China's electronic industry growth is slowing, one market research firm said on Thursday, leading to a reduced demand for semiconductors.

Market observer iSuppli said expects China's semiconductor revenue in 2006 to grow somewhere between 11 percent to 15 percent, creating a market space of $41 to $43 billion. This is down from firms forecast of 18 percent growth one year ago.

The reduction in iSuppli's semiconductor forecast reflects a general slowdown for Chinese electronics system production, Byron Wu, director of China research for iSuppli, said in a statement. Although China's electronics market continues to grow, several key issues such as over-heated investment, increased operational costs and reduced corporate earnings threaten to stall the expansion.

For the country's semiconductor sector, what started as a breakout year is closing on a note of caution, following disappointing sales in Q3, Wu added. Much is riding on the upcoming holiday season, which will drive semiconductor purchasing activity in Q4.