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Chip overflow puts dent in 2008 forecast

Talks of pesky recession ain't helping much either

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The semiconductor biz looks set for a bumpy start to the New Year with analysts downgrading worldwide spending and sales expectations amid oversupply woes, high energy costs, and credit crunch fears.

Gartner reduced its forecast for sales for chip building equipment by nearly 10 per cent to $40.3bn for 2008, a decrease of $4.5bn compared to the total spent this year.

It said the tech market had been flooded with too much DRAM in 2007 and reckoned the industry now faced the less-than-pretty prospect of having to scale back spending. It's a move that will inevitably impact sales in that sector for the year ahead.

Echoing those findings, market research firm iSuppli marked down its revenue growth forecast for the chip industry overall by 1.8 per cent to £291.4bn for 2008.

It said that semiconductor market conditions in the first half of next year will be "extremely weak" as the biz struggles to turn around price attrition and correct its oversupply issues.

iSuppli said the DRAM market could undergo a pricing recovery in the second quarter of next year, with NAND-type flash memory sales possibly rebounding in Q3. But it also warned that the arrival of a much-feared recession in the US could yet put the boot in.®

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