SOURCE: Advanced Forecasting

August 21, 2006 08:00 ET

Can GDP Be a Forecasting Tool for the IC Industry? NO!

SARATOGA, CA -- (MARKET WIRE) -- August 21, 2006 -- The U.S.'s gross domestic product (GDP) has been thought by many to be a leading indicator for the performance of the semiconductor industry. Analysis conducted by Advanced Forecasting, a leading semiconductor forecasting house, has disproved this supposed phenomenon, finding that the GDP's value as a leading indicator was only relevant during five out of the sixteen years investigated.

"The GDP's historical year-over-year quarterly growth rate correlated well with IC Revenues from the end of 2000 to the end of 2004 with a 3 month lead, but no correlation exists during the periods 1990 through 2000 and 2005 through the present," said Rosa Luis, Director of Marketing and Sales for Advanced Forecasting. "Continuing to use the GDP as a predictive tool for the semiconductor industry today may greatly mislead decision-makers."

The 2001recession was an anomaly with disastrous results for numerous U.S. industries including metal fabrication, construction materials, and automobiles. The same analysis conducted on IC revenues was performed on each of the aforementioned industries with similar results for the 2000 through 2004 period. In the years prior and following this period, the correlations vary from non-existent to strong.

Conclusion: Due to the strength and depth of the U.S. "Dot.Com" 2001 recession, many industry segments were similarly affected. Each experienced the increasing growth rates leading up to a peak in 2000 and a severe decline following that peak. This "Dot.Com" recession was an outlier. The fact that IC revenues matched GDP (with a lag of three months) wasn't unique to the semiconductor industry, and like in other industries, this phenomenon vanished afterward. Therefore, continued use of the GDP as a predictive tool for the IC industry based on the strong correlation during that period is risky.

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 Information

  • Contact:
    Rosa Luis
    Director of Marketing and Sales
    Advanced Forecasting
    Email Contact
    Toll Free: 1.888.658.3227