EL SEGUNDO, CA -- Saying consumer demand is slowing and inventories are rising, research firm iSuppli lowered its 2010 semiconductor revenue forecast to 32%, down from its previous outlook of 35.1%.

Global semiconductor sales now are expected to amount to $302 billion in 2010, up from $228 billion in 2009. Despite the reduced outlook, 2010 still will be a year of impressive growth and record-setting revenue for the industry. Revenue will top by some $28 billion the previous peak in 2007, iSuppli predicts.

iSuppli also lowered its forecast for fourth quarter sales, saying revenue will drop 0.3% sequentially, the first sequential drop since the first quarter of 2009.

“There has been a significant slowdown in the second half in consumer demand for some electronic devices, including PCs,” said Dale Ford, senior vice president at iSuppli. “Meanwhile, inventories have been building throughout the semiconductor supply chain. These factors will conspire to cause a small sequential decline in semiconductor revenue in the fourth quarter.”

Global semiconductor revenue in the second half will rise 7.8% sequentially, down from 10.7% sequential growth in the first half.

Still, iSuppli does not believe this signals the start of a significant downturn in the global semiconductor market.

“Unstable economic conditions and worrisome market reports continue to create an environment of poor visibility and ongoing uncertainty in the electronics industry,” Ford said. “This has led to frequently expressed concerns regarding a potential double-dip downturn in both the overall economy and in the electronics and semiconductor industries. However, based on its most recent analysis of the electronics supply chain, iSuppli expects the chip business to experience a soft landing in 2011 and not to suffer the kind of dramatic downturn seen in 2009.”

Global semiconductor revenue in 2011 will rise 5.1%, iSuppli predicts.

Sequential quarterly growth in 2011 is projected to follow a more normal seasonal pattern compared to 2010, with declining revenue in the first quarter followed by improving sales that will reach a peak in the third quarter. The long-term growth expectation is for average annual growth of slightly more than 4% between 2010 and 2014.

The leading electronic equipment market driving demand for semiconductors in 2010 will be the data processing area, a category dominated by PCs. With shipments of mobile PCs — including tablets — continuing to soar in 2010, semiconductor sales to this area will rise 38.6%. Sales to the wireless communications area will rise 30%, and IC sales for wired communications and consumer electronics will grow 25.4% and 26.5%, respectively, in 2010.

In terms of specific semiconductor products, the hottest items in 2010 will be DRAM, voltage regulators, LEDs, programmable logic devices (PLDs) and data converters. Revenue for each of these products is projected to grow by more than 43% in 2010. DRAM will lead the group with 87% growth on the strength of the soaring PC market.

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