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Cutthroat DRAM Market Prompts Semiconductor Industry To Lower Revenue Forecast

 

It’s a great time for PC vendors and consumers to buy DRAM, as competition this segment remains strong and prices show little signs of recovery (according to DRAMExchange, 1 Gb DDR2-667 chips are currently selling for about $2.16 in Taiwan.) But the impact of this environment is now strong enough to drag down the semiconductor industry as a whole, leading the Semiconductor Industry Association (SIA) to cut its revenue forecast for the current year.

The SIA expects chip revenues to climb by about 4.3% to $266.6 billion this year. Non-DRAM chip categories will see a revenue increase of 7.4% this year, the SIA said. The organization believes that the industry will crack the $300 billion barrier in 2010, when revenues are expected to hit $307 billion.

"Key end-markets that drive demand for semiconductors continue to be healthy," said SIA president George Scalise in a prepared statement. "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% this year to around 300 million units. Cellphone unit shipments are expected to grow by about 12 percent to more than 1.3 billion units, with the largest growth coming from China, India, and other emerging markets."

SIA reported that unit sales of many other consumer products continue to be strong despite widespread concerns about consumer confidence and rising energy prices. Unit sales of flat-panel televisions are expected to grow by more than 29% and digital cameras are forecasted to grow by 11% this year.

According to Scalise, "DRAM revenues declined by 34% even as unit shipments increased by more than 30% in the first four months of 2008 compared to the same period last year."

Microprocessors, which account for roughly 14% of total semiconductor revenues, have experienced healthy unit sales growth to date in 2008, and revenues are expected to grow more than 10% per year for the next two years.