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Reading the Tea Leaves: The 2010-11 prognosis remains solid


With the way 2009 went, how could markets be anything but rosy this year?  Indeed, we've been happily awash in mostly positive news, and those numbers have been holding steady.  This status quo is borne out by SEMI's latest book-to-bill numbers that show an eight month holding pattern of positive indexes and three month moving averages (3MMA).  3MMA numbers are now well into 2007 territory - that's good for those who don't remember the pre-collapse days.

Book-to-bill numbers have been at 1.22 levels for 2 months now, last month was 1.23, and the individual bookings are at a healthy US $1,231.8 million and billings at US $1,011.8 million.

So, with all this good news continuing to flow, is it time to worry about the continuation of the trend, or do we maintain our optimism and stay the course?

Now that we are moving out of 1Q10, I surveyed the numerous research, market and financial analysts as well as the major company forecasts.  These data show that semiconductor growth trends are holding despite the fact that there continue to be undercurrents of concern in global unemployment levels, GDP questions, continued housing slumps, and individual countries' budgetary, monetary and fiscal problems (e.g., Greece, potential Chinese bubble, US employment and various credit problems remaining).  See the following for some of the publically available sources consulted: EETimes here, here and here, DigiTimes 2/25/2010, 3/8/2010, 3/10/201, and 3/19/2009, iSuppli here, here and here, and at, here; other sources were used but are not publically available.

Chip demand and electronics purchases are also holding and seemed to have been steady during the past couple of quarters, especially important as we exit holiday months.  The lean inventory throughout the electronics supply chain reinforces that the growth numbers are based on real demand and needs based on pent up fab equipment requirements due to past CAPEX cuts, increased IC demands across many sectors (especially memory, both DRAM and NAND), and improving corporate demands, along with continued consumer purchasing holding at modest but positive levels.

All in all, the forecasts for growth during 2010 and 2011 are based on solid, valid foundations, rooted in well grounded data, trends and multiple data sources from macro- and micro-economic and market data sets.  There are other problems and dips and upswings ahead based on geo-economic shifts occurring but overall, the course is valid (see MarketWatch Quarterly's ongoing series for more economic details; the Americas is the next geo-economic region to be covered in the upcoming Quarterly, due out next month!).

Lisa Ann Cairns, Ph.D.
Written on Wednesday, 24 March 2010 10:01 by Lisa Ann Cairns, Ph.D.

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