Should We Say Goodbye to Boom Bust Semiconductor Cycles? Not really!

Saratoga, California – October 17, 2006 – Goodbye to Boom Bust Cycles is “a phrase that should create unrestrained fear among industry players, not the unsubstantiated glee it usually generates,” said Rosa Luis, Director of Marketing and Sales for Advanced Forecasting, a quantitative forecasting firm, adding that “We are predicting that the end of the current cycle is on the horizon.”

 

The idea that cycles in the semiconductor and its related industries have now been eliminated is the same idea that is notorious for perpetuating the 1996 recession. It is prudent to investigate whether one should consider the current statements to be more trustworthy than those of mid-1995 when “No More Silicon Cycles” peppered the headlines.

 

A common characteristic to both 1995 and 2006 is that each follows a sequence of four strong growth years. 1992 was the first year to break from the 1989-1991 stagnation, and by 1995 the industry recorded growth of 207% from December 1991 to December 1995. 2006 is the fifth year from the lowest point of the 2001 recession (September 2001), climbing 99.4% until August 2006. These long periods of continuous growth create a belief that it will continue indefinitely. Extrapolations become the forecasting tool of choice, until the unexpected turning point occurs – the decline they accelerated and exacerbated.

 

Can we say goodbye to the Silicon Cycle just because the industry is maturing? “No!” stated Moshe Handelsman, President of Advanced Forecasting. “The IC industry is a maturing one in which growth will slow down, oscillating around a more moderate trend line. However, it shall continue to oscillate and the cycles will continue! Any extrapolators that ignore a turning-point will be caught unaware and suffer more than those who did not subscribe to this belief.” The scars that most obtained during the last downturn created a wariness that did not previously exist, but as those scars fade, a repeat of the boom bust cycle will occur.

 

Founded in 1987, Advanced Forecasting is a leader in forecasting demand for semiconductors, semiconductor equipment by segment, and materials industries. Its unique features are using purely quantitative input and never retroactively modifying its forecasts. Advanced Forecasting provides the industry’s most accurate forecasts and has acquired a user base of more than 400 companies worldwide.

 

Contact:

Rosa Luis

Director of Marketing and Sales

Advanced Forecasting

rosal@adv-forecast.com

Toll Free: 1.888.658.3227

  

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