August 23, 2006 – The surge in demand for consumer electronics has led to tracking broader economic trends such as consumer spending as a factor in semiconductor industry growth projections, but adopting one of the major economic benchmarks — US gross domestic product (GDP) — as a leading indicator for the IC industry is not the way to go, according to analyst firm Advanced Forecasting.

“Continuing to use the GDP as a predictive tool for the semiconductor industry today may greatly mislead decision-makers,” according to Rosa Luis, director of marketing and sales for the Saratoga, CA-based firm, noting that the GDP’s historical year-on-year quarterly growth rate lined up well with IC revenues from the period of 2000-2004, but the two metrics were not closely associated in the decade before that, and have not been linked since 2005 to the present.

The firm points out that the 2001 “dot-com” recession was an “anomaly” that hit many US industries particularly hard, not just the IC industry. Metal fabrication, construction materials, and automobiles all experienced increasing growth rates leading to a peak in 2000, followed by a severe decline. Comparing those industries to the US GDP resulted in similarities to with the IC industry’s comparisons for 2000-2004, and with correlations varying from “non-existent to strong” in the other periods.

“The fact that IC revenues matched GDP (with a lag of three months) wasn’t unique to the semiconductor industry, and like in other industries, this phenomenon vanished afterward,” noted the firm, in a statement. “Therefore, continued use of the GDP as a predictive tool for the IC industry based on the strong correlation during that period is risky.”