iSuppli Trims 2008 Semi Forecast

While it forsees an overall positive year for the market, research firm iSuppli says global economic woes have prompted a reduction in the firm's global semiconductor revenue forecast for 2008. iSuppli now predicts revenue will rise to $291.4 billion in 2008, up 7.5 percent from an estimated $270.9 billion in 2007 (Fig. 1). Previously, the firm predicted a 9.3 percent increase for the year. Rising energy costs and the sub-prime mortgage crisis will negatively impact chip sales, according to iSuppli. The dim economic outlook for the U.S. will have global repercussions, impacting demand in other nations. iSuppli says the first half of 2008 will bode especially weak for the semiconductor market. Global chip revenue during that time will decline to $135.9 billion, down 4.5 percent from $142.3 billion in the second half of 2007. Memory market conditions will be especially poor during the first half of 2008, iSuppli says. Prices will continue to fall due to an oversupply of DRAM and NAND-type flash. The DRAM market should undergo a pricing recovery in the second quarter, but NAND will not begin to rebound until the third quarter, iSuppli predicts. Because of this staggered recovery, the market as a whole will not feel memory’s resurgence until the third quarter of 2008. Since memory devices will account for about 22 percent of global semiconductor revenue, developments in this market will have a major impact on the overall chip industry. Semiconductor Equipment Falls As Well iSuppli has also reduced its 2008 growth forecast for electronic equipment. Revenue is expected to rise to $1.6 trillion in 2008, up 6.6 percent from $1.5 trillion in 2007 (Fig. 2). The firm previously predicted 7 percent growth. Shipments of notebook PCs and 3G mobile handsets saw strong growth in 2007, but are not expected to grow the same levels in 2008. Also, significant price reductions for Digital Televisions (DTVs) in 2007 helped boost sales. Since these same reductions won't exist in 2008, the same level of growth will not be achieved, iSuppli says. 2007 estimates upped For 2007, iSuppli boosted its semiconductor and electronic equipment revenue forecasts. Global semiconductor revenue will increase to $270.9 billion in 2007, up 4.1 percent from $260.2 billion in 2006. In September, iSuppli said there would be a 3.5 percent increase in annual revenue. The anticipated second-half surge in chip sales was stronger than expected due to increased demand and lengthening lead-times, creating a more stable pricing situation. Only memory chip revenue came in below expectations because of oversupply and declining prices. Electronic equipment will grow 7.4 percent due to strong sales of notebook PC and 3G handsets. The firm previously predicted 6.8 percent growth.