Worldwide semiconductor revenue is projected to increase significantly over last year as tighter supplies drive up prices, Gartner Inc. said. Revenue is expected to reach $217 billion this year, a 22.6 percent increase over last year.

"A tighter supply environment in 2004 will bring increased revenue and profitability to the industry" according to Gartner analyst Richard Gordon. Manufacturers are currently running in excess of 95 percent of capacity, which is about 10 points higher than the traditional trigger point for additional capital spending, Gordon said.

The forecast is somehow conservative because of concern whether consumers will continue to spend on electronic goods. In addition, businesses are still being cautious about investing in information technology.

Over the last two years, consumer spending on digital cellular handsets and digital consumer electronics has driven semiconductor demand, Gartner said. More recently, demand has been fueled by a PC upgrade cycle, especially in the enterprise market.

Should the global economic recovery continues to gather pace, then demand is expected to improve across all application segments, the research firm said.

By: DocMemory
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