Global chip makers cut 2007 sales outlook

TOKYO, May 30 (Reuters) The world's top chip makers have cut their sales growth forecast for the global chip market in 2007 following a weaker-than-expected first quarter but still expect solid growth in 2008, an industry body said on Wednesday.

The global semiconductor market is now expected to grow by 2.3 percent to 3.51 billion in 2007, according to World Semiconductor Trade Statistics (WSTS), which groups the world's main semiconductor manufacturers.

In October it expected growth of 8.6 percent.

The new outlook underlines the sense of oversupply within the industry, which had expected a bigger jump in demand from Microsoft Corp.'s Vista. Severe price falls hurt chip makers in the January-March quarter.

''Revenues in first quarter 2007 (were) lower than expected for almost all products,'' WSTS said in a statement.

The group also trimmed its 2008 growth estimate for the worldwide semiconductor market to 10.2 percent from an earlier expectation of 12.1 percent growth.

For 2009 it sees 5.2 percent growth, it said in its bi-annual market forecast.

But microcomputers are likely to recover in July-September as falling prices stimulate demand, said Macquarie Securities's Yoshihiro Shimada, who expects the market to shrink by 2.6 percent this year before jumping 19.0 percent next year.

''It's counter-intuitive, but development costs have fallen so that chip makers can get the right technology out at the right price,'' he said.

The WSTS forecasts a moderate recovery in the second half of the year partly due to back-to-school demand.

Microcomputers, also known as microprocessors, are the central computing brains of devices and are made by companies such as Intel and AMD WSTS said demand for semiconductors in 2008 and 2009 will continue to be driven by consumers' appetite for electronic products such as personal computers, digital consumer gadgets and mobile phones.

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

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

REUTERS KR DS1419