Chip market to slow in second half of 2010

Dr. Robert N. Castellano, The Information Network

NEW TRIPOLI, USA: Taiwan Semiconductor Manufacturing Co. (TSMC) chairman Morris Chang has said he expects chip market growth to slow in the second half of 2010, before picking up again in 2011, according to a Taiwan Economic News report.

Chang was speaking on Thursday (March 17) at a Global Semiconductor Alliance (GSA) meeting in Taipei and predicted that the fast-paced growth of the first half of the year and the slower growth in the second-half would result in the chip market expanding by 18 percent in 2010, the report said.

And that growth, modest compared with some other predictions, will quickly settle back to an average annual rate of 4 to 5 percent between 2011 and 2014, Chang was reported saying. However, Chang is more bullish about the foundry business, which he is quoted predicting will expand by 29 percent in 2010.

As a reminder to our readers, we pointed this out in an Insight note on Feb 16. It's encouraging to see that someone of Morris Chang's stature agrees, as all we keep seeing in the press are forecasts of hypergrowth and shortages. See below as a reminder.

February 16, 2010. . . Our US weekly leading economic indicators are pointing to a weakening of the US economy in mid-2010 resulting in a slowdown in semiconductor revenues. Personal consumption will remain sluggish in the second half of 2010 because of a jobless recovery, further deterioration in credit, and continued weakness in home prices.

Our US weekly leading indicator forecasts economic conditions approximately six months in the future.Source: The Information Network.

“The US is the largest consumer electronics market,” noted Dr. Robert Castellano, president of The Information Network. “In 2009, 20 percent of the global consumer electronics revenue came from purchases in the US, followed by Western Europe with 19 percent. Weak consumer demand in 2010 will translate to weak chip sales.”

Semiconductor revenues will grow 11.2 percent in 2010 to $245 billion, up from $220 billion in 2009.