SIA has cut down its projection for growth in global sales of semiconductors in 2008 as prices are expected to fall due to increasing competition in memory chips.
The Semiconductor Industry Association (SIA) has trimmed its forecast for global sales growth of semiconductors in 2008 on the grounds that the prices will fall due to increasing competition in the field of memory chips, as reported by RedOrbit
SIA anticipated the chip sales to reach about $266.6 Billion this year, up by 4.3%, but a decline from a growth prediction of 7.7% in November last year. This is because of the various flaws in flash memory and DRAM market. In spite of a more than 30% rise in unit shipments during January to April 2008 over January to April 2007, revenues from DRAM dropped by around 34%.
Robust competition in memory chip market is the main reason for a drop in the forecast values for 2008. Also, continuous price pressure is a significant reason for decline in chip market. The unfavorable pricing conditions existing in the memory IC market are likely to continuously pressurize the overall semiconductor market.
Moreover, soaring food and energy prices are leading to a downward growth in the chip market as consumers are spending more on basic necessities rather than on semiconductor and electronic items. A double-digit drop in the pricing of DRAM is adversely affecting not only the margins and sales but the entire semiconductor industry and is encouraging many industry players to quit from the market in spite of a growth in bit shipment.
However, the chip sales are likely to increase in 2009. A strong growth in main segments, such as consumer electronics, mobile phones and PCs, is going to boost overall sales of the industry. Also, sales in the largest market for semiconductors - PCs - are expected to grow apace, particularly in the emerging markets.
A Senior Research Analyst at RNCOS said, “The shrinkage of chip sales forecast for 2008 has threatened the global semiconductor industry. However, the prediction that the major end-markets like mobile phones and electronics that heavily rely on chip industry will remain strong in 2009 due to strong demand in emerging markets may offset the fear.”
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