Report: Semiconductor market shows mixed fortunes

JOHANNESBURG (12/05/2003) - A favorable supply environment, driven by increased fab utilization and falling inventory levels, caused the worldwide semiconductor industry to grow by 11,8 percent in 2003, with revenue totalling US$175 billion, according to preliminary statistics by Gartner Inc. In 2002, worldwide semiconductor revenue increased by 2 percent.

"Though strong overall, 2003 has been a mixed year for individual semiconductor vendors," says Jeremey Donovan, vice-president for Gartner's worldwide semiconductor group. "Companies with greater exposure to commodity markets like flash memory and DRAM were able to outgrow the market. This is a complete reversal of fortune, as these companies suffered more than specialty application semiconductor vendors in the 2001-2002 downturn."

Intel Corp. remained the top vendor based on worldwide semiconductor revenue in 2003, with 16 percent of the market. This is the twelfth consecutive year that Intel has held the top spot. Samsung Electronics Co. Ltd. was in the second position, followed by Renesas Technology Corp. This is the first time that Renesas Technology, a joint venture between Japanese companies Hitachi Ltd. and Mitsubishi Electric Corp., has been reported in the rankings. In 2003, Hitachi and Mitsubishi were ranked number 10 and 11, respectively.

For two years, Samsung's growth was aided by strong NAND flash memory sales. "Samsung had another excellent year, with growth nearly twice that of the overall market," Donovan says. "The company made a strategic decision at the start of 2003 to shift production from DRAM to NAND flash to take advantage of stronger average selling prices."

Toshiba Corp. grew by 16.5 percent, benefiting from strong NAND flash memory sales. As with several other Japanese semiconductor vendors, Toshiba was also aided by the strength of the yen relative to a weakened dollar.

By growing in excess of the industry average, Texas Instruments Inc. was a standout among vendors that are more focused on specialty applications as opposed to commodity device markets. The company continued to maintain a strong position in the wireless semiconductor business. NEC Electronics Corp., which separated from its parent in July, had a mixed year, with weakness in sales of devices to the consumer game console segment being offset by strong sales in the wireless handset and automotive segments.

Overall, the big three European semiconductor vendors had mixed performances. Infineon Technologies AG had the strongest growth with 33 percent, due to a combination of product growth in wireless and in DRAM, as well as favorable exchange rates. Driven by wireless and digital-consumer products, STMicroelectronics NV grew by 12 percent. Philips struggled during the first half of 2003, but the company began seeing strong sequential growth during the third quarter, in its digital-consumer semiconductor segment.

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