Research: Electronics, semiconductor market growth to slow in 2007

August 2, 2007: 2:52 PM ET

Electronics and semiconductor market growth will slow in 2007, research firm iSuppli predicts. Though consumers worldwide continue to buy more phones, PCs and other gadgets, the growth rate will taper off from last year's pace.

The projections have implications for major semiconductor firms such as Intel (INTC), Advanced Micro Devices (AMD), Texas Instruments (TXN) and SanDisk, whose chips go into an increasing number of electronic devices. They also matter to firms such as Nokia (NOK), Samsung and Motorola (MOT), who will be fighting for their share of a pie that will grow less quickly. iSuppli says semiconductor sales in the wireless market grew 14.2 percent in 2006, driven by the 20.7 percent unit growth in phones. This year, semiconductor revenue growth for wireless communications will be 7.7 percent, as phone unit sales growth slows to 10 percent.

From the firm's release:

The frenzied demand for new consumer-electronics products over the past four years has slowed also; revenue growth for the consumer-electronics market dropped by about one-third in 2006, to 9 percent. And it is expected that growth will decline by more than one third in 2007, to a smaller, but respectable 5.2 percent revenue growth as the market slows and average selling prices continue to plummet. The wired communications segment is expected to post 3.1 percent growth in 2007 and automotive electronics are expected to post a 3.9 percent increase in 2007, a weaker trend than seen in recent years.

Note that this doesn't mean that overall sales are slowing down – sales continue to increase. It's the rate of growth that's slowing. Below, a look at iSuppli's numbers. I'd suggest looking closely at the 2007 numbers, and taking everything else with a grain of salt. Research firms have to make multi-year projections, but in a quickly evolving market like this one, the further out you go, the fuzzier the numbers.

iSuppli Figure: Annual Growth Forecasts for the Global Electronic Equipment and Semiconductor Markets, 2006-2011 (Percentage Revenue Growth)

2006 2007 2008 2009 2010 2011

Electronic Equipment 7.7% 6.0% 6.4% 4.7% 5.8% 4.5%

Semiconductor 9.6% 6.0% 8.8% 2.7% 8.4% 9.0%

Source: iSuppli Corp. August 2007
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