Chip sales to fall in 2009 but grow in next two years

SAN FRANCISCO (MarketWatch) -- Worldwide chip sales are on track to fall this year, but are poised to grow over the next two years, as the industry bounces back from one of the most severe downturns in its history, an industry group said Thursday.

Global semiconductor sales look set to reach $219.7 billion in 2009, down 11.6% from 2008, according to a report by the Semiconductor Industry Association.

However, worldwide sales are also expected to grow by 10.2% to $242.1 billion in 2010, and by 8.4% to $262.3 billion in 2011.

The Philadelphia Semiconductor Index closed 2.6% higher Thursday, thanks to gains from chip giants Intel Corp. (INTC:$18.99,00$0.10,000.53%) , Advanced Micro Devices (AMD:$4.97,00$0.14,002.90%) and Texas Instruments (TXN:$24.1600,$-0.0200,-0.08%) .

"The new forecast is brighter than our earlier projections, reflecting an improving global economy," SIA President George Scalise said

Scalise attributed the improved outlook to strong demand for personal computers and cell phones "which together account for about 60% of semiconductor demand."

Still, he said, the group remains "cautiously optimistic for the longer term," adding that "the current forecast is closely tied to projections of continuing improvement in the worldwide economy."