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From Bust to Boom: ICs set for V-shaped recovery


With IC Insights' latest research bulletin just out last night, the news couldn't be better.  Not only are the July IC sales and unit volume numbers showing steep upticks, the good news spans a wide swath of the IC sector covering "many product lines from DRAM, NAND flash memory, analog, and microprocessors, as well as the overall IC industry." (IC Research Bulletin, September 15, 2009 and here)

As we've been saying since 2007 here at Smith's MarketWatch, a critical variable to keep an eye on is what's happening upstream at the fabs and foundries.  As IC Insights echoes, the lack of CAPEX spend over the past 12-18 months coupled with the number of shuttered lines and fabs due to scaling back and insolvencies, respectively, helped to clear the inventory supply chain, but these reductions now pose a potential problem: shortage.

As we've reported, and as the new IC Insights underscores, utilization levels have been jumping quickly to the point that 90+% is forecasted through the end of the year (Y09), and higher levels for Y10E:

With significant IC unit demand on the horizon and little capital spending being allocated for new/upgraded facilities, industry-wide capacity utilization stands a very good chance of being maxed out in the coming months, resulting in longer lead times, spot shortages, and escalating average selling prices throughout the industry. (click here for source article)

Watch for more detailed analysis investigating the underpinnings of the recovery underway in the semiconductor and electronics industries.  Learn the details in our synthesized, global reports that bring all the variables together for you in targeted articles in the upcoming MarketWatch Quarterly, due out in the next week to subscribers and in early October to the general audience.  Subscription is FREE and takes but a minute

Are you interested in learning more about our industry and how today's complex set of economic and industrial forces act to shape the markets?  Subscribe now, the only cost is your email address.

Lisa Ann Cairns, Ph.D.
Written on Wednesday, 16 September 2009 00:00 by Lisa Ann Cairns, Ph.D.

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