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By | Tony Smith 7th December 2004 09:34

iSuppli cuts 2005 chip sales growth target

Optimist deflates expansion rate

iSuppli, the bullish semiconductor market watcher, yesterday slashed forecasts for 2005 sales, cutting the level of expected growth by almost half.

The research firm now estimates the chip market will grow 4.7 per cent in 2005, from 2004's $226.6bn-$237.1bn. Last September, iSuppli pegged growth at 9.6 per cent, a forecast it reiterated as recently as November.

Once again, inventory correction is to blame, iSuppli said, as is a fall in the level of "electronic equipment production" growth, down from 10.1 per cent this year to 6.2 per cent in '05..

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

Even growth of 4.7 per cent is bullish compared to other forecasts. Research company IDC last week said it expects 2005's sales to fall two per cent compared with 2004's anticipated total. Even the usually optimistic Semiconductor Industry Association (SIA) trade body believes growth will be flat next year.

The World Semiconductor Trade Statistics (WSTS) organisation is a little more optimistic: it expects 1.2 per cent growth next year, although this is down from its previous prediction of 8.5 per cent. ®

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