Surprising weakness in the memory chip market in Q4 took the wind out of the sails of the global semiconductor market, causing growth in 2007 to fall short of expectations, according to iSuppli Corp.
Revenues of the global chip market grew by only 3.3 percent in 2007, based on the results from iSuppli’s final 2007 chip market share data. In a preliminary estimate released in November, iSuppli predicted the global chip market would grow by 4.1 percent in 2007.
DRAM revenue fell by 19.1 percent in Q4, down from Q3. This compares to iSuppli’s earlier forecast of a 4.7 percent decline. Meanwhile, NAND flash revenue declined by 3.9 percent in the same quarter, well below iSuppli’s previous forecast of 3 percent growth. This caused memory chip revenue in Q4 to decline by 11 percent sequentially, down from iSuppli’s prediction of 1.2 percent growth in overall memory chip revenue.
The previous growth estimates presented by iSuppli were heavily influenced by the Q4 revenue guidance presented by semiconductor suppliers in their communications with the investment community in October and November. This poor performance in the memory market was significantly below industry expectations for Q4.
"This was a complete role reversal for memory semiconductors compared to 2006," said Dale Ford, senior vice president, market intelligence, for iSuppli. "During the second half of 2006, memory IC revenues helped to prop up the growth of the overall semiconductor industry. In 2007, the poor results for memory chips restrained overall market growth. If memory were excluded from the revenue total, the semiconductor market would have grown by 2.4 percent in Q4. However, due to the influence of the weak memory market, total semiconductor market revenues fell by 0.5 percent in the fourth quarter."
Memory divergence
Weak market conditions had a major impact on most memory suppliers in 2007, including Nanya Technology and Qimonda, which saw their memory IC revenues fall by 32.4 percent and 26 percent, respectively, for the year.
Leading memory chip supplier, Samsung Electronics Co. Ltd, experienced a decline of 3.3 percent in its memory semiconductor revenue in 2007—contributing to a 0.8 percent decline in total chip revenue for the year.
