iSuppli: Semiconductor Market to Hit Growth High Point in 2007; Revenues to Top $285B

Worldwide semiconductor revenue will expand at 10.6% to $285.8 billion in 2007, compared to a 9% surge in 2006 to $258.5 billion, according to iSuppli. After 2007, iSuppli forecasts growth to decelerate to 8.7% in 2008 and then bottom out at 3.7% in 2009, before bouncing back to a 7.4% rise in 2010. 


Source: iSuppli Corp., January 2007

10.6% growth in 2007 will represent the peak year of its present growth cycle for the chip sector, but only a moderate rise for a semiconductor business that has seen expansions as high as the 30 to 40 percent range during its best years. Of course, the industry also has witnessed the 28.9% revenue plunge in 2001. 

The average annual growth rate of the semiconductor market has been slowing for a decade. The industry’s Compound Annual Growth Rate (CAGR) has settled in to a range between 7 and 9 percent, compared to an average in the mid-teens in the past. The cyclical behavior also is moderating in terms of peaks and valleys, with the variance between the high and low years of the present cycle amounting to only 6.9 percentage points, compared to 52.7 percentage points between the previous low point in 2001 and the peak in 2004.

The semiconductor industry will post an improved performance in 2007 due to a healthier market for electronic equipment and a stabilization in the chip Average Selling Prices (ASP). Global revenue for all types of electronic equipment will rise to $1.47 trillion in 2007, up 6.7% from $1.37 trillion in 2006. This compares to growth of 6.6% in 2006.

Semiconductor demand from all major applications will rise in 2007 compared to 2006. Areas seeing the strongest growth will be data processing, wired communications and consumer electronics.

Semiconductor revenue derived from the market for:

  • wired communications gear will grow by 18.2% in 2007, compared to 9.9% in 2006. 

  • consumer-electronics oriented chips will grow by 14.4% in 2007, compared to 10.3% in 2006.

  • data processing segment will increase by 9% in 2007, compared to only 5.8% in 2006.

Microprocessors suffered a tough 2006 due to major competitive pressure that eroded pricing, combined with slowing PC demand. However, conditions are set to improve as the dust settles from the competitive battle between Intel Corp. and Advanced Micro Devices Inc.

  • iSuppli estimates microprocessor revenue declined by 6.6% in 2006, a significant drop for a product that has consistently grown by an average of about 8% annually. Microprocessor revenue growth will bounce back to double digits in 2007, at 10.8%, rising to $35.4 billion, up from $31.9 billion in 2006.

  • Revenue growth for logic ICs also will accelerate in 2007. Global logic IC revenue will amount to $72.7 billion in 2007, up 10.8% from $65.6 billion in 2006. This compares to 7.8% growth in 2006.

  • Analog ICs is another area that will see accelerated growth in 2007. Revenue for analog ICs will amount to $46.99 billion in 2007, up 11.2% from $42.3 billion in 2006. In comparison, analog IC revenue grew by only 8.8% in 2006.

For more information more about iSuppli’s semiconductor forecast, read iSuppli's upcoming report, Electronic Equipment and Semiconductor Forecast—Q1 2007. To learn more about this report, please visit:

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