The pace of growth in the mainland semiconductor market is expected to slow next year, according to Gartner Dataquest research, adding to investor fears the cyclical industry is at its peak. Gartner expected chip demand in Hong Kong and the mainland would grow 33.2 per cent this year to US$39.7 billion. This rate was unsustainable and growth was expected to slow to 21.66 per cent next year and 7.25 per cent in 2006. In the Asia-Pacific region, Gartner expected chip demand to grow 27.4 per cent to US$71.3 billion this year. Meanwhile, figures from industry group Semiconductor Equipment and Materials International showed global shipments of chip tools grew 42 per cent in the first quarter to US$9.16 billion, indicating chipmakers were aggressively adding capacity. Gartner's forecast follows the unenthusiastic response to the $683.1 million initial share sale by mainland chipmaker CSMC Technologies. The Wuxi-based company halted the sale after failing to fill its order book. Market sources said institutional investors were willing to subscribe to CSMC only if the shares were priced much lower than the indicated 73 cents to $1.10. CSMC is in talks with sponsor Citigroup on possibly lowering the offer price or waiting until market sentiment improves. Brokers said investors also were worried the central government's efforts to rein in the economy could hurt sales of consumer electronics and chip demand. The mainland will remain the Asia-Pacific's fastest-growing chip market, accounting for 44 per cent of demand. China is the world's third-largest chip consumer. Gartner principal analyst Tina Tang said demand for computers, communication equipment and consumer electronics were driving mainland chip growth. 'Along with the market expansion, foreign and Chinese domestic manufacturers are trying to provide new products more frequently and are increasing investment in production capacities of electronics equipment, in order to gain more market share,' Ms Tang said. 'Efforts from manufacturers and increasing demand from consumers will drive this market over the next few years.'
