Future Horizons has cut its semiconductor forecast for the year from the 11 per cent forecast it made in April to 6 per cent.

"There was a bad first quarter and the second quarter was not so good", Malcolm Penn, CEO of Future Horizons, told the Industry Forecast Seminar 2007 in London today. 

Q1 saw industry revenues contract 7 per cent and Q2 saw them shrink again by another 1 per cent. "Q1 gives no guidance to the year as a whole", said Penn.

A good sign for the second half is that capacity utilization is slowing down while unit demand is increasing. "Capacity expansion is measured", said Penn, "inventory is well controlled. Reactions to capacity and inventory changes are faster, and there's a strong end market for electronic consumer goods."

He pointed out that capacity increases now can't impact output for a year, so 2008 looks like being a good year.

The underlying world GDP growth, on which all this depends, is predicted to be strong  with the IMF forecasting 4.9 per cent growth for this year and next.

See also: David Manners' blog, Mannerisms - Chaos Theory For Semiconductor Forecasting