I'm so tired of these fortune tellers.
Demand for semiconductors seen softening next year
The Semiconductor Reporter
September 25, 2006
SARATOGA, Calif. -- The semiconductor industry will experience a downward turning point around mid-2007, with the depth of the decline depending on the level of over-heating generated by double bookings and exaggerated revenues prior to the downturn, according to Advanced Forecasting.
"Currently, IC revenues are below underlying demand and are expected to increase into 2007," said Rosa Luis, director of marketing and sales for the model-based forecasting firm. "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."
Chip makers have exercised caution in their decision-making since the recession of 2001 by adding capacity incrementally and limiting excess spending, Advanced Forecasting said. This prevented over-heating until now, allowing IC unit shipments to grow faster than revenues thus keeping average selling prices 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 the second half of 2004, 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 growth stage of nearly six-years, which was continuous except for the short plateau in the second half of 2004. That plateau which resembled the late-1998 plateau preceding the 1999-2000 boom, Advanced Forecasting observed. This is the longest continuous growth period, climbing 94% from September 2001 to July 2006, breaking the record set by the four-year, 207% upswing of the 1992-1995 boom, ending with the 1996 recession. |
