BEIJING, July 17 -- Growth in China's semiconductor sector slowed sharply last year with mixed signals in the first half of 2006, ending two decades of rapid gains as the industry reaches critical mass, data showed.

    China's chipmakers posted US$37 billion in sales last year, up 12.8 percent from 2004, according to a report released last week by data tracking firm iSuppli.

    Last year's growth was down sharply from the break-neck 34.9 percent figure logged in 2004, according to iSuppli.

    It forecast that growth would reach 18 percent this year, up from 2005, but still nearly half the rate for 2004.

    "China's semiconductor demand has enjoyed a brisk annual growth rate for about two decades, and so it's not surprising to see some slowing of the growth as the demand base expands," iSuppli said in a statement.

    "Declining growth rates in China have been a significant trend among the major semiconductor suppliers in recent years."

    iSuppli said the first half of 2006 had produced mixed results.

    "China's semiconductor demand was quite strong in the first quarter," it said. "However, in the second quarter, some inventory accumulated in the mobile-phone supply chain and for consumer electronics goods such as DVD players and digital set-top boxes, which were mainly for export."

    Within the China market, Intel Corp., the world's biggest chipmaker, retained its top spot with US$5.77 billion in sales, up an industry-beating 14 percent.

    But the company's growth was well behind the 20 percent growth for the broader PC industry in China last year, reflecting recent inroads in the market by Intel's archrival, Advanced Micro Devices.

    Intel's growth was also behind the market's three next top players, Texas Instruments Inc., STMicroelectronics and Samsung Electronics, which posted growth of 23 percent, 21 percent and 28 percent, respectively.

    Texas Instruments told reporters last week it expected to maintain a growth rate of more than 20 percent this year, again beating the broader market.

    The No. 5 and No. 6 players in China, the semiconductor business of Philips and Japan's Toshiba Corp., each saw their revenue grow by 7 percent. The No. 7 player, South Korea's Hynix Semiconductor Inc., saw its revenue drop by 6 percent.

    Rounding out the top 10 were Freescale Semiconductor, whose sales rose 13 percent; Infineon Technologies, whose sales dropped 11 percent; and Micron Technology, whose sales rose 5 percent.

(Source: Shenzhen Daily/Agencies)