News & Analysis
Slowing sales growth prompts a chip forecast boost
Peter Clarke
9/9/2004 1:17 PM EDT
The El Segundo-based market researcher has added one percentage point to its semiconductor revenue forecast for 2004 taking it up to 25.4 percent from 24.4 percent previously. At the same time iSuppli has shaved more than 2 percent off its semiconductor revenue growth forecast for 2005, taking it into the single digits, at 9.6 percent, down from 11.8 percent previously.
ISuppli explained its counter-intuitive boost to the 2004 figures saying that although it has detected a slowing rate of revenue growth, because this slowing will impact revenues mainly during the fourth quarter, the second half of 2004 would still generate growth of 10 percent on top of the strong growth seen in the first six months of the year. The company increased its forecast to 24.4 percent in June 2004.
Global semiconductor sales grew by 31.4 percent in the first half of 2004, compared to the first half of 2003, iSuppli said Wednesday (Sept. 8). Second-half semiconductor sales are set to achieve 20 percent growth compared to the same period in 2003 and with the increased visibility comes iSuppli's forecast of 2004 as a 25.4 percent growth year.
With sales growth flattening at the end of 2004, iSuppli expects that semiconductor revenue in the first half of 2005 to grow by less that 2 percent compared to the second half of 2004. The second half of 2005 should show more growth, with chip sales rising by 6 percent compared to the first half.
A DRAM revenue downturn in 2006 is forecast to limit total semiconductor growth to only 2 percent that year. iSuppli predicts 2006 will mark the bottom of the semiconductor downturn.
The rapid decline in semiconductor industry growth is due to softening prices for chips as well as to a slowing in the electronic equipment markets, which drive chip sales. Revenue growth in the electronic equipment market will slow to 5.8 percent in 2005, down from 9.8 percent in 2004, iSuppli estimates.
The fates of two most important electronic products; the mobile phone and the notebook PC are key to both the equipment and semiconductor markets iSuppli said.
Mobile-phone unit shipment growth, which has been soaring during the past two years with 30 and 18 percent growth in 2003 and 2004 respectively, is expected to slow to just 5 percent unit growth in 2005. Meanwhile, notebook PC unit shipment growth will drop to 10 percent in 2005, one-half the 20.1 percent increase in 2004, iSuppli asserted.
Throughout early 2004, semiconductor prices held firm, as supply and demand came into balance. However, with demand slackening, price erosion will emerge in late 2004 and will become a major factor in depressing worldwide semiconductor industry revenue growth in 2005, iSuppli predicts. DRAM revenues are likely to be weakened by the price erosion significantly, causing worldwide sales growth for the memory to decline to 8.6 percent in 2005, down from 56.2 percent in 2004.
