SIA Industry Forecast Optimistic, But With Reservations
The SIA's newest forecast predicts 2009 sales to reach $220B, down by 11.5% from 2008, but sees 2010 as topping $242B and 8.5% growth in 2011.
Alexander E. Braun, Senior Editor -- Semiconductor International, 11/6/2009
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George M. Scalise, outgoing president of the SIA. |
At its Annual Forecast and Awards event, the Semiconductor Industry Association's outgoing president, George Scalise, presented his organization's forecast for 2009 and 2011. Although cautious, the forecast reflects the improving economic environment in the United States and around the world, resulting in a brighter outlook than the SIA's June 2009 forecast.
"We now expect sales in 2009 to be about $220B, approximately 11.5% below 2008," Scalise said. "We project that there will be 10% growth, sequentially, in 2010, bringing us to $242B, followed by about 8.5% growth in 2011 topping out at $262B."
Scalise put the new forecast into perspective, saying, "The current cycle has been painful for all of us, but it is less severe than what it was for 2000-2001. During that period, sales declined by about 32% year-to-year, as opposed to 11% this time. This is largely because the semiconductor industry and its downstream customer base handled the situation very effectively; they really managed the downcycle, and as a result excess inventory will not be an issue that will hinder our recovery."
Scalise said one of the important advantages of the present upturn is that the industry is entering the current recovery cycle with a far better supply and demand balance, with some upside potential on billings. However, the SIA president issued a warning: "I put out this cautionary comment: that this current forecast is closely tied to the projections for continuing improvement in the world economy — clearly, that is a must."
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Torsten Slok, director of global economics for Deustche Bank Securities. |
Torsten Slok, director of global economics for the Deutsche Bank Securities (New York), was somewhat less optimistic, basing his projections on the continuing impact of the housing crisis on the U.S. economy. Although he expects the picture to improve in 2010, Slok said because of the shaky economy, this year the United States has fallen to second place — behind Switzerland — in the Global Competitiveness Index.
"There have been three overall factors that have affected U.S. competiveness recently," he said. "The first has been institutional. The business community has doubts about the government's ability to maintain arms-length relationships with the private sector, and is worried about the government's wasteful spending. There is increased concern related to the functioning of private institutions, with a measurable weakening of the assessment of auditing and reporting standards."
Slok said macroeconomic imbalances are responsible for the second factor, including rising fiscal deficits and the resulting burgeoning levels of public indebtedness. "The third is the weakening of the assessment of the financial market's sophistication, the loss of confidence in the soundness of banks fed by the recent bank failures and bailouts, which have made access to finance through various channels considerably more difficult."
Although the recovery appears sustainable, Slok said the long-term outlook is worrying. "There is great need for other nations to continue buying the enormous amount of debt that the U.S. government is generating. At present Asian countries, mostly China, are doing it, but should this stop the results would be serious."
John E. Kelly III, senior vice president and director of research at IBM, received the semiconductor industry's highest honor, the 2009 Robert N. Noyce Award, recognizing his outstanding contributions to the microelectronics industry.
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