This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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) 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) 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

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs