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Memory problems prompt SIA to cut forecast

Posted: 16 Jun 2008 ?? ?Print Version ?Bookmark and Share

Keywords:SIA forecast? flash memory? semiconductor market?

The Semiconductor Industry Association (SIA) said semiconductor sales are forecast to slow down in this year principally due to problems in the memory IC sector, but the entire industry will continue to record strong revenue increases through 2011.

The SIA's mid-year forecast expects chip sales to rise 6.1 percent on a CAGR basis from 2008 to 2011 when revenue for the global market would reach a record $324.1 billion from a projected $266.6 billion in 2008.

Although weak pricing conditions in the memory IC market would continue to pressure the entire semiconductor industry for some time, SIA believes total industry sales would remain strong due to continued strength in core segments like PC, mobile devices and other consumer electronics products.

"Key end-markets that drive demand for semiconductors continue to be healthy," said SIA president George Scalise in a statement announcing the annual mid-year forecast. "Sales of PCs, the largest single market for semiconductors, continue to be strong, especially in emerging markets."

"Total unit sales of PCs are on pace to grow by 10 percent this year to around 300 million units," he added. "Cellphone unit shipments are expected to grow by about 12 percent to more than 1.3 billion units, with the largest growth coming from China, India, and other emerging markets."

The industry body said it expects the semiconductor market would grow more than 6 percents in 2009, to $283.2 billion and rise an even stronger 8.4 percent in 2010 to $307 billion and jump to $324.1 billion in 2011, up 6 percent from the prior year.

The SIA is not known for hitting its forecast, however, mainly due to problems predicting sales in a market reputed for erratic price swings and demand as well as supply problems.

The industry body, for instance, has already trimmed its 2008 sales projection down to a 4.3 percent increase from 7.7 percent or higher, citing weakness in the DRAM and flash memory market.

The double-digit declines in DRAM pricing witnessed by the industry over the last several quarters have devastated the sector, hurting sales and margins and pushing some companies to consider exiting the sector despite surging increase in bit shipment.

"DRAM revenues declined by 34 percent even as unit shipments increased by more than 30 percent in the first four months of 2008 compared to the same period last year," the Scalise said. "A recent JPMorgan report projected a 65 percent increase in DRAM bit shipments in 2008. Memory products account for about 20 percent of total semiconductor sales."

- Bolaji Ojo
EE Times

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