Chip distributor Smith & Associates is optimistic about the future of the semiconductor business, despite signs that the market has reached the peak of its cycle and is expected to slow next year. Market watchers are pointing to rising inventories at chip giants such as Intel as evidence that the market is cooling. But Smith & Associates chief executive Douglas Kelly said he could not see any glaring signals that the market was coming to an end. 'Right now, there aren't any extreme patterns that we're picking up. We're still optimistic about where the business is going,' he said. The privately held company is in a position to know. It has a small role to play in the US$211 billion semiconductor industry but is often among the first to discern trends in the cyclical sector. Its business was booming in the six quarters to the end of 2000, when demand suddenly dropped, foreshadowing a turn in the cycle that would be one of the worst on record. The Texas-based firm is targeting as much as US$500 million in sales this year, compared with $320 million last year. Its three Asian offices - in Hong Kong, Shanghai and Seoul - account for about 25 per cent of its revenue. This percentage is growing as more global manufacturers relocate their operations to the mainland. According to IC Insights, the China market for semiconductors is forecast to reach US$80 billion in 2010, compared with about $23 billion last year. Much of the demand is provided by international suppliers, giving an opportunity for companies such as Smith.
