SAN JOSE, Calif. Market research firm Future Horizons on Thursday (Dec. 30) cut its worldwide growth forecast for ICs. The research firm now predicts that the semiconductor industry would grow 15 percent in 2005, down from its original forecast of 28 percent.
The research firm also appears to have lowered its IC forecast in 2004. It expects the industry to grow 28 percent, down from its original forecast of 32 percent.
Future Horizons (Sevenoaks, England) recently dropped hints it would devise a new forecast for 2005. Back in the summer, the research firm projected that the global semiconductor market will grow 32 percent in 2004 to $220 billion, and a further 28 percent in 2005 to $282 billion (see July 30 story).
Still, Future Horizons' new projection for 2005 remains bullish, as compared to most forecasters, which are generally projecting from 5 percent growth to a 5 percent decline next year. VLSI Research Inc. projects that the IC industry will grow 8 percent in 2005, it was noted.
Future Horizons indicated that the first half of 2005 is expected to be slow, as the current and ongoing inventory correction problem will continue to haunt the IC market. The inventory correction problem hit the IC industry back in the summer of 2004, causing a slowdown in the market.
"Clearly, the second-half 2004 slowdown came as a shock to the industry," said Malcolm Penn, CEO of Future Horizons, in an e-mail newsletter.
Penn envisions at least two scenarios for 2005. The worst case scenario for the IC industry is only 6 percent growth in 2005 over 2004, according to Future Horizons.
The more likely scenario is that the IC industry will reach $245 billion in terms of worldwide sales in 2005, up 15 percent over 2004, Penn said. "We see the industry bouncing back strongly in the second half of the year, yielding an overall IC unit growth in the nine percent region, with ASPs up a further six percent," Penn said.
"Growth will be driven by the continued digitization across all product segments, underpinned by a 10 percent minimum growth in PC shipments," he said.
However, there are some problems that could impact IC growth, including disappointing 3G mobile-phones services and a massive handset overbuild scenario in China, he added.