Reports are growing that the global semiconductor market has bottomed out and is picking up again. U.S. market research firm IC Insights predicted on Thursday that the market would see an 18 percent growth in the second half of this year compared to the first half. The company said that with cell phone and PC unit shipments expected to grow by 18 percent and 15 percent, the demand for relevant semiconductor products such as DRAMs and CPUs would also rise.

Another research firm, iSuppli, projected that the semiconductor market would record a 7.1 percent growth in the second quarter from the previous quarter, and gains of 10.4 percent in the third and 4.9 percent in the fourth. This is a significant recovery, as the market contracted by 18.8 percent to $44.3 billion in the first quarter from the fourth quarter of 2008.

The semiconductor equipment market is also showing signs of improvement. U.S.-based researcher Gartner predicted that the market would expand from $3.5 billion in the first quarter to $4.9 billion in the fourth on the back of growing spending by semiconductor producers.

The greatest contributor to the recovery is China. The Chinese government's "home appliances to the countryside" program launched last November has stimulated domestic spending. Under the program, the Chinese government provides incentives to buyers from the country's rural areas when they purchase home appliances. Home appliance sales in China increased by 15.2 percent in May.

Easing oversupply is another factor bringing welcome relief to the semiconductor market as key producers have begun to control production. "While the velocity of the semiconductor industry recovery is subject to debate, at least the discussion over the next few quarters will be about how much sequential growth can be expected in instead of how far the markets are going to fall," said Bill McClean, president of IC Insights.