's mid-year forecast shows chip sales reaching $211 billion in 2002, and then growing 25% to $265 billion in 2003. The revised forecast places semiconductor revenues at $283 billion in 2004, increasing just 6.8% from the previous year.

The new forecast shows semiconductor sales dropping 22% to $50 billion in the Americas market this year, but then growing 20% to $60 billion in 2002, followed by a 25% increase to $75 billion in 2003. An expected slowdown in 2004 will reduce revenue growth in the region to 2%, moving sales up slightly to $76 billion.

European semiconductor sales are now expected to drop 6% to $40 billion in 2001, followed by a 20% growth to $48 billion in 2002 and a 26% increase to $60 billion in 2003, according to the revised SIA forecast. European chip sales will increase another 8% to $65 billion in 2004, said the San Jose-based trade group.

Chip sales in Japan are now expected to fall 9% to $43 billion in 2001, followed by a 19% jump to $51 billion in 2002 and a 23% increase to $62 billion in 2003. The SIA forecast shows chip revenues in Japan growing 9% to $74 billion in 2004.

The new SIA forecast shows chip sales in the Asia Pacific region dropping 16% to $43 billion in 2001. Semiconductor revenues in the region are now expected to bounce back with a 23% increase to $53 billion in 2002, and 27% growth to $68 billion in 2003. Chip sales will grow 9% to $74 billion in 2004, said the SIA's mid-year forecast.

Tracking chip sales by region

Market	2001	2002	2003	2004
Americas	$50 billion (-22%)	$60 billion (+20%)	$75 billion (+25%)	$76 billion (+2%)
Japan	$43 billion (-9%)	$51 billion (+19%)	$62 billion (+23%)	$68 billion (+9%)
Asia Pacific	$43 billion (-16%)	$53 billion (+23%)	$68 billion (+27%)	$74 billion (+9%)
Europe	$40 billion (-6%)	$48 billion (+20%)	$60 billion (+26%)	$65 billion (+8%)
World total	$175 billion (-14%)	$211 billion (+20.5%)	$265 billion (+25%)	$283 billion (+6.8%)
Source: SIA mid-year forecast