The Hindu Business Line : Chip market size pegged at $5.5 b by 2009

Scorching pace
India’s share in global market to touch 1.62%
Total market seen growing at 26.7 per cent CAGR
Revised estimate due to dip in average selling price

Predicting growth: Mr Ashwani Kumar (second from right), Minister of State for Industry, launching the ISA Frost & Sullivan report update 2007-08 along with (from left) Ms Poornima Shenoy, President of the Indian Semiconductor Association (ISA), Mr Anand Rangachari, MD, India & South Asia Asia, Frost & Sullivan, and Mr S. Janakiraman, Chairman, ISA, in the Capital on Friday. - Kamal Narang

Our Bureau

New Delhi, Aug. 31 Fuelled by telecom, IT and consumer electronics usage, the total market for semiconductors (in imported form and locally manufactured products) in India is estimated to touch $5.49 billion by 2009, a compounded annual growth rate of 26.7 per cent over $2.69 billion in 2006, according to a report released by Indian Semiconductor Association (ISA) and Frost & Sullivan.

During the same period, the semiconductor total available market revenue – which reflects the semiconductor consumption only in locally manufactured products – is slated to grow even faster at 35.8 per cent to touch $3.18 billion in 2009, from $1.26 billion in 2006, signifying a scorching pace of domestic manufacturing for different electronic products in India.

India’s share in the global semiconductor market is slated to touch 1.62 per cent by 2009 against 1.09 per cent in 2006.

“As domestic demand for all electronics products grows, India is emerging as one of the fastest growing regions in the world,” said Mr Anand Rangachary, Managing Director, South Asia and Middle East, Frost and Sullivan.

“The global semiconductor total market is growing at 8-9 per cent CAGR, while the India total market is touching 26.7 per cent CAGR till 2009.”

End-user products

Mobile handsets, desktops and notebooks, GSM base stations, set-top boxes and energy meters are the top five end-user products that are expected to drive this growth.

The top four semiconductor products that are expected to drive revenues are microprocessors, analog, memory and discretes.

An ISA report released last year had projected that the overall consumption of semiconductors — or the total market revenues — would reach $3.8 billion and semiconductor total available market revenues would be $1.62 billion in 2006, whereas the update now estimates the actual revenues at $2.69 billion and $1.26 billion, respectively.

Revised estimate

“The revised estimate for 2006 is due to a sharp decline in various semiconductors average selling price in end-user product, which resulted in the shortfall between the forecast and the actual market levels,” the report said.

The decline has been the sharpest in mobile handsets, where the electronics bill of materials per unit witnessed a steep decline from $25.7 to $11.

Given the significant volumes generated by this market, this 43 per cent decline impacted the revenue estimates.

Also, a decline in the prices of discrete and memory products reduced the contribution of colour TVs towards semiconductor total available market revenues.