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9/26/2007
02:17 PM
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Lower Global Semiconductor Revenue Forecast For 2007

Any ongoing rally in the second half of the year will stem from a surge in memory integrated circuit revenue and a stronger end-equipment market, researcher iSuppli predicts.

Market researcher iSuppli on Wednesday lowered its global semiconductor revenue forecast for all of 2007, due to a weakness in the first half of the year that offset stronger conditions in the second half.

Revenue growth for the year is now expected to rise by only 3.5% to $269.9 billion, up from the $260.6 billion chipmakers reported in revenue in 2006, iSuppli said. The firm in June had projected 6% growth for 2007.

The revision was due to a 6% decline in semiconductor revenue in the first half of the year, caused by a sales decline in memory integrated circuits, such as DRAM and NAND-type flash. "The memory revenue decline was spurred by a drop in average selling prices, which in turn was caused by a glut of parts on the market," iSuppli analyst Gary Grandbois said in a statement.

Any ongoing rally in the second half of the year will stem from the normal year-end seasonal strength, a surge in memory integrated circuit prices and revenue, and a stronger end-equipment market, iSuppli said. Global semiconductor revenue is expected to rise by 10% in the second half compared to the first half, marking a major turnaround in market conditions. If final sales match the forecast, semiconductor revenue would rise by 9.8% sequentially from the second quarter to the third quarter and by 4% from the third quarter to the fourth.

The projected rise in memory integrated circuit revenue is projected to have a major impact on the overall chip market, because the technology accounts for 23% of total semiconductor revenue, iSuppli said. Integrated circuit revenue is forecast to increase by 15% in the second half of the year over the first, as ASPs improve and the holiday season commences, bringing stronger sales of PCs.

PC shipments worldwide are still on track to increase by 12.3% this year over last year, according to Gartner. Shipments next year are still expected to rise by 11%.

Despite poor performance in the first half of 2007, improving conditions in the semiconductor market in the second half of the year are expected to ripple into 2008, iSuppli said. Electronic equipment revenue is expected to rise by 7% for 2008, up from the previous forecast of 6.4%.

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