Global chip makers cut 2006 sales outlook

AMSTERDAM, Oct 31: The world's top chip makers have trimmed their 2006 sales growth forecast for the global chip market to 8.5 percent from 10.1 percent, but expect solid expansion in 2007 and 2008, they said on Tuesday.

The global semiconductor market is expected to grow 8.5 percent on an annualised basis to 7 billion in 2006, according to World Semiconductor Trade Statistics (WSTS) which groups the world's main semiconductor manufacturers.

The worldwide semiconductor market will increase by a further 8.6 percent in 2007 and 12.1 percent in 2008, it added in its bi-annual market forecast.

The adjusted forecast comes after a few important chip categories lagged behind initial expectations.

''The most notable decline was in microcomputers,'' WSTS said, adding the majority of products remained close to the patterns predicted in its spring forecast. Microcomputers, also known as microprocessors are the central computing brains of devices and are made by companies such as Intel and AMD.

Demand for semiconductors in 2007 and 2008 will continue to be driven by consumer appetite for electronic products such as personal computers, digital consumer gadgets and mobile phones.

Not only will demand for these products increase, but they will also contain more powerful chips.

The forecast assumes a generally healthy world economy, and WSTS also predicted an absence of wild swings in demand which characterised the chip industry up to 2002.

It warned ''some product groups maintain cycles similar to historical patterns''. In recent weeks, chip-equipment manufacturers warned about overinvestment in production capacity for flash memory chips used in MP3 players and digital cameras.

The Asia Pacific region continues to be the fastest-growing geographical area, primarily due now to rising domestic demand.

Previously, growth there was driven mainly by chip makers moving production to Asia in order to benefit from lower wages and the increasing presence of electronics goods assembly companies.

REUTERS