Chip market slumps over lower prices

The chip market has slumped due to lower prices, says analyst Gartner.

The chip market has slumped due to lower prices, says analyst Gartner.

Due to more severe declines in dynamic random-access memory (DRAM) average selling prices than previously expected, and continued price competition in the computer microprocessing segment, Gartner has lowered its 2007 worldwide semiconductor market forecast to £142bn, a modest 2.5% increase from 2006.

In Gartner’s previous forecast, it predicted a 2007 revenue increase of 6.4%. Gartner said semiconductor sales in the first quarter of 2007 were more than 5% lower than in the fourth quarter of 2006, which was worse than the expected decline that would normally be associated with a seasonal build up in inventory levels at year end.

“Since the beginning of this year, soft semiconductor market conditions have been exacerbated by sharply declining average selling prices in key device markets, such as DRAM, computer microprocessing and application-specific standard products (ASSPs),” said Richard Gordon, an analyst at Gartner.

“It is likely that, despite continued unit growth in influential electronic systems markets, downward device average selling price pressure will remain in place for much of 2007, as oversupplied semiconductor market conditions persist,” said Gordon.

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