Chip Industry Projects Big Jump in Sales in 2010; Slower Growth to Follow

Semiconductor sales are expected to soar 28.4% this year, as the industry works its way out of a difficult year, according to a mid-year report from the closely watched Semiconductor Industry Association (SIA) that was released Thursday.

While this year is expected to reap the benefits of double-digit growth to $290.5 billion, the next two years will face far more moderate increases, says the SIA. For example, next year the chip industry is expected to grow 6.3% to $308.7 billion and a mere 2.9% in the subsequent year.

"While the year-on-year growth rate will moderate through the remainder of the year, we expect modest sequential sales growth in line with historic seasonal patterns," says George Scalise, SIA president, in a statement. "The industry began the year with inventories in balance and we do not see evidence of excess inventory accumulation at this time."

National Semiconductor (NSM), for example, reported a 42% year-over-year increase in fourth quarter revenues Thursday and noted it expected to generate between $410 million to $418 million in revenues during the first quarter -- a 30.5% increase if it comes in at the low end of its first quarter guidance.

For the chip industry as a whole, emerging markets, especially in China and India, are expected to drive the growth this year and next visa-vie sales of technology products, notes SIA.