Strong demand for consumer electronics could fuel the highest annual growth rate in 10 years for the semiconductor industry according to a market research firm.

Worldwide semiconductor revenue is on track to reach a record $300.3 billion, up 30.6% from $229.9 billion last year, iSuppli said. The last time the industry saw growth greater than 30% was in 2000, when revenue grew 36.7% year over year.

However, unlike in 2000 when the rise was based on the dot-com bubble, which burst soon after, the expansion predicted for this year is driven by "real fundamental supply/factors that slowly have been gaining momentum during the past 12 months," iSuppli said.

"Building on the continuing expansion in sales that followed the downturn in late 2008 and early 2009, the semiconductor industry is set to achieve remarkable revenue growth and record size in 2010," iSuppli analyst Dale Ford said in a statement released Thursday.

Besides hot consumer electronics products, such as laptops, smartphones and flat-panel TVs, diligent inventory and capacity management efforts on the part of chipmakers are helping to drive growth, Ford said. In addition, innovative technologies at the component and end-system levels are contributing to sales.

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Ford also acknowledged that the high growth rate expected this year is helped by the fact that 2009 was a dismal year because of the economic recession. "Compared to 2008, the semiconductor industry in 2010 will achieve more moderate revenue growth of 15.4%," he said.

Nevertheless, 2010 will likely be a good year for the industry, provided the overall economy remains healthy. "The economy represents the biggest wildcard in iSuppli's 2010 forecast," Ford said.

Source : Informationweek.com