June 21, 2007 – In the industry’s latest bearish move, research firm iSuppli Corp. has tweaked its outlook for 2007 downward again, though the firm expects chip sales “will gain momentum throughout 2007 following the first-quarter trough.”
iSuppli’s data now pegs 2007 chip sales at $276.6 billion in 2007, a 6.0% increase from 2006 — down from expectations of 8.1% just two months ago, and 10.6% back in January. The outlook for 2008 remains basically unchanged, though, at ~8.8% growth, while the forecast for 2009 has been reduced slightly to 2.7% (vs. 3.2% in April and 3.7% in January).
Like other industry watchers, iSuppli blames pricing problems, particularly in the memory segment. The firm had baked in some price declines and an inventory correction for early 2007, but the resulting 6.2% sequential revenue decline in 1Q was more than was anticipated, according to Gary Grandbois, principal analyst for iSuppli.
Nevertheless, the firm says there is some good news in its revision, saying that the market is “fundamentally sound” despite the price erosions, which are expected to wane in 2H07. Breaking its forecast into bite-sized chunks, iSuppli says chip sales in 2H07 should rise 8%, vs. a -3% decline in 1H07.
Also, end-equipment demand is still “vital,” with >10% unit growth projected for PCs and handsets offsetting “modest slowing” in other segments of the consumer and industrial electronics markets, the firm wrote. Projections of ~6% growth in the total electronics market this year suggest continuing demand, which will underpin semiconductor unit growth and “single-digit revenue growth” in areas excluding memory and microprocessors.
iSuppli predicts sequential quarterly growth will be stronger in 2008, though a combination of weakening markets, overcapacity, and price erosion will weigh down the market in 2009 to just 2.7% growth.
Updated worldwide semiconductor forecast
(Revenues in US $B)
…………………………2007………………….2008…………………..2009…………………..2010…………………..2011
Jan. 2:
………………..285.8 (10.6%)……..310.5 (8.6%)……..322.0 (3.7%)……..346.0 (7.4%)……..N/A
April 24:
……………….281.4 (8.1%)……….306.1 (8.8%)……….315.7 (3.2%)……….347.5 (10.1%)……….371.6 (6.9%)
June 20:
………………276.58 (6.0%)……300.91 (8.8%)……308.94 (2.7%)……335.06 (8.5%)……365.34 (9.0%)
WaferNEWS source: iSuppli Corp.