Analyst: Be wary of “overheating” signs

November 15, 2006 – A spike in sales during September caps five years of consecutive growth, and may indicate a tipping point has been reached that could send the industry down a cyclical slope, according to analyst firm Advanced Forecasting.

Actual chip sales rose 4.5% sequentially in September, bringing them in balance with the level of underlying demand, the firm claims. IC units have surged above underlying demand since March, after remaining in line with demand for about five years.

Moshe Handelsman, president of Advanced Forecasting, noted that underlying demand isn’t expected to peak until 2H07, but that could be hastened if seasonal factors — e.g., a seasonal rundown in IC revenues — do not materialize.

He cautioned that even in forecasts with annual growth rates, there are embedded “turning points” — e.g. the previous cyclical peak year of 2000, which witnesses 36% growth, but peaked in October followed by years of recession.


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