SIA downgrades global chip forecast

Weak memory prices will hinder growth of the worldwide semiconductor industry

By Jim Carbone -- Purchasing, 7/2/2008 2:21:00 PM

In its mid-year update, the Semiconductor Industry Association (SIA) lowered its forecast for 2008 global semiconductor sales growth from 7.7% to 4.3%, despite continued healthy demand from key end markets.

The SIA now projects 2008 sales will reach $266.6 billion and then grow to $324.1 billion in 2011. SIA forecasts a compound annual growth rate of 6.1% for 2008-2011.

The forecast downgrade is due to weak memory prices. If memory sales were excluded, the chip industry would post 7.4% growth in 2008, the association says.

While memory IC will drag down revenue growth, some product segments will post decent growth. Microprocessors, which account for roughly 14% of total semiconductor revenues, have experienced healthy unit sales growth to date in 2008, and revenues are expected to grow more than 10% per year for the next two years.

Analog chips, which account for about 14% of total semiconductor demand, are expected to grow at a compounded annual growth of 5.3% 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% this year based on strong demand from a variety of end markets, including consumer products.