Semico Continues to Predict Upturn in 2006

Semico IPI - Source: Semico Research Corp.

Phoenix, Arizona August 9, 2005 - Data going back to 1984 shows Semico’s Inflection Point Indicator (IPI) registered a historical 16.5 in June, the highest IPI on record. This month’s IPI represents an improvement of 6.7% from the May IPI. It also marked the second consecutive month the IPI increased, up from 14.9 in April and 15.5 in May.

Since Semico’s IPI is designed to forecast the market 8 to 9 months in advance, the current IPI points to the February-March 2006 timeframe. With this nearly unprecedented jump in the IPI pointing to the 1Q06, it raises our optimism immensely—if such strength in the IPI continues for another month or two, it will make a persuasive case for a much more robust 2006.

Current expectations are for a moderate upswing in 2006. If the trend continues, an upward revision to the 2006 forecast would be warranted, most likely with growth reaching into the upper teens. In turn, a strong 2006 start would accelerate new plant and equipment expansion by 6 months, from 2007 to 2H06.

In that scenario, the market would ramp in 2007, continuing into 1H08. With the upturn occurring approximately 6 months sooner, the downturn—which is currently forecast for 2009—would also occur 6 months earlier in 2H08.

One caveat is that the three month rolling average for semiconductor sales is down a slight 0.5%, from $18.1 billion to $18.0 billion, triggering the possibility that sales could flatten out for the remainder of the year.

Semico will continue to closely monitor the IPI for indications the next inflection point has hastened. Along with our quarterly forecast, the next IPI update will be presented at Semico’s Semiconductor Outlook Annual Forecast conference on September 15, 2005 at the Wyndham Hotel in San Jose, CA.

At the Outlook event, Semico’s founders and analysts will present Semico’s forecast for total worldwide semiconductor sales, an industry overview and focus on semiconductor sales opportunities being created in two emerging consumer markets: Networking and Portability.

Semico Research developed the Inflection Point Indicator to assist in forecasting semiconductor revenues approximately two quarters in advance. IPI—combined with our bill-of-materials, end-market analysis and primary research—has helped Semico Research accurately forecast the industry ahead of all the other prognosticators.

About Semico
Semico Research Corp is a marketing and consulting research company located in Phoenix, Arizona. Semico was founded in 1994 by a group of semiconductor industry experts. We have improved the validity of semiconductor product forecasts via technology roadmaps in end-use markets. Semico offers custom consulting, portfolio packages, individual market research studies and premier industry conferences.

www.semico.com