A slowing memory sector will drag down the chip market as a whole this year, prompting research group Gartner to predict almost flat growth for the next two years.

Reuters reported yesterday that the research firm has trimmed its 2005 semiconductor forecast from 5.2 per cent to 3.4 per cent. Next year will be little better, with just 2.1 per cent growth. This compares to 2004's 24 per cent growth rate.

The main culprit is memory prices which Gartner forecasts will slump from $48.3bn last year, to $42.8bn in 2006. Earlier this week Samsung Electronics, a major DRAM player, made a downbeat forecast for the year ahead, saying the outlook for key businesses was not good. Sales will begin to pick up in 2007 and 2008, Gartner forecasts, but there is a sting: not long after that, key technology markets such as phones and PCs will have become saturated, with future sales dominated by replacement sales, not first-time buys. ®

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