iSuppli cuts semiconductor industry forecast

Financial crisis could result in reduction in chip demand

By Jim Carbone -- Purchasing, 10/9/2008 2:16:00 PM

Researcher iSuppli has trimmed its forecast for 2008 worldwide semiconductor revenue growth and is warning of significant potential downside if economic conditions continue to worsen.

Global semiconductor industry revenue is expected to rise to $280.1 billion this year, up 3.5% from $270.6 billion in 2007. iSuppli’s previous forecast, issued in August, predicted 4% growth for the year.

The researcher says signs appeared in September that the semiconductor market may be feeling the impact of the credit crisis and economic downturn.

“The credit crisis is impacting the semiconductor market on several levels,” says Dale Ford, senior vice president, market intelligence, for iSuppli, based in El Segundo, Calif. “The first level is demand for electronic equipment from the Wall Street firms themselves, which is expected to drop and thus decrease demand for semiconductors,” he says.

The second level, and a much more significant factor, is the impact on corporations in general, according to Ford. With companies unable to get credit, the crisis could spread to the wider economy, impacting demand for electronic equipment and semiconductors. The final level, and the most significant area of impact, is the broader effect on consumer confidence and spending if the overall economy collapses, he says.

Also see: Semiconductor sales have grown 5.5%