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  • Report Forecasts Semiconductor Industry Recovery
Oct 2003
LITTLE FALLS, N.J., Oct. 28 -- It has been a rough ride for the semiconductor industry over the last few years, but chip fabricators and suppliers can take solace in signs of recovery that are emerging, says one market analysis firm.

"Stock prices for semiconductor companies have been going up, even if revenues are still lower than they were before the tech bubble burst in 2001," according to market researcher Kline & Company. "For suppliers of compound semiconductors in particular, the end of the bust cycle is critical. The light at the end of the tunnel is visible, even if the tunnel exit still appears to be some distance away."

Li Wang, a manager in Kline's electronic chemicals and materials practice, said, "The suppliers we surveyed for our study told us that their customers have finally been asking for new products to test again. While this won't necessarily mean an immediate increase in orders, it's at least something."

Although the current market for compound semiconductors, including silicon-germanium wafers, is only about 5 percent of the overall semiconductor market, its growth potential could be much greater than that for silicon types, the company said. From 1997 to 2000, the total market for compound semiconductors grew by an average annual rate of 38 percent, compared to 15 percent for silicon-based chips, according to Kline estimates.

After the electronics industry suffered substantial losses through 2000 and 2001, the market for compound chips dropped further in 2002, by about 7 percent. But Kline's report, "The Global Outlook for Chemicals and Materials in Compound Semiconductors, 2002-2007," predicts a gradual recovery, with growth of 15 percent a year through 2007.

Compound semiconductors will continue to find a place in mobile wireless communications, especially for power amplifiers in handsets such as cellular telephones, pagers and global positioning systems, according to the report. Superior performance in optoelectronics, however, explains most of the excitement over the future of compound semiconductors, it said.

"Markets for laser diodes and high-brightness light-emitting diodes appear favorable in the near term as new products are developed for back lighting, signs and displays, automobiles, optical storage and new lighting systems. In the medium term, the market for infrared lasers and detectors is likely to show significant growth from a base that has been severely depressed by overstocking and low demand," the company said. "This growth depends, however, on a commitment by fabricators to spend money on development."

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