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SIA sets most pessimistic semiconductor sales forecast for 2007 |
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Jun 13, 2007 at 05:14 PM |
 In an uncharacteristic move, the Semiconductor Industry Association (SIA) has lowered its forecast for semiconductor sales in 2007 below that of other market research projections, down to 1.8 percent growth compared to its previous projection at the beginning of the year of an expected 10 percent growth over 2006.
The SIA typically tends to be slightly more optimistic than other forecasters; however recent revisions by iSuppli, WSTS, Gartner and others put growth at between 2 and 3 percent for 2007.
"Despite strong unit demand for semiconductors, driven by healthy growth in major end markets, worldwide microchip sales will not reach our earlier forecast of 10 percent growth in 2007," said SIA President George Scalise. "We now expect that total sales will grow by 1.8 percent to $252 billion in 2007, with further growth to $306 billion in 2010. The new forecast projects a 5.4 percent compound annual growth rate for year end 2006 through 2010. Rapid price attrition in three key market segments - microprocessors, DRAMs, and NAND flash memories - is the major factor contributing to lower growth than previously projected."
"PC sales are on track to reach 10 percent unit growth in 2007, reaching approximately 255 million units," said Scalise. "PCs continue to be the largest single end market for semiconductors. Despite strong unit PC sales growth, we expect that total sales of microprocessors will decline by 1.6 percent as intense competition is contributing to price erosion at a more rapid pace than historical patterns."
"Sales of personal media players (PMPs) and MP3 players are expected to grow by more than 20 percent this year to more than 215 million units, driving unit demand for flash memory," said Scalise. "Despite strong unit growth in important demand drivers for NAND flash, this market segment is experiencing price attrition in a very competitive environment. According to the World Semiconductor Trade Statistics (WSTS) organization, ASPs for NAND flash declined by more than 35 percent year-on-year in April even as unit shipments grew nearly 54 percent."
The SIA also said that most other market segments - discrete products, optoelectronic devices, sensors, analog chips, and MOS micro - will see growth in line with the overall industry forecast. MOS logic devices are expected to grow by 5.7 percent in 2007, according to the trade association.
Total industry capital spending is now projected to be in the range of 20-22 percent of industry sales, a rate that should not lead to excess capacity, the SIA believe. However, over-capacity already exists in major memory markets.
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