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SIA slashes 2007 chip sales forecast

Posted: 26 Jun 2007 ?? ?Print Version ?Bookmark and Share

Keywords:microprocessors? flash? DRAM? NAND? market forecast?

The Semiconductor Industry Association (SIA) has lowered its 2007 growth sales forecast for microchips from 10 percent to 1.8 percent, citing a drop in average selling prices (ASPs) in the microprocessor, DRAM and NAND flash markets.

The downgrade came despite what it said were solid fundamentals and continued strong unit growth in major end markets.

SIA now projects worldwide sales for the year to reach $252 billion, and rise to $306 billion in 2010.

"The new forecast projects a 5.4-percent compound annual growth rate for yearend 2006 through 2010. Rapid price attrition in three key market segmentsmicroprocessors, DRAMs and NAND flash memoriesis the major factor contributing to lower growth than previously projected," said George Scalise, SIA president.

He noted a PC sales growth of 10 percent that will reach approximately 255 million units by yearend, but warned a 1.6-percent decline in total microprocessor sales due to unprecedented intense competition and falling prices.

DRAMs sales, meanwhile, are set to expand by two percent in 2007. "Average selling prices in April of 2007 were down by approximately 33 percent compared to December of 2006," Scalise revealed. "Inventory issues in this segment will affect ASPs going forward, and the current forecast assumes continued degradation of prices."

Market segments such as discrete products, optoelectronic devices, sensors, analog chips and MOS micro will see growth in line with the overall industry forecast. Industry capital spending is projected to be in the range of 20-22 percent of industry sales, a rate SIA said should not lead to excess capacity.

"End markets continue to be strong, with consumers realizing major benefits from lower chip prices coupled with ever-increasing performance and functionality from advances in chip technology. Despite a forecast of slower growth, we expect that global sales of microchips will surpass last year's record level," Scalise concluded.

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