8/2/2004 - The global semiconductor market will see a growth of 32 per cent growth in 2004 to $220 billion, and a further 28.0 per cent growth in 2005 to $282 billion according to the 2004 Mid-Term Semiconductor Forecast, published by Future Horizons, Europe's leading semiconductor analyst.
But the semiconductor market will see a downturn of -8 per cent to $259 billion in 2006 as the industry sees the return of a cyclical downturn after an 18-month growth cycle.
"The second half of 2004 will continue strong despite the fact the industry still doesn't believe it and feels bruised and battered from the 2001 downturn. Capacity is tight, and we see it staying that way for a few more quarters, despite the current acceleration in capital spending and an anticipated slowing in unit demand. We don't see the supply/demand cross-over occurring until the back end of 2005, causing capacity to overshoot, signalling a downturn in 2006," said Malcolm Penn, CEO, Future Horizons.
"We fully accept that the 28% growth forecast for 2005 is high - and out of line with current conventional wisdom - but if the 2005 world economy grows at the currently predicted 4.0% to 4.6% level, unit demand will hold up and capacity will struggle. Despite management being cautious as a result of the severity of the previous downturn and to some extent the new levels of corporate responsibility post-Enron, this is my ninth semiconductor cycle and don't see any signs of it being any different from the others," said Penn.
The European market is out of step with the worldwide semiconductor recovery. Future Horizons reported a $40 billion trade deficit in electronics equipment for the European Union in 2003 with worldwide market share falling. As a result, its share of the worldwide semiconductor market dropped from a peak of 24% in 1998 to 19 percent in 2003.
Future Horizons predicts that the European market will lag worldwide semiconductor market growth, with 26.6% in 2004 to $40.9 billion, 26.0% to $51.5 billion in 2005 and -6.0% to $48.4 billion in 2006. "My worry is that this part of our forecast could prove highly optimistic - we see nothing on the horizons to reverse Europe's decline," Penn said.
Future Horizons bases its analysis on three fundamental facets: the economy; unit demand; and fabrication capacity. The interaction of these three so-called 'semiconductor apocalypse horsemen' determines the market behaviour.
Future Horizons 2004 Mid-Term Semiconductor Forecast remains unchanged from its original 2004 Semiconductor Forecast made in January 2004. At the time it was deemed optimistic but since all other market watchers have revised their forecasts upward. It also correctly predicted market growth of 18% to $166 billion in 2003.
The Future Horizons 2004 Mid-Term Semiconductor Forecast Seminar proceedings are available from Future Horizons priced at £350 for a single-user license. Future Horizons Semiconductor Monthly Update Report is also available for £1,000 for a single-user 12 month edition licence.
About Future Horizons
Future Horizons, founded in 1989, is Europe's leading semiconductor analyst. It provides market research and business support services for use in opportunity analysis, business planning and new market development. Its industry information seminars and Forums are widely considered to be the best of their kind. Future Horizons publishes a series of monthly, half-yearly and annual market reports, with emphasis is placed on the worldwide microelectronics and electronics industry and the European market environment. See www.futurehorizons.com for further information.
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