Strong second-quarter sequential growth along with improving supply chain visibility and semiconductor demand trends has prompted iSuppli Corporation. to upgrade its forecast of 2009 chip sales. iSuppli now predicts global chip sales will decline by 16.5% in 2009, compared to the publicly announced forecast previously of a 23% drop. In a forecast delivered to clients in early August, iSuppli had improved its 2009 growth forecast to a 17.6% decline.

"Lack of visibility from the end market and through the electronics supply chain was a major problem for semiconductor suppliers in the first quarter," said Dale Ford, Senior Vice President, Market Intelligence Services for iSuppli. "However, due to a stabilizing economic environment in the second quarter and improving supply chain visibility, semiconductor shipments rebounded as inventories were replenished and modest forward-looking purchases were made."

Third-quarter semiconductor sales are benefitting from improved market outlooks by major OEMs in key markets such as PCs and mobile handsets.

The global economy in the second quarter was boosted by worldwide economic stimulus efforts. Although the American Recovery and Reinvestment Act (ARRA) really didn't go into effect during the period, China's stimulus efforts spurred a massive increase in consumer purchasing in the country, benefitting worldwide economic conditions.

Uncharted Territory

While the outlook for the global semiconductor market may have gained some clarity, the industry appears to have entered uncharted territory when it comes to tracking sales trends.

"In the history of the semiconductor industry, the market has never had a cycle like this one," Ford said. "Semiconductor sales have always been subject to a cyclical growth pattern that sees a move from a low point, through one or more supply-chain balancing periods and then to an eventual peak in revenue. However, the most recent cycle, starting in February 2006, was robbed of its peak. Just as the industry had achieved a balanced supply chain and was starting to move toward a peak, the global economic crisis drove the industry down."