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Background
• Forecasting Semiconductors: A Demand-Driven Approach
– The Econometric Semiconductor Forecast Service uses a rigorous
state of the art econometric model system to link global GDP
macroeconomic forecasts to semiconductors. We believe we are the first to
provide forecasts at a quarterly frequency with monthly updates, allowing
forecast recipients to plan for short-term fluctuations in the volatile
semiconductor industry.
– The Econometric Semiconductor Forecasting Service uses a proven
econometric forecasting process that incorporates measures of economic
uncertainty, global economic shocks, and regional volatility to develop a
Silicon area forecast for the global semiconductor industry.
– Demand-driven equation to forecast of MSI reported by SEMI based on:
• Global real GDP growth (from Consensus Forecasts)
• US final demand for technology goods (consumer & business), policy
indicators, and inventory-shipments ratio, computers
• Financial crisis shock indicator to capture panic behavior in latest cycle
• The model captures >96% of the long run variation in semiconductors
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Benefits
• Real time data analysis ensures latest trends are incorporated into forecasts
• Basing the forecast on Consensus Forecasts provides an outlook of the
forecasting community’s consensus view of the global economy
• Forecasting conducted through a rigorous statistical process that relates the
semiconductor industry to what is happening in the global economy
• Industry knowledge leveraged to make informed adjustments to the model on
such emerging issues as sequestration
• Quarterly forecast, with monthly adjustments
• Detailed forecasts on the next four quarters and following two years
• Scheduled Webinars to explain the economics driving the forecast and the
implications for our subscribers
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Quarterly Semiconductor Model
• Attempts to look past the “noise” of monthly (and daily) data
– Major trends in final demand
– Cyclical factors
– Statistically significant seasonal factors
• Captures about 96% of the long run variation in semiconductors
• Two-Part (trend-cycle) demand-driven equation based on:
– Global real GDP growth
• History: IMF, 97% of world real economy (annual data, distributed to
quarters)
• Forecast: Consensus Forecasts, Hilltop Economics
– US:
• Final demand for technology goods (consumer & business)
• Policy indicators (Policy Uncertainty Index, short and long term interest rates)
• Inventory-shipments ratio, computers
– Global financial crisis shock indicator to capture panic behavior in latest cycle
• Possible future enhancement: www.policyuncertainty.com indexes of
economic policy uncertainty in Europe and Asia
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Another Below-trend Year for Global Growth
-4
-2
0
2
4
6
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
%Change
Forecast
Long-term Trend
World Real GDP Growth
Relative to 2012: slightly weaker in US; mild recession in Eurozone continues;
slightly stronger in Asia, with positive spillovers to other emerging economies
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2013 Global Outlook
• Another below-trend year of real GDP growth
– Weak in US, below 2012’s estimated real growth of 2.2%
– Mild recession in Eurozone continues
– Slightly stronger in Asia vs. 2012, with positive spillovers to Latin America
and commodity-producers
• Technology-goods spending rises a little as policy uncertainty recedes
– Investment, especially in productivity-related goods
– Consumers in emerging countries and, more modestly, in the US
• Assumes no major shocks or radical shifts in policy
– Europe and US remain “tight” with fiscal spending, “loose” with monetary
policy
– Major Asian economies (China and Japan, especially) stimulate with fiscal
policy and loosen monetary policy
– Economic uncertainty recedes in the second half of the year
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800
1,200
1,600
2,000
2,400
2,800
3,200
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV
2008 2009 2010 2011 2012 2013 2014 2015
Q1 2013 Forecast
Q4 2012 Forecast
History (Through 2012Q4)
SemiconductorMSI(Semi)
Q1 2013 vs. Q4 2012 Forecast:
2012 actual Q4: 2162, -9.5%
Forecast Q4: 2197, -8.0%
Forecast error: +1.6%
Slightly weaker in the first half of 2013, slightly stronger beginning in the second half
of 2013, and healthy growth in 2014 and 2015. (MSI from SEMI)
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Segment Growth Rates
-
2,000
4,000
6,000
8,000
10,000
2011 2012 2013 F
MSI
Total Silicon Area, and Use by
Segment
Discrete
Analog
ASIC
MPU
Flash
DRAM
MSI
2011 2012 2013
DRAM 1,122 1,122 1,167
4% 0% 4%
Flash 1,294 1,437 1,666
14% 11% 16%
MPU 216 231 261
35% 7% 13%
ASIC 3,430 3,340 3,574
3% -3% 7%
Analog 1,076 1,043 970
0% -3% -7%
Discrete 760 722 678
-4% -5% -6%
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Reporting Schedule
• The Econometric Semiconductor Forecast Service has two key deliverables
released on a periodic basis:
– Quarterly Forecasts - will be published 4 times a year (in
February, May, August, November) with corresponding webinars
– Monthly Updates - which will be published 8 times per year, in the
remaining months.
• The Publication Schedule for 2013:
Release date Output
4th week of January 2013 January 2013 Monthly Update
7 March 2013 1Q 2013 Quarterly Forecast (webinar)
4th week of March 2013 March 2013 Monthly Update
4th week of April 2013 April 2013 Monthly Update
4th week of May 2013 2Q 2013 Quarterly Forecast (includes webinar)
4th week of June 2013 June 2013 Monthly Update
4th week of July 2013 July 2013 Monthly Update
4th week of August 2013 3Q 2013 Quarterly Forecast (includes webinar)
4th week of September 2013 September 2013 Monthly Update
4th week of October 2013 October 2013 Monthly Update
4th week of November 2013 4Q 2013 Quarterly Forecast (includes webinar)
4th week of December 2013 November 2013 Monthly Update
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Next Steps
• Fees & Terms
– Cost of the service is $2,900 for a 12 month single user subscription.
• Single user subscribers will be allowed to use the material but not
forward the forecasts nor have others from their firms sit in on our
webinars.
– An enterprise wide subscription is $11,500 for 12 months.
• Enterprise subscribers will not have restrictions on internal company-
wide distribution of the newsletters and can have multiple people sit in
on webinars from their company.
• To Purchase the Service, Please Contact:
Mike Corbett
mcorbett@linx-consulting.com
Office: +1 973 437 4517
Cell: +1 973 698 2331
Mark Thirsk
mthirsk@linx-consulting.com
Office: +1 617 273 8837
Cell: +1 774 245 0959
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Who We Are
Linx Consulting LLC
• Linx Consulting LLC offers electronic materials consulting services within the
semiconductor, display, compound semiconductor, energy, and nanotechnology segments.
Drawing on many years of experience in development, marketing, and consulting Linx
Consulting LLC offers unparalleled expertise and capabilities for driving strategic and
tactical data generation and decision making for users, specifiers, and suppliers of electronic
materials.
Hilltop Economics LLC
• DUNCAN H. MELDRUM, PhD, Chief Economist, is a business economist with extensive
experience in the application of economics to forecasting and analysis problems. He is a
frequent presenter on economic and industry outlooks at major industry events and
professional meetings.
• Meldrum spent thirty years at Air Products and Chemicals, Inc., where as the chief
economist he advised the executive team and provided direct support to the operating
groups. After retiring from Air Products, he spent two and a half years directing the IHS
Global Insight Center for Forecasting and Modeling, a group that conducted research on
forecasting methods and managed the EViews econometric software business. Meldrum
established Hilltop Economics LLC after leaving IHS to focus on specialized research,
consulting and forecasting projects.
