Semiconductor revenues forecast to rise

20 Dec 2007

Despite global economic woes, worldwide semiconductor revenues are forecast to rise to US$291bn, up 7.5pc on last year.

Analyst firm iSuppli predicts, however, that chip sales for the first half of 2008 will be weak, declining by 4.5pc to US$135.9bn on the year due to oversupply of DRAM and NAND-type Flash memory early in the year.

The DRAM market is expected to undergo a pricing recovery in the second quarter of 2008 but it will be the third quarter before the market really rebounds.

With memory devices expected to account for 21.6pc of global semiconductor revenue in 2008, developments in this market will have a major impact on the overall chip industry. The normal, seasonal uptick in semiconductor sales will drive the recovery in memory in the second half.

However, iSuppli cautions that the potential arrival of a much-feared recession in 2008 could put a damper on this expected growth and may scuttle the anticipated second-half recovery.

Along with the reduction in the semiconductor outlook, iSuppli has reduced its 2008 growth forecast for all types of electronic equipment.

Global electronic equipment revenue is expected to rise to US$1.6trn in 2008, up from US$1.5trn in 2007. This is slightly lower than iSuppli’s previous forecast of 7pc growth.

Notebook PCs and 3G mobile handsets attained strong growth in shipments in 2007. However, growth in these products is not expected to reach the same levels in 2008.

Furthermore, big price reductions for digital televisions in 2007 boosted sales vigorously. Absent these major reductions in 2008, the same level of growth will not be achieved.

Equipment revenue in 2008 also will be impacted by economic concerns and reductions in capital spending.

By John Kennedy