Gartner Raises Global Semiconductor Revenue Forecast

Gartner on Monday raised its worldwide semiconductor revenue forecast for the year by more than 1%, noting that the slowdown in the U.S. economy has not had a major impact on consumer electronics sales.

Revenues are expected to increase 4.6% this year to $286.5 billion, compared to $273.9 billion last year, Gartner said. The latest forecast is slightly higher than Gartner's prediction in February, when the analyst firm said it expected a 3.4% increase.

"It was widely assumed that the slowdown in the U.S. economy that began in mid-2007 would reduce demand for electronics goods and, by extension, semiconductors in 2008," Richard Gordon, research VP at Gartner, said in a statement. "However, while we are still forecasting low single-digit growth for the semiconductor market in 2008, this has more to do with supply-side factors than weakness in demand."

In the first quarter, global sales were seasonally normal, held afloat by healthy PC and mobile phone production, Gartner said. So far, there have been no signs of a significant slowdown in the markets for digital consumer and automotive electronics, two areas that would likely be affected by cutbacks in consumer spending.

Gartner also said the commodity memory segment of the market has marginally improved, and the analyst firm has made a significant upward change to its unit production forecast for portable navigation devices.

In addition, guidance from electronics and semiconductor vendors in the second quarter suggests that they do not expect market conditions to worsen, Gartner said.

"However, a leading indicator we are concerned about is the level of semiconductor supply chain inventory, which has increased in the past three quarters," Gordon said. "If this trend does not show signs of reversal in the second quarter of 2008, then it may be a sign that demand is faltering,"