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DECEMBER 14, 2006 BULLETIN

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Worldwide Semiconductor market to Reach $400 Billion in 2011

Semiconductor industry capital spending forecast to exceed $80 billion that year!

The worldwide semiconductor market is forecast to register a double-digit 2006-2011 average annual growth rate (CAGR) of 10.1% to reach $400 billion in 2011, according to IC Insights’ upcoming 2007 edition of The McClean Report, A Complete Analysis and Forecast of the Integrated Circuit Industry. IC Insights believes that this milestone will come only three years after the market exceeds $300 billion for the first time in 2008 (Figure 1).



Figure 1

As shown in Figure 1, the worldwide semiconductor market first exceeded $200 billion in the boom year of 2000 and $100 billion six years earlier in 1994. IC Insights expects that the semiconductor market will reach $247 billion this year, a 9% increase over 2005. From 1990, when the market first exceeded $50 billion, through 2006, the worldwide semiconductor industry registered a CAGR of 10.4%. This historical 16-year CAGR is only slightly higher than IC Insights’ 10.1% CAGR forecast for the 2006-2011 timeperiod.

To serve the fast-growing semiconductor market, semiconductor vendors must invest significant amounts of capital for new equipment (fabrication, assembly, test, etc.) and facilities. Figure 2 shows the milestone years for semiconductor industry capital spending beginning with 1989, the first year capital outlays exceeded $10 billion.

IC Insights expects that semiconductor industry capital spending will reach $53 billion in 2006, a 14% increase over 2005. The capital spending record ($60 billion), that still stands today, was set back in the boom year of 2000. As shown in Figure 2, IC Insights believes that semiconductor industry capital spending will exceed $80 billion in 2011. At this level, the capital spending as a percent of semiconductor sales ratio would be similar to the 2006 ratio of 21%.



Figure 2

The 2007 editions of IC Insights’ McClean Report (A Complete Analysis and Forecast of the Integrated Circuit Industry) and O-S-D (Optoelectronics, Sensors, and Discretes) Report are scheduled for release in January 2007. Together, the reports provide a complete study of the worldwide semiconductor (ICs and O-S-D devices) market. Packed with numerous tables and graphs, these reports will be available in three-ring binder, CD-ROM, and on-line formats.

About IC Insights

IC Insights, Inc., based in Scottsdale, Arizona, is dedicated to providing high-quality, cost-effective market research for the semiconductor industry. Founded in 1997, IC Insights offers coverage of global economic trends, semiconductor market forecasts, capital spending and fab capacity trends, product market details, and technology trends, as well as complete IC company profiles and evaluations of end-use applications driving demand for ICs.

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