Analyst lowers chip forecast, but PC end-market “much brighter”

Analyst lowers chip forecast, but PC end-market “much brighter”
Apr. 9, 2008 – A day after slashing its outlook for the NAND flash memory sector, industry analysis firm iSuppli is lowering its outlook for semiconductor sales overall — as it warned it would do — to just 4% growth in 2008 (to $279.6B) instead of a previously projected 7.5% increase.

As before, the firm pins blame on the US subprime mortgage crisis, which is leading a slowing trend in global economic conditions and weakness in some application markets, notes principal analyst Gary Grandbois, in a statement.

Five of six major electronic equipment segments — computers, industrial, automotive, and wired/wireless communications — are expected to see slowing growth in 2008, enough of a widespread trend to lower overall worldwide OEM revenue growth to 5.9% (vs. ~7% in 2007), slightly below iSuppli’s initial 6.6% prediction.

Softest conditions are in the wired communications segment, gear for telco and cable network infrastructure, expected to slow from 13% growth in 2007 to just 3.5% in 2008, as global telco providers are largely finishing upgrades to metro and long-haul networks. Wireless (mostly mobile handsets) will slow to 8.2% growth from 11.1% a year ago, despite healthy unit shipments, due to by falling ASPs for older 2G handsets. Taken together, these two groups will amount to a tiny 1.6% increase in sales of wireless semiconductors in 2008, vs. 2.4% in 2007.

Look for a milder slowdown in the computing sector, with equipment revenue growth slipping from 9.6% in 2007 to 8.6% in 2008. Conditions in the PC segment “will be much brighter,” the firm claims, with 5.3% growth vs. 0.9% a year ago, as ASPs for MPUs stabilize following a cease-fire in the Intel-AMD price wars. DRAM market conditions also are expected to be better this year than last, helping boost long-suffering ASPs, the firm adds.

iSuppli’s revised semiconductor forecast:
2008: $279.57B (4.0%)
2009: $303.29B (8.5%)
2010: $326.16B (7.5%)
2011: $340.38B (4.4%)
2012: $367.63B (8.0%)


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