Chips are down according to iSuppli

Semiconductor growth is predicted to slow

Analyst iSuppli recently trimmed its forecast for 2008 worldwide semiconductor revenue growth, as the world descends into ominous economic conditions.

The analyst warned that if the slump continues we could see a “significant potential downside”.

The good news is that global semiconductor industry revenue is expected to rise to $280.1bn (£164.1bn) this year, up by 3.5 per cent from $270.6bn in 2007. ISuppli’s previous forecast, issued in August, predicted four per cent growth for the year.

The US Semiconductor Industry Association this month reported global semiconductor sales rising by 5.5 per cent in August against the previous year. Chip sales had continued to grow according to iSuppli’s expectations. But with banks collapsing, the analyst said the semiconductor market may be feeling the impact of the economic downturn.

“The credit crisis is affecting the semiconductor market on several levels,” said Dale Ford, senior vice president, market intelligence, for iSuppli.

“First, demand for electronic equipment from Wall Street firms is expected to drop. Second is the effect on corporations. With companies unable to get credit, the crisis could spread to the wider economy, affecting demand for electronic equipment.

“Finally, the most significant area is the broader effect on consumer confidence and spending if the overall economy collapses.”

In its latest 2008 semiconductor forecast, iSuppli has downgraded its outlook for memory revenue, particularly DRam. ISuppli lowered its 2008 semiconductor memory revenue forecast by 5.8 percentage points, and its DRam outlook by 5.4.
Bernd Dombrowsky, EMEA inside sales director for memory vendor Kingston Technology, said: “The market will eventually turn around. However, the timing of the DRam recovery will centre on the timing of the economic recovery, which no one can determine at this time.”