iSuppli lowers semiconductor chip revenue forecast to 6%, remains above other forecasts

June 29, 2007 - Market research company iSuppli has reduced its revenue forecasts for semi-conductor chips in 2007 to 6%, above its April projection of 8.1%, but still sees prospects as stronger than predicted by other market analysts.

Global revenue is expected to increase from $260.9bn in 2006 to $276.6bn in 2007 according to iSuppli’s latest forecasts.  Reasons for the cut in expectations include plunging memory chip prices and significant inventory reduction, which caused a 6.2% drop in first quarter chip revenues, but the market is expected to stabilise throughout the remainder of 2007, and pricing conditions are projected to improve. Gary Grandbois, principal analyst at iSuppli, commented: “Despite the price erosion, the market is fundamentally sound.  The end-equipment market is still vital, with PC and handset growth expected to exceed 10 per cent.  On the whole we expect that the electronic equipment market will grow by six per cent in 2007.”

Grandbois attributes many of the recent pessimistic projections by analysts of around 2% to the supposition that weak pricing condition in the first quarter will persist throughout the entire year.  “iSuppli’s more optimistic outlook reflects our view that pricing condition will improve in the second half,” Grandbois added.  The market research firm projects that the semiconductor chip market will grow by 8.8% in 2008, with growth falling to 2.7% in 2009 due to a combination of weakening markets, overcapacity and price erosion.  For 2007 the demand for electronic equipment will keep semiconductor chip growth up, and “generate decent single-digit revenue growth in most segments besides memory and microprocessors.”