LONDON While 2007 was a disappointing year for the semiconductor industry things will get better in 2008 according to analysts at Future Horizons. The first 2007 half-year IC sales were down 6 percent in value on the second half of 2006 and with recovery only starting at the beginning of Q3, overall growth for 2007 is expected to be 5 to 6 percent.
“It was a disastrous start to 2007 but thankfully the market fell in line with normal seasonal patterns by the start of the third quarter,” said Malcolm Penn, head analyst at Future Horizons (Sevenoaks, England). “Unfortunately, it has been a case of too little too late, hence our overall growth expectation for the year now in the disappointing 5 to 6 percent range.”
“On the face of it, this represents quite a dramatic industry slowdown, but the silver lining is the fact that the underlying causes were structural market corrections and not a full-blown semiconductor recession. This distinction is very important, because the industry can bounce back quite fast from a correction, whereas recovery from a recession is a much slower process,” said Penn.
2007 is now the third consecutive year of single digit growth following the last boom years of 2003 and 2004 when the industry grew 18.3 and 28 percent respectively. According to Future Horizons, the reason for this year’s low growth was declining average selling prices (ASPs), given unit growth for the year is expected to end up at a respectable 12 percent. Whilst this was lower that 2006’s 18.1 percent number, it was more sustainable and in line with the industry’s 10 percent long-term average, especially given the current above-average global GDP growth.
Future Horizons predicts that in 2008 the semiconductor market growth should recover to a respectable 12 percent level, based on a 10 percent unit growth and a modest 2 percent ASP recovery.
“The economists are not yet forecasting a global economic recession, and until they do, we are confident that 2008 will be a decidedly rosier year for the semiconductor industry,” said Penn.