Gazing into the crystal ball, it’s big business

Did the global semiconductor market hit a speed bump in the fourth quarter,

or did it simply get hit head-on by a semi-truck?

Neither of which the major high-tech market forecasters appear to have seen

coming. Now they are scrambling to revise their lofty 2001 market growth

projections for everything from personal computers to semiconductors. We should

neither be surprised at this, nor expect this to be the last time IDC, Dataquest

& Co. prove accurate in their forecast for the short term and while things

are moving pretty much along nicely in a straight line.

As late as November, semiconductor forecasts foresaw strong sales growth for

2001. Now, the market will be lucky to break even. It was the same story back in

September 1995 at Dataquest’s annual two-day semiconductor market overview

conference in Palm Springs. Unabated demand growth for DRAMs and microprocessors

was forecast, demand that was sure to take the IC market to $333 billion in

2000. And there was even talk of a trillion-dollar IC market by 2005.

That forecast blew up in Dataquest’s face less than 30 days later when the

industry hit a similar wall and DRAM prices dropped from $70 to $8 in a few

months time. Even after two years of strong growth the chip market is still only

at $165 billion.

Market forecasters, we should remember, are just that. And in many cases they

are doing market research projects on behalf of paying customers who want to see

nice growth to put into their presentation graphics. Market calamity forecasts

just don’t command the huge fees the market researchers charge for the number

they come up with.

So in most cases, market realities are largely ignored in forecasting until

after the market has already made a sharp U-turn.