TOKYO, Jan 27: The semiconductor market could shrink in 2007 due to tumbling prices of memory chips, bucking the industry's expectations of solid growth, the head of Elpida Memory Inc. was quoted by the Nikkei business daily as saying in an interview published on Saturday.

"It is possible there will be negative growth compared with the previous year," Yukio Sakamoto, president of Japan's only maker of dynamic random access memory (DRAM) chips, told the newspaper.

He was speaking about the market in revenue terms. Sakamoto cited tumbling prices of DRAM and flash memory chips and was also quoted as saying that PC microprocessors were not selling unless discounted. No one at Elpida could be reached to confirm his comments.

Earlier this month, research firm iSuppli predicted that global semiconductor revenues would grow 10.6 per cent this year to $285.8 billion thanks to a healthier market for electronic equipment and more stable chip prices.But the recent slide in DRAM prices could change the industry's growth scenario, Sakamoto said.

DRAM prices held their own through December as PC makers stocked up on inventory ahead of Microsoft Corp.'s new Vista operating system launch, but spot prices have since fallen and analysts have forecast lower contract prices from February.

Earlier this week Elpida reported a strong jump in third-quarter profit, but Sakamoto predicted that DRAM prices would drop 20 per cent in January-March from the previous quarter, clouding the outlook.

Sakamoto told the Nikkei that Elpida would fight the tough conditions by making circuits smaller and employing advanced chip-making eqiupment.—Reuters