Global chip sales growth sputters, estimate slashed

The global chip market is suffering from falling prices in microprocessors and memory chips, bad news for companies but great for users.

Steep declines in DRAM (dynamic RAM) for PCs and NAND flash memory, used in a variety of gadgets including digital cameras and iPods, as well as microprocessors prompted the Semiconductor Industry Association (SIA) to slash its global sales forecast for this year to US$252 billion, just 1.8 percent growth compared to last year. The previous estimate called for sales growth of 10 percent this year.

Sales of gadgets themselves are on track to meet forecasts, however, SIA said. Chip shipments overall remain healthy, as does end-user demand. But prices continue to fall for a variety of reasons, including a glut in the memory market and a price war between Intel Corp. and Advanced Micro Devices Inc. in microprocessors.

"End markets continue to be strong, with consumers realizing major benefits from lower chip prices coupled with ever-increasing performance and functionality from advances in chip technology. Despite a forecast of slower growth, we expect that global sales of microchips will surpass last year

Copyright © 2007 IDG Communications, Inc.

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