CUPERTINO, Calif. -- With the year 2000 ending on a weak note for semiconductor companies, Advanced Forecasting Inc. here today continued to warn of softer bookings and delays in chip orders in 2001. Advanced Forecasting also did a little chest pounding, by bragging that it was the only major research firm to "accurately" predict the semiconductor's turning point in the fourth quarter of 2000.
"As expected, signs of slowing semiconductor sales have been emerging with each passing month, confirming our mid-99 prediction for the second half of 2000," said David Crume, Advanced Forecasting's director of marketing and sales.
The Cupertino-based company described itself as a "lone wolf" in predicting the current semiconductor slowdown, when other market researchers were still forecasting a boom in chip sales through 2003. At the annual Industry Strategy Symposium (ISS) in Pebble Beach, Calif., last January, analysts from Advanced Forecasting stunned the meeting by predicting an 80% probability of a significant downturn in semiconductor sales during 2000 (see Jan. 11 story). Other analysts at the executive summit were bullish about 2000 and 2001.
But at the January meeting, Advanced Forecasting suggested that there was an 80% chance of a turning point--or "elbow"--in the trend line during the second quarter of 2000--a few quarters ahead of the current turning point. After a strong second quarter, inventory corrections in the second half of 2000 put a damper on what has been a strong year in chip growth. The major question now is whether the correction will be completed early next year, with strong revenue growth resuming in later in 2001.
Advanced Forecasting warned that it expects to see a continuation of softer bookings, push-outs from chip customers, inventory buildup, and inventory-driven backlog adjustments in the first quarter of 2001. The research firm added that chip manufacturers have overbuilt capacity based on an inflated demand for semiconductors.
"Unfortunately, as in previous cycles, chip and semiconductor equipment suppliers have relied on qualitative information which is based on extrapolations," Crume said. "They have been mislead by bullish forecasts of demand for IC and end equipment applications, which motivated them to gear up for anticipated strong demand for the remainder of 2000 and 2001."
Advanced Forecasting claims its quantitative Short-Term IC Forecast has accurately predicted five downturns since the mid-1980s.