This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Industry Sees Chips Cooling

After record-setting sales of an estimated $214 billion this year, the worldwide semiconductor industry should stall and see zero growth in 2005, the lead chip trade group predicted today.

The Semiconductor Industry Association said it's gearing for sales in 2004 to rise 29% from last year's levels, sticking with the prediction it made last June in one of its biannual forecasts.

The group, however, expects chip revenue to stay flat in 2005, a slightly worse outlook than it was expecting as of June. At the time, the SIA thought chip sales would be able to eke out 4% growth next year.

Seconding that view, market research firm IDC said late Wednesday that it believes the chip industry will suffer a revenue decline of 2% in 2005, partly because it expects the effects of an inventory buildup, which got under way last summer, to last through the second quarter of the year. Earlier, it forecast revenue growth close to 8% in 2005.

The more humble outlook issued Wednesday fits with what top chip executives have recently outlined. On Oct. 27, Taiwan Semiconductor (TSM - Get Report) CEO Morris Chang said he expected "almost flat" growth in 2005 instead of the nearly 10% growth he predicted as recently as July.

On a similar note, in late September, Scott McGregor, the outgoing CEO of Philips Electronics' (PHG - Get Report) chip division, said the industry would likely grow only in the single digits next year.

But the industry's lackluster near-term prospects appear to have already been digested by investors. The benchmark Philadelphia Stock Exchange Semiconductor Index, which started the year at 508, ebbed as low as 352 on Sept. 8, marking a year-to-date decline of 31%.

The SOX has since rebounded to 410 as of Wednesday's close, reflecting that many investors have already priced in a good portion of the bad news.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BRCM $50.61 0.00%
PHG $27.81 0.00%
TI $13.20 0.00%
TSM $22.11 0.00%
AAPL $121.30 0.00%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs