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Econometric Semiconductor Forecast predicts 2014 will the best year for silicon demand growth since 2010

BOSTON, Mass., August 14, 2014 —Silicon demand is forecast to increase almost 10% in 2014, according to the latest Econometric Semiconductor Forecast (ESF) from Linx Consulting, the premier electronic materials consultant to the semiconductor industry.

The Econometric Semiconductor Forecast accurately predicted that the strong momentum of the first quarter would continue into Q2 to reach a new peak for the industry.  While Q2 silicon shipments exceeded the historical peak of 2489 MSI seen in Q3 2010, the ESF predicts silicon shipments will reach a new peak of 2598 MSI in the third quarter, 4.4% higher than the previous record.

Silicon growth has been driven by stronger business IT investment and steady consumer demand, making 2014 the best year for industry growth since 2010.  This growth is driving demand for many electronic chemicals and materials, resulting in strong financial performance for many suppliers.

After two years in operation, the ESF has an average one-quarter-ahead forecast error of 0.2%, and a mean absolute percent error, of just 2.6%.

The ESF is based on an advanced econometric forecasting model developed by Duncan Meldrum of Hilltop Economics in conjunction with Linx Consulting.  The model is based on a demand-driven equation that captures >98% of the long run variation in semiconductors and includes:

  • Global real GDP growth (from consensus forecasts)
  • US consumer and business spending on technology goods
  • Inventory-shipments ratio, computer & electronics
  • Financial crisis shock indicator to capture panic behavior in latest cycle

Linx Consulting is the leading electronic materials consulting firm, serving the semiconductor, photovoltaics, and electronics industries worldwide. The firm develops unique insights and creates knowledge at the intersection of advanced thin film processing and performance chemicals and materials.

Hilltop Economics LLC was founded by Duncan Meldrum, PhD, to focus on business economic research and forecasting projects.  Meldrum has over thirty years experience in the application of economics to forecasting and business analysis, first as the chief economist for Air Products and Chemicals, then as the director of the Center for Forecasting and Modeling at IHS Global Insight. His experience includes frequent presentations on economic conditions and industry outlooks for major semiconductor industry events and meetings.