The global semiconductor market is expected to grow by 8.5 percent in 2006 and reach $247 billion in revenues. This will creep up to 8.6 percent in 2007 and culminate with 12.1 percent growth in 2008. In other words, if world GDP growth stays good as forecasted, then the general demand for electrical devices - especially from consumers - will move along in tandem, pretty much ‘steady as she goes.'

However, there are a couple of elements that stick out! Firstly, the WSTS highlighted the issues surrounding the microprocessor war between Intel and AMD is pulling on semiconductor growth overall. Not new in its thinking here but it would seem that the WSTS is factoring in this negative attribute throughout its 2007 projections!

The second element is related to memory devices. In the bottom line of the table below, WSTS is projecting strong growth in memory in 2006 yet is only tracking the average global growth levels through 2008. 2007 is expected to be a very good year for DRAM as Microsoft rolls out Vista. NAND may be free falling year-on-year but will that continue through 2008?

Yes, memory capacity additions are going ahead right now but then it is a growth period for memory as new apps for NAND kick in strongly in 2008 and beyond. DRAM capacity is more fickle as demand due to Vista is expected to put pressure on supply in 2007 and fewer 200mm fabs can make the sub-90nm transition, potentially adding to supply constraint concerns.

With microprocessors fighting there own war, memory may be the one to watch to see how well demand and supply pan-out. If conditions prove to be better than currently forecasted then expect to see growth forecasts begin to rise in 2Q07!