STAMFORD, CT – Gartner Inc. cut its 2007 worldwide semiconductor forecast to $269.2 billion, a mere 2.5% increase from 2006.

Gartner previously predicted a 2007 revenue increase of 6.4%.

The research firm attributes the negative outlook to dramatic declines in DRAM average selling prices and continued price competition in the compute MPU segment.

Gartner said first quarter semiconductor sales were more than 5% lower than in the previous quarter, which was worse than expected.

The firm said it expects the industry to return to annual growth of 8.7% and 7.2% in 2008 and 2009, respectively.