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EL SEGUNDO, CAiSuppli Corp. has trimmed its forecast for 2008 worldwide semiconductor revenue growth, and is warning of a 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% compared to 2007. iSuppli’s previous forecast, issued in August, predicted 4% growth for the year.

The U.S. Semiconductor Industry Association this month reported global semiconductor sales rose 5.5% in August compared to a year earlier, indicating chip sales growth continues to track according to iSuppli’s expectations. However, 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,” said Dale Ford, senior vice president, market intelligence, for iSuppli. “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. The second level, and a much more significant factor, is the impact on corporations in general. 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.”
 
In its latest 2008 semiconductor forecast, iSuppli has significantly downgraded its outlook for memory revenue, particularly DRAM. iSuppli lowered its 2008 semiconductor memory revenue forecast 5.8 percentage points, and its DRAM outlook 5.4 points.

With memory expected to account for nearly 10% of global semiconductor revenue this year, this represents a major drag on global semiconductor revenue, the firm says.
 
However, iSuppli significantly boosted its forecast for global application specific standard product semiconductors, compensating somewhat for the memory forecast downgrade. The research firm raised its 2008 ASSP revenue forecast 3.2 percentage points for the year.
 
However, new signs of weakness have mounted in the DRAM market in recent times. iSuppli in September cut its rating of near-term conditions for DRAM suppliers to negative, down from neutral. Long suffering from a glut of parts, the DRAM market began to note a weakening in demand from the key PC market in September, according to iSuppli.
 
PC demand continued to defy the economic downturn through the second quarter, and the firm remains cautiously optimistic regarding sales through the remainder of the year.

iSuppli now predicts 12.5% growth in PC unit shipments in 2008. However, the company has noted some weakening in demand from PC makers since the start of September.
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