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Analyst signals flat semicon forecast

Posted: 24 Nov 2006     Print Version  Bookmark and Share

Keywords:Morgan Stanley  semiconductor forecast  IC  semiconductor  market growth 

Mark Edelstone, an analyst at Morgan Stanley, sees some troubling signs amid a flat semiconductor forecast for 2007.

According to Edelstone, the overall semiconductor market is projected to grow by nine per cent in 2006 and 10 per cent in 2007. The market ''is a mixed bag,'' he said in a recent interview.

Heading into 2007, there are some worrisome signs. On the earnings front, some 40 per cent of all chip makers missed their forecast in the third quarter of 2006, he said. The fourth quarter is slow and chip inventories remain high. In fact, chip inventories at the contract manufacturers are at the highest level since 2002, he added.

On the other hand, it's not all doom-and-gloom. PCs are projected to grow by an average of 12 per cent over a four-year period, while cellular-phones are expected to grow by 18 per cent, the analyst said.

This month, the Semiconductor Industry Association (SIA) lowered its chip forecast for the next three years. The new forecast projects that sales will reach Rs.1,132,537.60 crore ($248.8 billion) in 2006, an increase of 9.4 per cent, followed by increases of 10 per cent to Rs.1,246,337.60 crore ($273.8 billion) in 2007, 10.8 per cent to Rs.1,381,076.80 crore ($303.4 billion) in 2008, and 5.8 per cent to Rs.1,461,192 crore ($321 billion) in 2009, according to the SIA.

The SIA forecast projects a compound annual growth rate of nine per cent for the forecast period, 2006-2009.

Another sign that the IC business is slowing and maturing, the World Semiconductor Trade Statistics (WSTS) group in October also reduced its semiconductor forecast for 2006, 2007 and 2008. The global semiconductor market is expected to grow by 8.5 per cent to Rs.1,124,344 crore ($247 billion) in 2006, according to the autumn forecast of the WSTS. Projected growth in the worldwide semiconductor market will moderately increase to 8.6 per cent in 2007 and culminate with 12.1 per cent in 2008, according to the group.

- Mark LaPedus
EE Times

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