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Memory IC sector slows down semiconductor sales

Posted: 13 Jun 2008     Print Version  Bookmark and Share

Keywords:semiconductor  memory IC  chip sales  personal computers 

Semiconductor sales are forecast to slow down in 2008 principally due to problems in the memory IC sector but the entire industry will continue to record strong revenue increases through 2011. The Semiconductor Industry Association (SIA) said today in its mid-year forecast that it expects chip sales will rise 6.1 per cent on a compounded annual growth rate basis from 2008 to 2011 when revenue for the global market would reach a record Rs.1,297,082.88 crore ($324.1 billion) from a projected Rs.1,066,961.73 crore ($266.6 billion) in 2008.

The SIA believes total industry sales would remain strong due to continued strength in core segments like PC, mobile devices and other consumer electronics products despite weak pricing conditions in the memory IC market.

"Key end-markets that drive demand for semiconductors continue to be healthy," said SIA president George Scalise in a statement announcing the annual mid-year forecast. "Sales of personal computers, the largest single market for semiconductors, continue to be strong, especially in emerging markets."

"Total unit sales of PCs are on pace to grow by 10 per cent this year to around 300 million units," he added. "Cell phone unit shipments are expected to grow by about 12 per cent to more than 1.3 billion units, with the largest growth coming from China, India, and other emerging markets."

The industry body said it expects the semiconductor market would grow more than 6 percents in 2009, to Rs.1,133,396.70 crore ($283.2 billion) and rise an even stronger 8.4 per cent in 2010 to Rs.1,228,646.85 crore ($307 billion) and jump to Rs.1,297,082.88 crore ($324.1 billion) in 2011, up 6 per cent from the prior year.

The SIA is not known for hitting its forecast, however, mainly due to problems predicting sales in a market reputed for erratic price swings and demand as well as supply problems.

The industry body, for instance, has already trimmed its 2008 sales projection down to a 4.3 per cent increase from 7.7 per cent or higher, citing weakness in the DRAM and flash memory market.

The double-digit declines in DRAM pricing witnessed by the industry over the last several quarters have devastated the sector, hurting sales and margins and pushing some companies to consider exiting the sector despite surging increase in bit shipment.

"DRAM revenues declined by 34 per cent even as unit shipments increased by more than 30 per cent in the first four months of 2008 compared to the same period last year," the SIA's Scalise said. "A recent JPMorgan report projected a 65 per cent increase in DRAM bit shipments in 2008. Memory products account for about 20 per cent of total semiconductor sales."

- Bolaji Ojo
EE Times





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