Declining chip prices in the first half of the year will result in global semiconductor revenue growing just 1.8% in 2007 to $252 billion, the Semiconductor Industry Association (SIA) said. The association had earlier forecast 10% growth for the industry.

In its mid-year outlook, the SIA said falling prices for DRAMs, NAND flash and microprocessors will result in slower growth for semiconductor manufacturers.

Chip suppliers are fighting for market share and are lowering prices. As a result, semiconductor revenue will amount to $252 billion for the year instead of the $272 billion earlier forecast, according to the SIA. The slower revenue growth is occurring although there is robust demand for PCs, portable music players, cell phones and digital cameras.

"PC sales are on track to reach 10% unit growth in 2007, reaching approximately 255 million units," says SIA President George Scalise.

Microprocessor revenue will decline by 1.6% as intense competition is contributing to price erosion at a more rapid pace than historical patterns.

DRAMs are also under price pressure. Revenue will grow 2% for the year. Average DRAM prices in April of 2007 were down by approximately 33% compared to December of 2006," says Scalise.

Growth in the handset market has slowed with 10% currently projected for 2007, which translates to an additional 100 million units in 2007.

Other consumer products continue to experience very strong unit growth. "Sales of personal media players (PMPs) and MP3 players are expected to grow by more than 20% this year to more than 215 million units, driving unit demand for flash memory," says Scalise. "Despite strong unit growth in those demand driver segments for NAND flash, prices for NAND are falling because of a very competitive environment." Prices have declined 35% year on year in April although unit shipments were up 54%.

The global semiconductor market will grow only 1.8% in 2007 because of falling chip prices.

Chip sales rose in March