SAN JOSE – The SIA today lowered its 2007 forecast for global microchip sales growth from 10% to 1.8%, citing drops in average selling prices. The new forecast projects total sales of $252 billion, rising to $306 billion in 2010, a 5.4% CAGR for year-end 2006 through 2010, said the trade group's president, George Scalise.

The SIA noted that end-markets that drive sales of these products – PCs, cellphones, MP3/PMP devices, and other consumer products such as digital TVs and digital cameras – continue to be in line with previous forecasts. However, sharp declines in ASPs for chips in several key segments – microprocessors, DRAMs, and NAND flash – will contribute to slower growth in worldwide sales of semiconductors, the SIA said.  

“PC sales are on track to reach 10% unit growth, reaching approximately 255 million units,” said Scalise. “PCs continue to be the largest single end market for semiconductors. Despite strong unit PC sales growth, we expect that total sales of microprocessors will decline by 1.6%.”

“DRAMs continue to be under significant price pressure, with the result that we now expect total sales to grow by 2% in 2007,” Scalise continued.

Growth in the handset market has slowed somewhat, with unit growth of around 10% currently projected for the year.

Sales of PMPs and MP3 players are expected to grow by more than 20% to more than 215 million units this year, said Scalise.

SIA recently reported total chips sales in April of $19.9 billion, up 1.6% year-over-year, reminded Scalise to a Webcast audience this afternoon.

In the Webcast, Scalise said that end-of-the-line demand is still very strong and will continue in that direction, even though the revenue forecast has declined from SIA's original forecast.

He stated, "We will set new records every year for next four years, and there is a good chance pricing pressures will recede."

In the first quarter, excess semiconductor inventory was $3.2 billion, according to SIA, but Scalise believes this is not a big issue. The SIA estimate was slightly higher than that of research firm iSuppli's, which pegged the number at $2.8 billion.