Slowdown may dip Indian chip market growth by 50 percent

January 28th, 2009 - 6:48 pm ICT by IANS  

Bangalore, Jan 28 (IANS) The global economic slowdown will dip the growth of the semiconductor (chip) market in India by over 50 percent, an industry study said.”The compound growth of the Indian semicon market for 2009-10 will be 13.4 percent as against the projected 26.7 percent due to lower investment and sluggish manufacturing, resulting in over 50 percent decline,” Indian Semiconductor Association (ISA) chairman Jaswinder Ahuja told reporters Wednesday.

According to the study, conducted by global IT research firm Frost and Sullivan (F&S) for ISA, the chip market will grow in single digit (6.7 percent) on annualised basis over the two calendar years.

In revenue terms, the total market is poised to increase $1.69 billion to $7.59 billion in 2010 from $5.9 billion in 2008, while the total available market is projected to grow 13.1 percent or $710 million to $3.24 billion in 2010 from $2.53 billion in 2008.

The total market is defined as total consumption of silicon chips in any form, purchased locally, imported partly or completely by any source such as firms, distributors or importers in US dollar or Indian rupee.

The total available market denotes consumption of chips in India by manufacturing end-user products in the country and consumed through a local purchase order.

“Another factor for the steep growth fall is 3-10 percent decline in average selling price for semicon components on the end product and the silicon chip content,” Ahuja said.

The slowdown and consolidation in the global semicon industry will also impact the growth rate of the Indian market, as the country’s electronics industry manufacturing index is a woeful 0.45 percent of the total production.

The F&S study, however, does not include the chip design and embedded software services segment of the semicon industry though global and Indian firms make a significant contribution to the sector growth rate.

The global semicon market is set to witness a marginal growth of 4.2 percent to $273 billion in 2010 from $262 billion in 2008 due to worldwide recession and drastic slump in consumption.

IT products such as notebooks, desktops (PCs) and servers, office automation wireless handsets (mobile phones) and consumer electronics will be the key drivers of the growth, albeit slower than in previous years.

According F&S analyst V. Niju, set-top-boxes for DTH (direct-to-home) service, cell phones, 3G rollout, WiMax, notebooks and smart cards will primarily drive the chip market even when “chips are down”.

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