Analyst: Silicon demand predicted to increase 10% in 2014

According to the most recent Econometric Semiconductor Forecast (ESF) from Linx Consulting, silicon demand is set to increase nearly 10 per cent in this year. The forecast revealed that the strong momentum of Q1 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 3Q10, the ESF predicts silicon shipments will reach a new peak of 2598 MSI in Q3, 4.4 per cent 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 per cent, and a mean absolute percent error, of just 2.6 per cent.

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 per cent 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 and electronics; and financial crisis shock indicator to capture panic behaviour in latest cycle.