SOURCE: Advanced Forecasting

July 10, 2006 08:00 ET

Should the Semiconductor Industry Worry Now or Later?

SARATOGA, CA -- (MARKET WIRE) -- July 10, 2006 --Debate as to whether the IC industry is approaching a turning point or will maintain its growth momentum continues to rage, fueled by growth statistics of ICs and many equipment and materials segments that are reaching record levels. Bookings for semiconductor equipment in April 2006 were 50% above their level 12 months earlier. Shipments of IC units in May 2006 were 26% higher than in May 2005 while IC revenues were 9% higher. These high growth rates cannot be sustained in the long-term; is a correction for the IC industry right around the corner?

"Yes, on the one hand a correction could take place in the near-term," said Rosa Luis, Director of Marketing and Sales for Advanced Forecasting, a quantitative forecasting house. "The current levels at which the industry is operating may be considered dangerous since they were commonplace preceding major recessions such as those of 1996 and 2001." For example, IC units increased 28% in October 2000 from the same month a year earlier. Billings of wafer processing equipment grew 75% in December 2000 from the previous December. IC revenues climbed 39% from December 1994 to December 1995.

"No, on the other hand growth rates cannot independently trigger a correction, and the current situation is structurally healthier than in past cycles," added Luis. "The cautiousness that industry decision-makers exercised in the period following the 2001 recession continues to be present today, manifested by actual IC revenues and sales of equipment growing in a slower pace than during the 2000 boom while staying below forecasted Underlying Demand."

In sum: The frightening skyrocketing growth rates will surely level off as they cannot be sustained in the long-term. The result will either be a smooth-landing or another recession, depending on whether decision makers throughout the semiconductor food-chain extrapolate the current good times into the future, adding excess capacity that will exceed forecasted underlying demand, or they continue being vigilant in planning ahead for a turning-point in demand.

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. It provides the industry's most accurate forecasts and has 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