Growth of consumer electronics drives semiconductor industry to new heights.

The world semiconductor industry is projected to grow by 9 percent this year to $249 billion, followed by a projected increase of 10 percent next year to $274 billion, according to the Semiconductor Industry Association. In 2008, growth is projected at 10.8 percent to $303.4 billion.

The

reason for the robust growth this year is consumer purchases of electronic products, especially digital cameras, televisions and MP3 players, which combined account for nearly 20 percent of semiconductor consumption. Cell phones drive another 20 percent of consumption. Unit sales of cell phones are expected to increase by more than 20 percent this year to more than one billion units.

"With the average semiconductor content of $41 per unit, the cell phone market is now the second-largest consumer of semiconductors, after personal computers," says SIA.

The unit growth of digital cameras this year should top 11 percent; MP3 players, 35 percent; digital televisions, 56 percent; and personal computers, 10 percent.

"Consumer purchases of electronic products have also taken on increased importance as a driver of technology advances for the semiconductor industry," says SIA president George Scalise. "The highest-performance, most expensive PCs on the market today are not designed for corporate use, but for gaming enthusiasts who demand theatre-quality sound and graphics, which in turn require extremely high-performance microprocessors, graphics processors and large amounts of the highest-performance memory available."

Cell phones that include cameras, MP3 capability and television access also require a new generation of high-performance semiconductors. In China, almost 90 percent of the cell phones being sold have color screens, 60 percent have cameras and 50 percent have MP3 capability. Next year, another generation of cell phones will be introduced with built-in GPS systems, which require high-performance flash memory, DSP circuits, RG chips and image-sensing devices.