Future Horizons reflects on semiconductor growth in 2007 and predicts growth for 2008

Semiconductor analyst house Future Horizons, has summarized what it describes as a disappointing year for the semiconductor industry in 2007 and gave its predictions for a more respectable 2008.

The first 2007 half-year IC sales were down 6 percent in value on the second half of 2006. With recovery only starting at the beginning of Q3, overall growth for 2007 is expected to be 5 percent to 6 percent.

Head analyst at Future Horizons, Malcolm Penn summed up the year. “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. Unfortunately, it has been a case of too little too late, hence our overall growth expectation for the year now in the disappointing 5 percent to 6 percent range.”

2007 is now the third consecutive year of single digit growth following the last boom years of 2003 and 2004 when the industry grew an impressive 18.3 percent and 28 percent, respectively. According to Future Horizons, the reason for this year’s low growth was declining 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.

Commenting on this year’s figures, Penn said. “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.”

Looking ahead to 2008, Future Horizons predicts that semiconductor market growth should recover to a respectable 12% level, based on a 10% unit growth and a modest 2% ASP recovery.

The full report is available free of charge from order@futurehorizons.com.