Global chip, equipment markets slow down in 2008

By : |April 22, 2008 0

USA: Consumers are feeling the pressure of the economic downturn—and so are global semiconductor and electronic equipment suppliers as they face slowing growth in demand in 2008, according to iSuppli Corp.

Five of the six major segments of the global electronic equipment business–computers, industrial equipment, automotive gear and wired and wireless communications–are expected to suffer lower growth in 2008 than they did in 2007. The widespread slowdown will hold worldwide OEM revenue expansion for all types of electronic equipment to 5.9 percent, down from 7 percent in 2007. iSuppli previously predicted 6.6 percent growth in 2008.

This will have a negative impact on semiconductor sales, which now are expected to rise only 4 percent to reach $279.6 billion in 2008, up from $268.9 billion in 2007. iSuppli’s previous semiconductor forecast called for 7.5 percent revenue growth in 2008.

                                 

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“Revenue growth in each electronic equipment segment is being impacted by a variety of specific factors. However, the macroeconomic impact of the U.S. subprime mortgage crisis is the underpinning of the market slowdown,” said Gary Grandbois, principal analyst with iSuppli Corp. “The global electronic equipment market has posted five strong years of growth in a row. But weakness in some application markets coupled with a slowing trend in global economic conditions, led by a U.S. slump, dim the prospects for strong equipment growth in 2008.”

Wired for slowdown
The biggest single area of slowdown in 2008 for electronic equipment will be in wired communications gear used for telco and cable network infrastructure. Equipment revenue growth in this area will amount to only 3.6 percent in 2008, a dramatic reduction from the 13 percent expansion in 2007. Spending in 2007 was driven by the rise of metro and long-haul network upgrades by global telco providers. However, in 2008, spending on equipment for those deployments has largely been completed and growth has slowed substantially.

The wireless communications equipment segment, a category dominated by mobile handsets, will experience the next biggest slowdown with growth of 8.2 percent in 2008, down from 11.1 percent in 2007. While unit growth for mobile handsets is expected to be healthy, falling Average Selling Prices (ASPs) for older 2G mobile handsets will restrain revenue growth in the global handset market. This will cause global semiconductor revenue growth for wireless semiconductors to slow to 1.6 percent in 2008, down from 2.4 percent in 2007.

The computer segment will experience a relatively mild slowdown in 2008, with global equipment revenue rising by 8.6 percent for the year, down from 9.6 percent in 2007. Conditions will be much brighter in the PC-oriented semiconductor segment, with global revenue growth of 5.3 percent, compared to a 0.9 percent rise in 2007.

The cessation of a price war between Intel Corp. and Advanced Micro Devices Inc. means that ASPs for PC microprocessors will hold relatively steady in 2008, helping the semiconductor segment to grow faster. Furthermore, market conditions for DRAM chips used for PC memory are expected to be better in 2008 than they were in 2007, keeping their ASPs high.

Global semicon revenue forecast

Global OEM equipment revenue forecast

 

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