Can we believe SEMI’s 28 percent equipment forecast?

Dr. Robert Castellano, The Information Network, USA.

NEW TRIPOLI, USA" According to the SEMI World Fab Forecast report just released, spending on worldwide fab projects, including construction, facilities, and equipping, could grow by 22 percent over 2010 levels with fab equipment spending (new and used) to grow by 28 percent over 2010 levels. This latest projection is based on analyses of recently announced increases in capital spending plans, mainly by foundries and memory companies.

Can we believe capex numbers – NO

Capex is a moving target. Below are data points from IC Insights, presented from complied spending plans at the beginning of the year and at the end of the year. Any quantitative information NO. Yet, SEMI seems to think so.Source: The Information Network.

Can we forecast based on previous semiconductor sales – NO

The semiconductor market has been down except for last month and the trendline up since 2000, it would be a stretch of the imagination to forecast what direction the market will move this way (yet it is done!).Source: The Information Network, USA.

Can we forecast based on our Proprietary Leading Indicators – YES

In my humble opinion, there is no way an accurate forecast can be made from these databases, and I started The Information Network in 1985, so that’s 25 years of doing this stuff.Source: The Information Network.

The only tried and true way of discerning growth is to look at the economies of the world, create a database and model, and compare it to real historic data. We’ve done this and taken the guesswork out of it.

The chart below compares our Proprietary Leading Indicators (PLI) with semiconductor equipment billings (sales). Our data show correlation up to 6 months out, which correlates to an extremely accurate forecast for the Q1-Q3 2011 period.Source: The Information Network, USA.