EL SEGUNDO, CA—While many researchers are cutting their forecasts for 2007 semiconductor revenue growth to the 2-percent range, iSuppli Corp. (www.isuppli.com) predicts a healthy 6-percent increase this year.

Global semiconductor revenue will rise to $276.6 billion in 2007, up from $260.9 billion in 2006. iSuppli's previous forecast, issued in April, predicted an 8.1-percent increase for the year.

The figure presents iSuppli's annual semiconductor revenue and growth forecast.

iSuppli trimmed its forecast following weaker-than-expected conditions in the first quarter. Plunging prices for memory chips combined with a significant inventory correction resulted in a 6.2-percent sequential revenue decline during the first three months of the year.

"The memory downturn and inventory reduction had been anticipated by iSuppli," notes Gary Grandbois, principal analyst for iSuppli. "However, we expected these factors to drive only a 5.4-percent decline in revenue for the quarter. With our dreary expectations having been exceeded, iSuppli has reduced its 2007 forecast by 2.1 percentage points."

Nonetheless, Grandbois says that semiconductor market conditions remain strong.

"Despite the strong price erosion, the market is fundamentally sound," Grandbois states. "The end-equipment market is still vital, with PC and handset unit growth expected to exceed 10 percent."