Citing global economic woes, iSuppli Corp. has reduced its forecast for global semiconductor revenue growth in 2008, but still foresees a positive year for the market-particularly in the second half. iSuppli now predicts global semiconductor revenue will rise to $291.4 billion in 2008, up 7.5 percent from an estimated $270.9 billion in 2007. This represents a 1.8-percentage-point reduction from iSuppli’s previous prediction in September of a 9.3 percent increase for the year.

Global semiconductor sales in 2008 will be negatively impacted by rising energy costs. Furthermore, the sub-prime mortgage crisis is dimming the economic outlook for the United States next year. This will have global repercussions, impacting demand in other nations.

These factors will contribute to underinvestment and nervous customers in 2008, restraining growth as they cut orders.

First-half struggles

Semiconductor market conditions will be extremely weak in the first half of 2008.

Global chip revenue during the fist six months of the year will decline to $135.9 billion, down 4.5 percent from $142.3 billion in the second half of 2007.

Memory market conditions will be very poor during the first half of 2008, with prices falling due to oversupplied conditions for 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 NAND will not begin to rebound until the third quarter. Because of this staggered recovery, the impact of memory’s resurgence will not be felt by the overall semiconductor market until the third quarter of 2008.

With memory devices expected to account for 21.6 percent of global semiconductor revenue in 2008, developments in this market will have a major impact on the overall chip industry. The normal, seasonal up tick 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.

Equipment outlook reduced

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 $1.6 trillion in 2008, up 6.6 percent from $1.5 trillion in 2007. This is down 0.4 of a percentage point from iSuppli’s previous forecast of 7 percent 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 (DTVs) 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.

2007 estimates upped

While the outlook for 2008 looks less rosy, iSuppli has boosted its forecasts of semiconductor and electronic equipment revenue for 2007.

iSuppli now predicts global semiconductor revenue will increase to $270.9 billion in 2007, up 4.1 percent from $260.2 billion in 2006. iSuppli in September predicted a 3.5 percent increase in annual revenue.

The anticipated second-half surge in chip sales was stronger than expected for most semiconductor types due to increased demand and lengthening lead-times, creating a more stable pricing situation. However, memory chip revenue came in below expectations because of oversupply and declining prices in this product sector.

iSuppli also raised its 2007 electronic equipment forecast to 7.4 percent growth, up from 6.8 percent before due to the strong sales of notebook PCs and 3G handsets during the year.

Other IT news about iSuppli Corporation