Research firm Future Horizons forecast chips sale to grow a healthy 20 and 22 percent in 2006 and 2007 respectively.

First quarter data supports the 20 percent expectation for this year, based on a 12 percent increase in unit shipments and an 8 percent increase in prices.

¡§Capex is still low and utilization rates are high. Back-end is tight, and there are shortages in the materials supply chain from raw polysilicon through packaging materials with no one mindful to make new investments,¡¨ said the analyst¡¦s March update report.
 
¡§Everyone wants a return on their past investment and, if these trends continue, 2006 will exit on allocation.¡¨

There is no possibility of over-supply, according to the firm. ¡§It is now virtually impossible to generate overcapacity this year,¡¨ said the report. ¡§No amount of increased capex can kill 2006.¡¨

By: DocMemory
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