Credit crisis forces iSuppli to cut global chip forecast

The credit crisis and economic woes in the U.S. are forcing an industry analyst firm to downgrade its predictions for the worldwide semiconductor industry's growth in 2008.

Analysts at iSuppli Corp. are lowering their forecast for semiconductor growth from 2007 to 2008 from 4% to 3.5%. The earlier projection was made in August, but iSuppli analysts said they were forced to downgrade it when the economy began forcing many companies to scale back IT spending plans.

A spokesman for iSuppli told Computerworld that their analysts' predictions for the global PC chip market had been lowered from 2.7% growth to 0.4%.

"We have a bias toward probably lowering the forecast again in the future because of economic conditions," said the spokesman, who added that they expect estimates to get worse before they get better.

And the compound annual growth rate from 2007 to 2012 was dropped from 6.5% to 6.1%, with the semiconductor market now predicted to hit worldwide revenue of US$363.5 billion in 2012, according to iSuppli.

"The credit crisis is impacting the semiconductor market on several levels," starting with "demand for electronic equipment from the Wall Street firms themselves," said Dale Ford, a senior vice president with iSuppli, in a statement. In addition, he cited the widespread lack of available credit for companies in all industries and a rapid decline in consumer confidence.

This past August - just weeks before news of trouble in the country's banking industry surfaced - analyst firm IDC reported that worldwide PC microprocessor shipments in the second quarter of this year reached record levels. Giving Intel Corp. a lot of credit for the growth, IDC noted that second-quarter global chip sales grew by 16.1% compared to the year before. IDC didn't disclose its projected sales totals.

Meanwhile an analyst from Gartner, Inc. said in March that the worldwide semiconductor industry was entering a long-term slowdown.

Gartner analyst Richard Gordon told Computerworld at the time that he doesn't see any major new growth drivers -- like the PC and cell phone were -- on the horizon. "The market is in a low-single-digit growth phase," he added. "It's a concern. The high growth of the late '90s seems to be in the past now. I don't see anything on the horizon that will fuel growth in the near future. We're talking about long-term -- about forever."

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Sharon Gaudin

Computerworld (US)
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