The global economy prospect does not look bright under the attack of the financial tsunami. The semiconductor industry, one of the most important industry of the world, has been harshly impacted as well. Based on the forecast by Topology Research Institute (TRI), the annual growth rate of semiconductor industry maybe 0% in 2009 and production value would be 266.9 billion US dollars as in 2008. From three major semiconductor indexes, the B/B value of northern American semiconductor equipment, IC industry stocking level and production capacity effeciency, researcher Ken Lee points out that the semiconductor industry will need one year at least to recover from the stagnated development of global economy caused by the financial crisis.

Overall, semiconductor industry will start the long way of recovery in 2010. Although the annual growth rate from 2010 to 2011 may be only single digit, but the production value will go up. After going out of the shadow of recession, the production value may break through 300 billion US dollars in 2011, and we will see the prosperity of semiconductor industry with double digits high growth rate in 2012.

North American Equipment B/B Value as Recovery Index

The trend of north American equipment B/B value is still slippery in year 2008. The major causes such as the supply over demand of memory industry, cut off capital spending of foundries, transition and reduction of the IC equipment procurement of IDM companies, and the deterating of global economy push the semi business becoming connservative. Due to the look down in early 2007 long before the financial storm arrival, the semiconductor industry has well prepared and made adjustment in advance. On the other hand, the adjustment period has undergone 18 months, the semiconductor equipment purchase orders will start to increase in second half of the year 2009 after another 2 to 3 seasons of adjustment from now. And the B/B value will be upturn, the semiconductor industry will revive then. Since the global economy developemnt is based on whether the semiconductor industry is recovered or not, so naturally speaking, the North American semiconductor equipment B/B value is the sign of the global economy recovery.

IC Stocking Waits for Consumption, Returning back to Safe Level in 2nd Half of 2009

Comparing the IC stock level between 2007 and 2008, TRI comments that the IC stock problem is not worse particullay but slower relatively meaning that the adjustment for the down turn of the semiconductor business in advance. This action can be sniffed from the northern American semiconductor equipment B/B vale trend and capital spending in 2008. But the deep economic recession from financial crisis and quick drop of market demand makes the companies hard to response quickly in time. The companies need more time to consume the stock. Ken Lee indicates that it took about one year to consumes the stock in year 2007, and it may need two year to finish consumption of the IC stock of the 2008 inventory. It is equivallent to say the safe stock level will be achieved until third or fourth quarter of 2009. The industry will be able to return to positive cycle after 2010.

Production Capability Efficiency Drops Quickly Waiting for Return to 85% in 2nd Half of 2009

Production capability efficiency is maintained at 90% before second quarter of 2008, and drop obviously since second half of the year. It was 85% in third quarter and only 70% in fourth quarter. Based on the estimate of the TRI, it could be on 60% in first quarter of 2009. This prompt industry behavior due to unclear future of the global economy and the head on impact of the financial crisis, and the freeze of global capital transfer. Under the rapidly freezing atomsphere, the semiconductor industry is affected as well. Every market behavior is depressed. Not only the current market demand goes down hill. The companies become precautious to future market demand or even neglet it. It is so that makes the prompt drop of the efficiency of the fourth quarter of 2008 and first quarter of 2009.

About the forecast of the semiconductor industry performance, Mr. Lee proposes the “cold in first half and hot in second half” view. The “cold in first half” means the first half year 2009 will follow the trend of year 2008, the development will reach the ravine. When it enter the second half of the year, the adjustment will come to an end gradually. Additional to the recovery of semiconductor industry in 2010, the industry will be more active in second half of 2009, that is the “hot in second half”. The TRI predicts the effiency will be back to 85% in second half of 2009 same as that of third quarter of 2008. Overall, the second half of 2009 is the key point to industry recovery, especially the third quarter performance will be the outpost of global semiconductor industry revival. And the fourth quarter of 2009 will have good performance with the lead of the upturn of the industry in year 2010.