Future Horizons tells TechEye chip industry naysayers full of rubbish

Future Horizons analyst Malcolm Penn has told us that the outlook for the semiconductor market is positive, despite many in the industry misinterpreting statistics.

According to Penn the current outlook for the market in 2011 is largely subject to abject pessimism, which is not a true reflection of the industry.

“People are looking at these numbers more than they should do, 2011 will in fact be a strong year,” he told TechEye.

“The WSTS said that last year was a boom year, but that does not really indicate anything, it just means that the industry grew in comparison to when it was in the bowels of depression the previous year.”

“Now it is thought that the industry is only set to see single digit growth in 2011, but in reality the market has just stayed roughly the same for quite a while now.”

Penn points out that this is illustrated by the fact that average selling prices have steadily increased since the second quarter of 2009, six consecutive quarters.

It was the World Semiconductor Trade Statistics (WSTS) figures for 2010 that were subject to a massive downgrade in January, with approximately one billion dollars knocked off market figures.

Penn noted that Future Horizons has adjusted the its own figures accordingly to 30 percent growth for 2010 following the change.

“These things do happen from time to time, but one of this size is quite rare. It was most likely just a human error.”

“Had it not rectified the error then there would there would be a massive lack of confidence in the data, though considering the amount in question, with another half a billion reduction just before, that may already be the case to an extent.”

Penn believes that the biggest concern in the industry at the moment is the lack of capacity by manufacturers who will not see gains from their capacity expansion for another year or so.

This has meant that UMC and TSMC have had to work through the Chinese New Year holidays just to keep up with demand due to lack of silicon capacity.

“The two biggest firms are now struggling to keep up with production due to a lack of investment in the past. At the moment, as fast as you can add the capacity it is getting used up, so if there had been none at all then the situation would be even worse.”

“Whereas this time last year the problem was getting any orders, the problem today is getting semiconductor product.”