SEMICONDUCTOR INDUSTRY OVERVIEW

Recent industry announcements by semiconductor research firms report that worldwide semiconductor revenues totalled around $250 billion in 2007 (a 4 percent rise on 2006) and that a compound annual growth rate of just under 10 per cent over the coming years will be achieved.

The Asia-Pacific region, which includes China and Taiwan, once again led the world in sales growth during 2007 with a year-on-year increase of 6 percent.  At $124 billion in total semiconductor sales, the Asia-Pacific region was more than double the size of the second-largest market, Japan. Chip sales in Europe were up 3 percent year-on-year to around $41 billion; the Americas fell just over 4 percent to $42 billion whilst Japan grew to $48 billion representing an increase of some 4 percent.

The Asia-Pacific region is experiencing the strongest growth and is expected to grow to $140 billion by the end of the year fuelled by strongly rising domestic demand and the continuing manufacturing shift to this region. The market in Japan is projected to remain steady at approximately 18 percent of world semiconductor consumption growing to $50 billion in 2008.

Europe is consuming just under 16 percent of all semiconductors and this market share is expected to continue as European electronics manufacturers shift production to Eastern Europe rather than Asia. The American semiconductor market fell as anticipated in 2007 and represented a little over 16 percent of the worldwide market. Growth is expected in 2008, which should see the market reach 2006 levels of around $45 billion.

Consumer electronics will continue to be a strong driver of semiconductor sales. The market for digital cameras is now larger than the market for traditional film cameras and unit shipments for  Solid State Disk drives are expected to grow strongly from 2009 onwards.

The $36 billion global analogue market, a key component for telecommunications, consumer and industrial applications, is expected to reach $42 billion by the end of 2009.

As a world leader in application specific, low-power, high-integration semiconductor devices, CML Microsystems is uniquely positioned to benefit from the demand for semiconductors within legacy and emerging target markets over the coming years. The company's 40-year development history, increasing market exposure, global distribution network and total customer focus places CML in a distinctive position to take advantage of the expected growth in the application areas being addressed