A Downward Turning Point in Semiconductors is on the Horizon, predicts Advanced Forecasting

Saratoga, California – September 25, 2006 – The semiconductor industry will suffer a downward turning point around mid-2007, according to Advanced Forecasting, a quantitative forecasting house. The depth of the decline will depend on the level of over-heating (in the form of double-bookings and exaggerated revenues) that precedes the forecasted decline.

 

“Currently, IC revenues are below Underlying Demand and are expected to increase into 2007,” said Rosa Luis, Director of Marketing and Sales for Advanced Forecasting. “Should the slope of their growth exceed that of Underlying Demand and over-heating results, the peak will take place earlier and the decline into a recession will be steeper than predicted.”

 

Industry leaders have exercised caution in their decision-making since the recession of 2001 by adding capacity incrementally and limiting excess spending. This prevented over-heating until now, allowing IC unit shipments to grow faster than revenues thus keeping ASP below the Experience Curve. The current annual growth rate of IC units is 23.8% but only 8.5% for IC revenues.

 

“The 2007 downturn is likely to have a much stronger impact on the industry than the slowdown in 2H-04 which caught many off guard after three years of continued recovery,” stated Moshe Handelsman, President of Advanced Forecasting. “The key difference between the resulting impact on the industry during these time periods is the softness in Underlying Demand as predicted by our model for 2007, which was absent during the 2004 correction.”

 

By the second half of 2007, the semiconductor industry will have reached the end of a nearly six-year continued growth stage, except for the short plateau in the second half of 2004 (which resembled the late-1998 plateau preceding the 1999-2000 boom). This is the longest continuous growth period, climbing 94% from September 2001 to July 2006, breaking the record set by the four-year upswing of the 1992-1995 boom that rose 207%, ending with the significant 1996 recession.

 

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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