Semiconductor Shipments to Reach $262 Billion

According to Semico, continued demand for communications and portable computing devices with innovative new features will drive purchases this year and help to boost sales of the semiconductors used in these products. Semico sees continued strong demand for communications and portable computing devices influenced by three factors: cell phones are adding computer-like functions; handheld devices are being designed with wireless connectivity; and high-end cell phones and notebooks are converging.

Overall, Semico expects total worldwide semiconductor revenue shipments will reach $262 billion, a 5.8% increase from last year. Pricing pressures continue to impact the semiconductor market, and the competitive market, with declining average selling prices (ASPs), is expected to continue at least through the first half of the year. Lower capacity utilization and inventory concerns about the Flash and the cell phone markets will contribute to moderate growth this year.

The U.S. economy is uncertain. After a weaker-than-expected fourth quarter reading on productivity, questions still remain about fundamental economic issues. There are lingering inflation worries, rising oil prices, and continued weakness in housing and production. On the other hand, the dollar is up versus the yen, worker productivity rose, and wages soared.

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