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Semiconductor market growth augurs well

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Worldwide semiconductor revenue is forecast to reach $286,5-billion in 2008, a 4,6% increase from 2007 revenue of $273,9-billion, according to the latest projections by Gartner, which has increased its 2008 growth forecast from February's 3,4% increase. 

"It was widely assumed that the slowdown in the US economy that began in mid-2007 would reduce demand for electronics goods and, by extension, semiconductors in 2008," says Richard Gordon, research vice-president at Gartner. "However, while we are still forecasting low single-digit growth for the semiconductor market in 2008, this has more to do with supply-side factors than weakness in demand."
In the first quarter of 2008, global sales of semiconductors were seasonally normal, buoyed by healthy PC and cell phone unit production. Gartner analysts said there have been no signs of a significant slowdown in the markets for digital consumer electronics products and automotive electronics, demand for which could be expected to be affected by cutbacks in discretionary spending by consumers.
"Guidance from electronics and semiconductor vendors about the forecast level of sales in the second quarter of 2008 suggests that they are not expecting market conditions to worsen," says Gordon.
"However, a leading indicator we are concerned about is the level of semiconductor supply chain inventory, which has increased in the past three quarters. If this trend does not show signs of reversal in the second quarter of 2008, then it may be a sign that demand is faltering."
Gartner has not made any downward forecast revisions of note for 2008. In the commodity memory segment, market conditions have marginally improved, and Gartner has made a significant upward change to its unit production forecast for portable navigation devices (PNDs).