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iSuppli Corporation has not trimmed but slashed its
semiconductor forecast for 2005, contrary to the market research firms press
release headline.
The firm has cut the chip sales growth rate by over half to
$232.7 billion in 2005, giving a 2.4 percent growth rate for 2005. Previously,
iSuppli was projecting sales growth of 5.9 percent, which was still on the low
side of compiled forecasts from the usual bunch of market analysts.
The FUD factor came out to play once again with isuppli
referring to energy price rises and excess fab capacity, though the research
firm was not specific with which areas of the industry were causing the
problem. Saying that, they may have assumed it was primarily the memory market
that was at fault as ASP's in DRAM have continued an aggressive dive all year.
In a troubling sign for the semiconductor industry, as they
put it, the research firm is seeing an increase in production-despite slowing
growth and weakening prices.
Capacity utilization is expected to increase to 86 percent
in the third quarter, up from 83 percent in the second, according to isuppli.
"With the significant amount of capacity that is available,
if end demand does not significantly increase, the fourth quarter will
experience a slowdown in manufacturing run rates," warned Len Jelinek, director
and principal analyst, semiconductor manufacturing, for iSuppli. "The severity
and length of this slowdown will be determined by the amount of semiconductor
inventory built up in the third quarter."
Not only that but the firm is getting more and more
pessimistic about good growth rates in 2006 and 2007 etc... Not sure I buy into
that yet as the FUD needs to turn in to reality before I would place my bets.
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