SIA cuts semicon forecast to 4.3pc

SAN JOSE, USA: Healthy demand from key end-markets will keep worldwide semiconductor sales at record levels through 2011, the Semiconductor Industry Association said today. Continued strong competition in memory chips – principally DRAMs – will result in slower growth in 2008. SIA lowered its forecast for 2008 semiconductor sales growth from 7.7 percent to 4.3 percent despite continued healthy demand from key end markets. Total semiconductor sales excluding memory products are forecasted to grow by 7.4 percent in 2008.

The SIA mid-year forecast projects that 2008 sales will reach $266.6 billion and grow to $324.1 billion in 2011. SIA projects a compound annual growth rate of 6.1 percent for the forecast period, 2008-2011. The revised forecast projects that sales will grow by 6.2 percent to reach $283.2 billion in 2009, by 8.4 percent in 2010 to $307 billion.

“Key end-markets that drive demand for semiconductors continue to be healthy,” said SIA President George Scalise. “Sales of personal computers, the largest single market for semiconductors, continue to be strong, especially in emerging markets. Total unit sales of PCs are on pace to grow by 10 percent this year to around 300 million units. Cell phone unit shipments are expected to grow by about 12 percent to more than 1.3 billion units, with the largest growth coming from China, India, and other emerging markets.”

SIA reported that unit sales of many other consumer products continue to be strong despite widespread concerns about consumer confidence and rising energy prices. Unit sales of flat-panel televisions are expected to grow by more than 29 percent and digital cameras are forecasted to grow by 11 percent this year.

Scalise cited continued price pressure in the memory sector as the principal reason for lowering the SIA sales forecast. “DRAM revenues declined by 34 percent even as unit shipments increased by more than 30 percent in the first four months of 2008 compared to the same period last year. A recent JPMorgan report projected a 65 percent increase in DRAM bit shipments in 2008. Memory products account for about 20 percent of total semiconductor sales,” Scalise said.

Microprocessors, which account for roughly 14 percent of total semiconductor revenues, have experienced healthy unit sales growth to date in 2008, and revenues are expected to grow over 10 percent per year for the next two years.

Analog products, which account for about 14 percent of total semiconductor demand, are expected to grow at a compounded annual growth of 5.3 percent over the forecast period. Consumer and communications applications continue to drive demand for these products.

Logic products – including both standard and special-purpose logic – are expected to grow by 10.8 percent this year based on strong demand from a variety of end markets including consumer products.

“Worldwide revenues will continue to grow throughout the forecast period, reaching historic highs each year,” said Scalise.