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iSuppli crops chip revenue outlook

Posted: 25 Jun 2007 ?? ?Print Version ?Bookmark and Share

Keywords:market outlook? growth forecast? chip market?

Market watcher iSuppli Corp. remains relatively optimistic about revenue growth for semiconductors this year, predicting a 6 percent increase, compared to some other forecasters who have suggested the market will only grow by some 2 percent.

iSuppli suggests global semiconductor revenue will rise to $276.6 billion in 2007, up from $260.9 billion in 2006. In April, the company predicted an 8.1 percent increase for the year, trimming its forecast following weaker-than-expected conditions in Q1.

SIA forecast
Earlier this month, the Semiconductor Industry Association lowered its forecast for 2007 global chip sales growth from 10 percent to 1.8 percent. The new SIA forecast projects total sales of $252 billion in 2007, rising to $306 billion in 2010.

The researchers at iSuppli say plunging prices for memory chips combined with a significant inventory correction resulted in a 6.2 percent sequential revenue decline during the first three months of the year.

Although the memory downturn and inventory reduction had been anticipated, Gary Grandbois, principal analyst for iSuppli said "we expected these factors to drive only a 5.4 percent decline in revenue for the quarter. With our dreary expectations having been exceeded, iSuppli has reduced its 2007 forecast by 2.1 percentage points."

Still optimistic
Nonetheless, Grandbois said semiconductor market conditions remain strong. "Despite the strong price erosion, the market is fundamentally sound. The end-equipment market is still vital, with PC and handset unit growth expected to exceed 10 percent."

He adds some modest slowing is being seen in some segments of the consumer and industrial electronics markets. "But on the whole, iSuppli expects that the electronic equipment market will grow by 6 percent in 2007. This will generate continuing demand that will keep semiconductor unit growth up and will generate decent single-digit revenue growth in most segments besides memory and microprocessors."

Grandbois adds the rate of price erosion is expected to slow in Q2 2007, allowing the semiconductor market to grow at a relatively robust rate of 8 percent in the second half of the year compared to the first half.

But for the first half of the year, he anticipates revenues would decline by 3 percent compared to the second half of 2006.

Sequential quarterly growth will be stronger in 2008, predicts iSuppli, resulting in 8.8 percent annual growth. However, a combination of weakening markets, overcapacity and price erosion will limit growth to 2.7 percent in 2009.

2010 will again see an upturn, by 8.5 percent, and the researchers predict an even stronger 9 percent increase for 2011, by when global chip sales are expected to reach $365.3 billion.

- John Walko
EE Times Europe

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