Handlesbanken Capital Markets lowered its worldwide semiconductor forecast amid sluggish growth in May and weak PC demand.

The market researcher projects that the semiconductor market will now grow 5 percent in 2006 over 2005, down from 6 percent in its previous forecast.

The investment banking firm blamed the lowered forecast on the worldwide PC slowdown. "Based on our analysis, we believe wafer foundry demand remains tepid with continued weakness from computer related applications and seasonal weakness from consumer electronics applications," said Bill Ong, an analyst with American Technology Research Inc., in a report issued on Tuesday.

Meanwhile, Handelsbanken also expects another sluggish month for worldwide semiconductor sales. The three-month average of May chip sales is projected to hit $19.37 billion, compared to $19.6 billion in April, according to the firm. The actual numbers will be released on Friday.