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IC Insights downgrades '07 chip forecast: Beware the 1Q-to-full year correlation! |
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Apr 17, 2007 at 10:17 AM |
IC Insights announced yesterday that it had lowered its 2007 IC global market forecast---from a previous estimate 7% to an adjusted---and near-parity---2% uptick.
The plummeting price of memory, especially DRAM, is the main reason cited by the market research firm for the adjusted forecast.
Lurking at the bottom of the press release is a particular correlation to keep an eye on: the comparison of first-quarter IC results with those for the entire year. Here's what Bill McClean and Co. have to say:
"The 30-year average March/February IC market increase is about 21%. If the March 2007 IC market registers a typical sequential increase of 21%, the total 1Q07 IC market would be $49.6 billion, representing a steep 11% decline from 4Q06 ($55.7 billion). If the March 2007 IC market matches the highest March/February increase that occurred within the past 30 years (i.e., +36.6% logged in March 2002), the total 1Q07 IC market of $52.0 billion would still represent a significant 7% drop from 4Q06.
"It should be noted that the correlation of first-quarter IC market results with the entire year results for the IC market is much more significant than when looking at individual monthly data.
"Over the past 30 years, the 1Q/4Q IC market has shown a decline of more than 4% only four times—1985, 1996, 1998, and 2001. What is unsettling is that these four years also happen to be the only negative growth years for the IC industry since 1978!" (italic emphases added)
"Unsettling" may be too mild a description for what could be a very iffy market scenario developing in the chipmaking world.
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