SAN JOSE, Calif. — Looking into his crystal ball, Mark Edelstone, an analyst at Morgan Stanley, sees some troubling signs amid a flat semiconductor forecast for 2007.
The overall semiconductor market is projected to grow by 9 percent in 2006 and 10 percent in 2007, Edelstone said. The market ''is a mixed bag,'' he said in a recent interview.
Heading into 2007, there are some worrisome signs. On the earnings front, some 40 percent of all chip makers missed their forecast in the third quarter of 2006, he said.
The fourth quarter is slow and chip inventories remain high. In fact, chip inventories at the contract manufacturers are at the highest level since 2002, he said.
On the other hand, it's not all doom-and-gloom. PCs are projected to grow by an average of 12 percent over a four-year period, while cellular-phones are expected to grow by 18 percent, he said.
This month, the Semiconductor Industry Association (SIA) lowered its chip forecast for the next three years. The new forecast projects that sales will reach $248.8 billion in 2006, an increase of 9.4 percent, followed by increases of 10 percent to $273.8 billion in 2007, 10.8 percent to $303.4 billion in 2008, and 5.8 percent to $321 billion in 2009, according to the SIA.
The SIA forecast projects a compound annual growth rate of 9 percent for the forecast period, 2006-2009.
In another sign that the IC business is slowing and maturing, the World Semiconductor Trade Statistics (WSTS) group in October also reduced its semiconductor forecast for 2006, 2007 and 2008.
The global semiconductor market is expected to grow by 8.5 percent to $247 billion in 2006, according to the autumn forecast of the WSTS. Projected growth in the worldwide semiconductor market will moderately increase to 8.6 percent in 2007 and culminate with 12.1 percent in 2008, according to the group.