iSuppli reduces semiconductor forecast for 2005

Worldwide semiconductor sales are expected to hit $237.1 billion in 2005, up 4.7 percent from $226.6 billion in 2004, according to iSuppli (El Segundo, Calif.). iSuppli previously had predicted 9.6 percent growth in semiconductor revenue in 2005.

iSuppli is still optimistic by most accounts. For example, the World Semiconductor Trade Statistics (WSTS) data collection group last month cut its forecast for global chip market growth in 2005 to 1.2 percent. Lackluster growth of 1.2 percent replaces a previous prediction of 8.5 percent and is to be followed by 3.0 percent annual growth in 2006 and 11.4 percent annual growth in 2007, according to ESIA.

For 2004 WSTS maintained its forecast at 28.5 percent annual growth to $213.78 billion (see Nov. 2 story).

iSuppli reduced its forecast due to a slowdown in electronic equipment production, combined with continued chip inventories. Electronic equipment production, which drives semiconductor sales, is expected to increase by 6.2 percent in 2005, down from 10.1 percent in 2004.

"The semiconductor industry in early 2005 will continue to contend with the excess inventories that flared up in the third quarter of 2004," according to iSuppli. "This will depress semiconductor average selling prices (ASPs) and restrain growth in 2005."