Budapest, Hungary — Semiconductor market analysts are still under estimating how good a yeart 2006 could turn out to be according to Malcolm Penn, chairman and CEO of Future Horizons.

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Speaking at his company’s Annual International Electronics Forum, Penn was still confident that his forecast made in January of a growth in dollar sales of semiconductors topping 20% this year was realistic while unit sales would grow 12%. Other major analyst predictions are coming out showing an average growth of 8% with only one willing at present to break the 10% barrier.
Penn is bullish that a combination of an improvement of 4.9% in world GDP which the IMF upgraded from 4.3% last week, a rise in unit demand and a shortage of capacity, pushing prices up, will provide the catalyst for a good year. "All the evidence is strong and everything is in place - if it is not a strong year then the semiconductor industry does not deserve a strong year," says Penn.
No-one believes that the chip industry can bounce back says Penn and there is too much of the 'Ill see believe it when I see' attitude but by the time it becomes evident it will be too late too take advantage.
Penn say the recovery in the unit demand started last May while a recovery in the average selling price started in the third quarter of 2005. Last year is seen as a market correction not a recession with the second half coming on strong after a first half depressed by inventory purges. "Markets normally bounce back fast from a correction," according to Penn. While average selling prices (ASPs) have bottomed out, they take a time to recover, anything between 4 to 8 quarters after unit demand has improved