What is the cause of the global IC market slowdown ahead of schedule

Analysis of from market research company Semico Research CEO Jim Feldhan, Semico has lower forecast for 2006 and 2007 IC market. Semico, the market research firm, predicts that the IC market will slow down in 2007 - a year earlier than previously forecast, after the latest Semico inflection point index (IPI) was announced.

Is the latest data, IPI has been three consecutive months of decline. Three months ago, IPI's forward-looking indicators indicate that the industry inflection point will appear in January 2007, which will be the beginning of the next slowdown." Feldhan said, Semico predicts 2007 semiconductor industry growth rate will drop to 3.4%." So, what factors led to the current semiconductor industry growth prospects change?

2006 capital expenditure will increase by 20%. That's more than 12.5% of Semico's forecast in January 2006, but was thought to be too optimistic. These devices will be put into production in the second half of and in 2007. The result would be a decline in capacity utilization, which would lead to a decline in semiconductor prices if consumer spending was taken into account.

2006 crude oil prices continued to rise to a record high, close to $80 a barrel. Strong demand for crude oil prices and geopolitical uncertainties and other factors still exist. High crude oil prices, dragged down retail sales.

The deterioration of the political situation of the world. North Korea fired seven missiles at the beginning of July, issued a challenge to the United States, France and japan. The continuing unrest in the Middle East, may require more troops, exacerbated by political uncertainty, leading to a decline in the stock market.

Consumer loan growth slowed. This is one of the consequences of rising gasoline prices, because of rising gasoline prices prompted consumers to tighten other spending. In addition, interest rates continue to rise, has now reached the highest level in more than five years.

The growth rate of economy is slowing, because companies are facing the same energy prices and rising interest rates, leading to business owners to hire less hand.

Although 2007 IC market growth may slow, but in 2006 the situation is not bad." Feldhan said, the mobile phone market sales situation will remain strong, the demand for notebook computers is also very stable, and the transition to the three in one service and digital home is driving the growth of various terminal products. The market situation is very good, but the average sales price fell sharply recently, prompting us to revise the overall semiconductor sales forecast in 2006 to $250 billion 700 million, an increase of 11% over 2005.

The good news is in the Intel Developer Forum launched a new generation of multi-core microprocessor based on Core series microcontroller architecture. According to introduction, the series chips will be manufactured using 65 nm and 300mm wafers. Intel's products are geared towards all computing systems - servers, workstations, desktop computers and laptops.

System using these new microprocessors will be in the third quarter of 2006 earlier shipment. This increases the likelihood of starting a new round of upgrades. For the expansion of the market, consumers are still new opportunities for rapid growth.