El Segundo, CA — After a better-than-expected first quarter, iSuppli Corp. has upgraded its semiconductor forecast slightly for 2006, going to 7.9% from 7.4%. Worldwide semiconductor revenue will rise to $255.7 billion in 2006, up from $237 billion in 2005, iSuppli predicts.
 
“The rise in the 2006 semiconductor revenue outlook comes despite a slowdown in the markets for electronic equipment,” said Gary Grandbois, principal analyst. “Worldwide electronic equipment revenue growth will decline to 6.8% in 2006, from 8.2% in 2005.
 
“However, electronic equipment demand remains very strong, and continues to be driven by the healthy PC, mobile- phone and consumer-electronics markets. Furthermore, improving conditions in the semiconductor industry, bolstered by rising average selling prices and lengthening lead times, are propelling chip growth to a higher level than that experienced by the end-equipment markets.”
 
The company predicts that semiconductor market growth will peak in 2007 and then bottom out in 2009.
 
The major products behind the market’s growth in 2006 are analog and memory ICs. Analog ICs are experiencing a strong resurgence as prices are pushed up by suppliers to pass on increases in material costs. A healthy mobile-phone market, expected to post 14% unit growth this year, also is important to the growth of analog ICs.
 
Memory IC growth is led by the continuing strength of flash, an area that is expected to expand 27%. Flash memory growth, combined with an 8% rise in DRAM revenue, will generate total memory IC growth of nearly 15% for the year.
 
However, higher-than-expected growth seen in the first quarter will be followed by some sluggishness in the market in the second half. Second-half growth of 5% is less than normal seasonal expectations. Orders appear to be weakening and inventories are rising.

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