Advanced Forecasting: Will There Be a Turning-Point in Integrated Circuits ''IC'' Shipments in 2004?

Business Editors/High-Tech Writers

SARATOGA, Calif.--(BUSINESS WIRE)--Jan. 12, 2004

Assuming that IC Revenues during 2004 closely follow their trend of 1998-2000 and as long as they stay in line with Underlying Demand, there will be no downward turning-point in 2004, according to Advanced Forecasting, a quantitative forecasting house. "Our forecast of Underlying Demand is very optimistic for the semiconductor industry in 2004," said Moshe Handelsman, president of Advanced Forecasting. "It surpasses the heights of 2000, hence, carrying the danger of overheating and an ensuing decline."

Methodology

To infer whether the current IC boom will end like the previous cycle one has to investigate the similarities between the current situation and the 1999-2000 boom period, Advanced Forecasting analyzed Actual IC shipments worldwide from 1999 until October 2003, along with its Cycle forecast as published in its monthly report, adding as an overlay Actual IC shipments during the 1999 recovery. The latter were shifted in time to match the current recovery, e.g., the minimum point of July 1998 is located on May 2002.

Note to Editors: A chart depicting a comparison of the two recoveries is available upon request.

Observations

1. The reasons behind the 1998 recession were different than those triggering the recession of 2001. Also, the severity of the latter was significantly greater than that of the former. Nevertheless, both share a similar recovery pattern. After reaching a bottom, both cycles experienced a slow recovery during the first year, a slight hesitation into the second year, followed by strong growth and another hesitation before continuing to increase in the third year.

2. Seasonality will affect the recovery. Sales tend to sag toward the end of a year and resume growth in the 2nd quarter. "Thus we expected some softness at the end of 2003, which does not indicate an end to the recovery," said Rosa Luis, director of Marketing and Sales at Advanced Forecasting, adding that "both recoveries were slow during the first year following the minimum point. They strengthened in the second year." A similar pattern occurred in the recovery from the 1985 recession.

3. Advanced Forecasting's IC Cycle forecast shows that the current recovery will be more robust than the 1999-2000 boom. However, "over-heating a-la-2000 (early signs of which are already surfacing) may trigger a nasty recession," stated Luis.

Summary

The current IC boom resembles the 1999-2000 boom with a lower danger of triggering a major recession like 2001-2002. This observation should hold as long as the industry conforms to the Underlying Demand for ICs, avoiding a build-up of over capacity.

Founded in 1987, Advanced Forecasting is a leader in forecasting demand for semiconductors, semiconductor equipment and materials industries. Advanced Forecasting uses a purely quantitative forecasting model, a unique and highly sought-after viewpoint that is never modified retroactively, thus appealing to high-level executives and industry leaders. It provides the industry's most accurate market forecasts and has acquired in its seventeen years, a user base of more than 400 companies worldwide.