(August 25, 2010) — In August 2010, the Semico inflection point indicator (IPI) index experienced its first drop since December 2009. The Semico IPI Index signals changes in the direction of semiconductor sales growth one year in advance.
Semico Research’s growth rate for semiconductor sales already assumes a slower year in 2011 at 13% year over year (YOY) growth compared to the 31% growth in 2010.
"The IPI drop was small and one month is not a trend, so we will not be making any major changes to our forecast numbers yet," said Jim Feldhan, president, Semico Research. "But we will be keeping our eye on what happens to the Index next month." Listen to a podcast with Feldhan about the market forecast.
The big question is whether the foundries and memory manufacturers will be able to control spending in the first half of 2011 in order to avoid an over-capacity situation in the second half of 2011 and into 2012.
The Semico IPI Index tracks 14 weighted, worldwide economic and semiconductor market factors including semiconductor sales, inventories, and printed circuit board (PCB) sales. Semico’s IPI accurately predicted the upturn in semiconductor sales that occurred in February/March 2009 when the IPI Index increased in February 2008.
In addition to the IPI variables, Semico’s forecast outlook considers the semiconductor production capacity landscape as well as consumer and business electronic buying trends. After experiencing two years of underinvestment, tight capacity and shortages in certain product segments have driven up prices this year, but huge capital investment projects are helping the industry to catch up.
Although Semico believes electronic devices will continue to be a ‘must-have’ for most consumers, the volatile economic situation in both the U.S. and Europe will determine whether we wait for bargain sales or splurge on the latest iPad for holiday gift giving.
To subscribe to the Semico IPI, contact Sam Caldwell at [email protected] or 602.214.9697.