SAN JOSE, Calif. Despite a slowdown for electronic equipment, market researcher iSuppli Corp. has slightly upgraded its semiconductor forecast for 2006.
And, while some analysts have lowered their forecasts, iSuppli's expected growth for 2006 has inched upward by a half-percentage point, going to 7.9 percent, up from 7.4 percent previously. Worldwide semiconductor revenue will rise to $255.7 billion in 2006, up from $237 billion in 2005, according to iSuppli (El Segundo, Calif.).
Semiconductor market growth is expected to peak in 2007 and then bottom out in 2009, according to the firm.
The semiconductor market outlook for 2006 isn't all rosy. The higher-than-expected growth seen in the first quarter will be followed by some sluggishness in the second half, according to iSuppli. Second-half growth of 5 percent is less than normal seasonal expectations. And orders appear to be weakening and inventories are rising.
"The rise in the 2006 semiconductor revenue outlook comes despite a slowdown in the markets for electronic equipment," said Gary Grandbois, principal analyst with iSuppli, in a statement. "Worldwide electronic equipment revenue growth will decline to 6.8 percent in 2006, down from 8.2 percent in 2005.
There are some positive signs. "However, electronic equipment demand remains very strong, and continues to be driven by the healthy PC, mobile- phone and consumer-electronics markets," he said. "Furthermore, improving conditions in the semiconductor industry, bolstered by rising Average Selling Prices (ASPs) and lengthening lead times, are propelling chip growth to a higher level than that experienced by the end-equipment markets."
On the other hand, two major product families are behind the semiconductor market's growth in 2006: analog and memory ICs.
"Standard linear analog ICs are experiencing a very strong resurgence because prices are being pushed up by suppliers in order to pass on increases in material costs. A healthy mobile-phone market, which is expected to post nearly 14 percent unit growth in 2006, also is important to the growth of analog ICs," according to iSuppli.
"Memory IC growth is being led by the continuing strength of flash, an area that is expected to expand by 27 percent in 2006. Flash memory growth, combined with the 8 percent rise in DRAM revenue expected in 2006, will generate total memory IC growth of nearly 15 percent for the year," according to the firm.