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Wafer Sales' Growth Will Continue Until At Least Q3 2004, says Advanced Forecasting.

Business Editors/High-Tech Writers

SARATOGA, Calif.--(BUSINESS WIRE)--Jan. 5, 2004

Using a set of strict assumptions, worldwide wafer sales seem to be assured of strong growth at least until the third quarter of 2004, according to Advanced Forecasting. However, the next downturn may arrive shortly thereafter. "The relationship we see between our forecast of underlying demand and the position of actual wafer sales leads us to believe, under some strict assumptions, that a decline in wafers sales is unlikely prior to Q3 2004," said Rosa Luis, Director of Marketing and Sales for Advanced Forecasting.

In comparing the slopes of actual wafer shipments in 2000 to 2003, Advanced Forecasting found that they are very similar. Likewise, the curvature and slope of forecasted underlying demand for the same periods run parallel to each other. Assuming these patterns continue, the likelihood of a downward turning-point for this market can be determined.

NOTE: The eight points in the analysis below refer to a comparison graph of underlying demand and actual wafer sales. It is available upon request.

"The situation today is much better than that of 2000, due to a mid-2002 correction," stated Luis. In 2000, underlying demand slowed while actual wafer sales continued to climb (2) following a strong increase throughout 1999 (1). Actual wafer sales overheated as compared to underlying demand (3), resulting in a build up of inventory and capacity (4), bringing forth an early and steep collapse in 2001 (5).

A premature recovery in 2002 stronger than underlying demand (6) led to a slight downward correction in the second half (7), preventing the segment from continuing to outpace underlying demand and propel itself into a recession comparable to 2001. "Although this correction was painful at the time, it ultimately saved the industry from continuing to overheat and triggering another recession," added Luis.

Currently, actual wafer sales are realigning with Advanced Forecasting's forecasted underlying demand (8). If actuals continue to correlate with underlying demand and if underlying demand repeats its pattern of 2000-2001, the growth will be sustainable at least until July 2004. However, assuming underlying demand starts declining in Q3 2004, as it did in 2001, and if actuals diverge from the forecasted underlying demand in an upward fashion, a potentially painful downward correction will occur. Note that this analysis and conclusion employ very strong assumptions that the 1999-2000 cycle of underlying demand will repeat in 2002-2004.

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.
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Date:Jan 5, 2004
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