Malcolm Penn (pictured) chief executive officer of Future Horizons, hereafter known as the Sage of Sevenoaks is bullish about this year's prospects to the point of forecasting 22 per cent growth in the world semiconductor market this year and admitting, "It's wrong, it will probably be more."
But before we get to this year let's take a look at how 2009 is expected to finish. "When we met here in January last year it was as if we were all in a lift descending fast and with no idea when it might stop," Penn remarked. Well February, surprisingly proved to be the basement month, and the climb back commenced in March. Penn got the pattern of growth right, he just underestimated the strength of the chip market's comeback. The March turnround was earlier than he anticipated, and it limited the first quarter deficit against Q1 2008 to 15.9 per cent. From there the market took flight showing growth over the next three quarters so that the eventual 9.7 per cent reverse on the previous year could almost be hailed as a triumph.
What Penn describes as the Four Horsemen Impact, otherwise known as market dynamics are all coming into line, not so much a perfect storm as a perfect calm. The global economy is recovering, there is strong unit demand with no excess inventory in sight, fab capacity is tight due to an understandable reluctance to invest during the recent economic turmoil and average selling prices are in the early stages of recovery.
This year the growth trend will continue, and only another Lehman Bros type event can derail this progress. So Malcolm Penn's initial 22 per cent forecast is looking conservative. "If you ask me now I'll say 24 per cent growth this year, it could be 30 per cent plus."
Next year will continue the climb, and Penn is going with 28 per cent growth in 2011, which will be the peak of this cyclical boom, for 2012 he predicts 18 per cent growth as the correction sets in, and 2013's three per cent growth will see the market correction in full flow and presaging a return to double digit growth in 2014. Penn actually thinks we could see a return to the halcyon days of 14 per cent CAGR for the global semiconductor market, and he is worth listening too. His 45 years in the industry means he has experienced every chip cycle bar one.
What he does find baffling is the dislocation between the reality of this growing market and confidence in the industry. "Nobody is saying 'Blimey, the market is really growing' "says a bemused Penn. He is concerned this lack of confidence could lead to missed opportunities.
Tomorrow: A look at the European chip market and some of the applications driving the renewed growth.
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