Global semiconductor revenue now is expected to rise to $269.9 billion in 2007, up 3.5% from $260.6 billion in 2006. iSuppli issued its previous 6% annual growth forecast in June.

Global semiconductor revenue declined by 6% in the first half of 2007 compared to the second half of 2006, limiting the full-year market growth potential.

Memory IC revenue will rise by 15% in the second half compared to the first as ASP erosion is blunted and the holiday season commences, bringing stronger sales of PCs. With memory accounting for 23% of total semiconductor revenue in 2007, this will have a major impact on the overall chip market.

DRAM suppliers in the first half had increased manufacturing at a rapid rate, which will cause their bit shipments to rise by a stunning 94% in 2007, iSuppli says, compared to the industry average of 55 to 60% annual growth. This oversupply caused a decline in memory prices that severely impacted the entire semiconductor market.

However, DRAM suppliers in the third quarter began slowing production growth, causing pricing to stabilize — and even rise in July.

While DRAM pricing has since softened, the market is still much stronger than it was in the first half. After declining by 10% and 23.8% sequentially in the first and second quarters of 2007, respectively, DRAM revenue will rise at a hefty 20.8% rate in the third quarter and will remain flat with a marginal 0.2 percent decline in the fourth quarter, iSuppli said.

While the 2007 semiconductor forecast has declined, the outlook for shipments of electronic sequipment using those semiconductors has improved.

iSuppli raised its 2007 electronics equipment revenue forecast to 6.8% growth, up from 6%. Of the six major electronic equipment segments, five — i.e., data processing, wireless communications, wired communications, consumer electronics and automotive — have been upgraded by iSuppli.

Industrial equipment is the only segment that has not been upgraded.

These positive developments are likely to ripple into 2008, with electronics equipment revenue expected to rise by 7% for the year, up from the previous forecast of 6.4%.

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