Penn stressed that the change was the result of recalibrating the speed of the recovery from the chip market pause caused by the financial crisis of 2008. As the recovery in electronic and semiconductor sales had been steeper than expected he had been forced to pull sales forward in time resulting in the higher 2010 figure and a more normal 2011 figure. "The fact that 2010 is higher automatically makes the percentage increase in 2011 lower," said Penn stressing that the change was "mathematical rather than a change of the analysis."

Speaking at a mid-year semiconductor market forecast organized by his company Future Horizons (Sevenoaks, England), Penn said: "It was a three-quarter pause, not a boom-bust recession," and emphasized his point by showing a number of graphs of market indicators with the last quarter of 2008 and the first half of 2009 omitted. "2009 was a pause not a bust, 2010 is a restart not a boom and 2011 will be a return to normality."

He also was highly critical of the majority of chip company CEOs for misreading the situation as a classical chip industry bust and allowing that prognosis to inform their risk aversion. "The industry did an appallingly lousy job of managing the experience; too quick to cut back and too slow to resume spending," said Penn.

The market situation in Q3 2010 is now very similar to where it was in Q3 2008, with many positive indicators except that the industry has reduced its chip manufacturing capacity by 14 percent, Penn said. hed added that this would soon start to drive average selling prices (ASPs) up strongly, to the benefit of chip makers and the chagrin of chip buyers.

Penn predicted that the chip market in 2Q10 would come in with 8.3 percent sequential growth. This is roughly in-line with a prediction of 9.4 percent made recently by independent analyst Mike Cowan. But both figures are way ahead of the 2.9 percent Q2/Q1 sequential growth that has been the average over the last ten years.

Penn puts the Q3 sequential growth at between 5 and 10 percent and Q4 sequential growth at between a 2 percent contraction and 3 percent growth. The downside of these projections would give a 2010 annual market of $299.9 billion and 32,5 percent annual growth. Penn's upside projection results in an annual market of $311.4 billion and 37.6 percent annual growth.

"Even a second-half meltdown provides 30-percent growth," said Penn. "The market is set to bust through the $300 billion threshold on December 14, 2010." Penn's 14.2 percent prediction for 2011 growth would put the 2011 annual chip market at $350 billion.

By: DocMemory
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