Market research firm Semico Research Corp. said Tuesday that the worldwide semiconductor market is facing an impending slowdown, and 2003 could be yet another weak year.


A slowdown would come as an unwelcome surprise to those who believe that the semiconductor market is bumping along the bottom of the worst and most prolonged collapse in its 40-year history, but that sales revenues and average selling prices are slowly rising in 2003.

Semico was led to its bearish conclusion by a statistical instrument called the Semico Inflection Point Indicator (IPI) that the market researcher claims forecasts the market six to nine months in advance, and gauges the strength and stability of the industry. Semico said today that the IPI has been negative for three consecutive months, between December 2002 and February 2003, indicating instability in the industry.

Its accuracy certainly raises concern for the market, said Jim Feldhan, President of Semico, in a statement. As a result, we will continue to monitor the IPI closely, but it appears a downward revision of the overall forecast is in order,?he added.

Semico cited a lagging economy and the military action in Iraq as factors contributing to a downward trending IPI. Continued economic weakness, the lingering war and, most recently, fears from the potentially fatal flu-like SARS virus, have continued to inhibit the market. This has limited business travel, delayed purchasing decisions, and caused plant closures, all of which have curtailed the apparent signs of growth seen in early 2003, Semico said.

The Phoenix-based company said that if the IPI remains negative for a fourth consecutive month it would provide a clear indication of semiconductor weakness throughout 2003.

Research semiconductor shipments will mark a critical junction for the industry. While a four-month negative IPITM cannot be ignored, a positive March IPI would denote a key turning point, quelling the downward trend," said Feldhan, in the same statement. Semico did not give a date when it would publish the IPI for March 2003.

This story first appeared in SBN, a US-based CMP publication.

Thanks to SemiRim Limited submitted on April 17, 2003