Looking to the Future

It seems everywhere we turn, there is hype about how low 2011 will go. Our own opinion is that 2011 will be an above average growth year, rising 9.5% over 2010. Considering an average growth year for the semiconductor industry is 8% growth, 9.5% is pretty good.

Our forecast is based on our IPI (Inflection Point Indicator) which has been an accurate indicator of the industry’s ups and downs for 15 years.

For example:
The IPI declined throughout 2000 indicating the slowdown for 2001.

Beginning in the second half of 2002, the IPI increased significantly, pointing to strong growth starting in the second half of 2003.

In 2004, when the market was booming ,the IPI started to turn down, indicating a correction year in 2005.

In 2006, we saw the IPI, again, on an upward trend, which matched 2007 as a peak year.

For most of 2007 the IPI declined, pointing to a decline in the semiconductor market in 2008.

The 2008 IPI hit bottom in February 2008, which pointed to the beginning of the V-shaped recovery starting in February 2009.

So how is the IPI predicting 2011 and beyond?  Take a look at the blue line in the graph above, which predicts the pink and green line about four quarters in advance.

Extrapolating the IPI out to 2014, and we start to see that:

2010 is UP
2011 is UP
2012 is UP with 2nd half declining
2013 is DOWN
2014 is UP

This current growth will continue into 2012.  The future for the next few years is bright for the semiconductor industry.

To learn more about the IPI visit our website or contact Sam Caldwell at samc@semico.com.