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The Semiconductor Industry Association [SIA] today released an updated forecast projecting worldwide sales of semiconductors will grow by 9.8 percent to $249.6 billion in 2006. The forecast was revised upward from the November forecast projecting an increase of 7.9 percent to $245 billion.

The SIA attributed the upward revision to stronger than expected growth in key end markets for semiconductors, most notably cell phones.

The modest increase to demand projections is certainly positive. However, the 9.8 percent growth in demand is still dwarfed by the potential 60 percent increase in supply. With supply and demand still so far out of whack, the pricing environment still looks cloudy to us.

Source: Semiconductor Growth Estimates Raised -- Not Nearly Enough