The iSuppli research firm is now trimming its worldwide semiconductor revenue forecast for 2008, citing plummeting prices for DRAM memory chips and a possible economic slowdown due to the financial crisis on Wall Street. While revenue from processors might decrease throughout the rest of the year, which could hurt Intel, AMD, Samsung and other companies, iSuppli analysts remain confident that sales of desktops and notebooks could help close the gap and soften the impact of the financial crisis.
While worldwide semiconductor revenue is still expected to top $280 billion
this year, the ongoing financial crisis on Wall Street and falling prices for dynamic
RAM memory chips are forcing iSuppi to
reduce its annual forecast for the industry.
On Oct. 9, the iSuppli research firm trimmed its 2008 revenue growth
forecast for the semiconductor industry from 4 percent to 3.5 percent. For the
year, chip revenue is expected to reach $280.1 billion, compared with the $270.6
billion in revenue the industry saw in 2007. Since September, there have been
signs that macroeconomic issues have begun to impact the semiconductor
There are several reasons why iSuppli analysts trimmed their chip revenue
forecast. These include the ongoing credit crunch in the United
States, financial worries on Wall Street that
could cut spending on IT equipment and a reduction in consumer spending.
"With companies unable to get credit, the crisis could spread to the wider
economy, impacting demand for electronic equipment and semiconductors," Dale
Ford, an analyst with iSuppli, wrote in report. "The final level, and the most
significant area of impact, is the broader effect on consumer confidence and
spending if the overall economy collapses."
In addition, analysts found that DRAM
prices are continuing to plummet. This year, memory chips are expected to
account for about 10 percent of all worldwide chip revenue. Prices for NAND
flash memory are also expected to fall, which appears to have forced Micro
Technology, a major supplier of DRAM and
NAND flash memory chips, to
close an older production plant and cut its work force by 15 percent.
The iSuppli study is one of several reports that have been issued in the
last week about the semiconductor industry and the impact the financial crisis
and the credit crunch are having on the IT industry. While it's still too early
to paint a definitive picture of how all this will impact the wider IT
industry, chip makers such as Intel
, Samsung and Micron are reliable bellwethers, since so many
products, from cell phones to PCs to servers, use microprocessors.
On Oct. 10, the
Semiconductor Industry Association reported
that while semiconductor sales
increased 5.5 percent from August 2007 to August 2008, macroeconomic issues
could have a big impact on the industry later this year. Gartner,
on Oct. 8, found that chip makers will spend about 25 percent
capital expenditures in 2008, and these companies will also cut spending in
Intel and AMD are expected to release
their third-quarter financial results the week of Oct. 13, which should shed
some more light on how the overall economy is impacting the tech industry.
The iSuppli report held out hope that continued demand for desktops and
notebooks, especially within the consumer market, might help make up for the
loss of revenue from memory chips and other concerns. For the year, iSuppli
is calling for PC shipments to increase about 12.5 percent
. However, it
should be noted that average selling prices for PCs continue to drop, thanks to
the availability of low-cost notebooks, or "netbooks," from Hewlett-Packard,
Dell, Lenovo and Asus, even as shipments increase.