September 7, 2004 – Saratoga, CA – Increasing growth rates of IC revenues in Asia-Pacific, that reached 43% level in July, indicate the industry is on the verge of a correction period that may put a halt to the 2004 boom, says Advanced Forecasting, a semiconductor quantitative forecasting house. The main question now is: how severe will this correction be?   

Growth rates in various world regions, total worldwide, as well as the gap forming for IC ASP above the Experience Curve, have reached levels approaching those experienced during the peak of the boom of 2000. However, the fact that currently, Asia-Pacific’s growth rate of 43% is well above the rest of the regions (from 22% to 25%), may lessen the danger of a full-fledge recession as devastating as 2001. 

“Escalating growth rates and IC ASP coupled with capacity utilization rates approaching the 100% level for the newest technologies, imply that the industry is currently over-heated and inadvertently preparing itself for a downward correction,” said Rosa Luis, Director of Marketing and Sales for Advanced Forecasting.   

“Using a twelve-month moving average, year-over-year calculation, and comparing the current regional growth rates to those of 2000, suggests that the worldwide growth rate (30%) is being heavily influenced by the Asia-Pacific region, mainly due to China,” commented Dr. Moshe Handelsman, President of Advanced Forecasting. “Because the extraordinary growth appears to be localized in that region, it will negatively impact the industry, but not as significantly as was experienced in 2000, as all regions at the time were abnormally high (ranging from a low of 33% to 48%).” 

Already in April 2004, Advanced Forecasting published a press release stating that the semiconductor industry would remain safe as long as worldwide IC units and worldwide revenues continued to have a common growth rate. However, the growth rates have diverged, with growth of revenues increasing much more rapidly than that of units; opening and maintaining a gap, as just prior to the 2001 recession. 

“The current slowdown felt across the industry may reduce the severity of an impending recession as the industry attempts to realign itself with underlying demand, as was the situation in 2002, where overheating during the first half year caused a correction in the second half,” stated Luis.   

 Advanced Forecasting cautions against using extrapolations based on the current period to forecast the IC Cycle. Likewise, employing any analysis of previous boom/bust phases in an attempt to predict the present cycle is dangerous and inaccurate. Only through quantitative models, that use just hard numbers as input and are by definition inherently unbiased, can an accurate forecast be obtained.  

Founded in 1987, Advanced Forecasting is a leader in forecasting demand for semiconductors, semiconductor equipment and materials industries. Reliance on purely quantitative models has allowed Advanced Forecasting to accurately predict 90% of the IC Industry’s major turning points since inception. Advanced Forecasting uses a purely quantitative forecasting model, a unique and highly sought-after viewpoint that is never modified retroactively. It provides the industry's most accurate market forecasts and has acquired, in eighteen years, a user base of more than 400 companies worldwide.

Contact:

Rosa Luis
Director of Marketing and Sales
Advanced Forecasting
rosal@adv-forecast.com
Phone: 1.408.725.2964

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