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Future Horizons reflects on semiconductor growth in 2007 and predicts

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Semiconductor analyst house Future Horizons has summarised what it describes as a disappointing year for the semiconductor industry in 2007 and gave its predictions for a more respectable 2008.
The first 2007 half-year IC sales were down 6% in value on the second half of 2006. With recovery only starting at the beginning of Q3, overall growth for 2007 is expected to be 5-6%. Head analyst at Future Horizons, Malcolm Penn summed up the year. "It was a disastrous start to 2007 but thankfully the market fell in line with normal seasonal patterns by the start of the third quarter." Penncontinued, "Unfortunately, it has been a case of too little too late, hence our overall growth expectation for the year now in the disappointing 5-6% range. "2007 is now the third consecutive year of single digit growth following the last boom years of 2003 and 2004 when the industry grew an impressive 18.3% and 28% respectively. According to Future Horizons, the reason for this year's low growth was declining ASPs, given unit growth for the year is expected to end up at a respectable 12%. Whilst this was lower that 2006's 18.1% number, it was more sustainable and in line with the industry's 10% long-term average, especially given the current above-average global GDP growth. Commenting on this year's figures, Penn said. "On the face of it, this represents quite a dramatic industry slowdown, but the silver lining is the fact that the underlying causes were structural market correctionsand not a full-blown semiconductor recession. This distinction is very important, because the industry can bounce back quite fast from a correction, whereas recovery from a recession is a much slower process. "Looking ahead to 2008, Future Horizons predicts that semiconductor market growth should recover to a respectable 12% level, based on a 10% unit growth and a modest 2% ASP recovery. Penn summed up to say, "The economists are not yet forecasting a global economic recession, and until they do, we are confident that 2008 will be a decidedly rosier year for the semiconductor industry."
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