Raises Forecast to 2.0% as Inventory Levels Improve

Worldwide Semico: Worldwide semiconductor revenue shipments will increase 2.0% in 2005 to $217.3 billion, a slightly more positive outlook on the market than the previous forecast. An upward adjustment in the forecast was spurred by recent improvements in inventory levels, and Semico’s Inflection Point Indicator (IPI) pointing to strength in the fourth quarter. Semico’s IPI, which is designed to forecast the market 8 to 9 months in advance, registered 15.1 in April, down from 15.8 in March. The April IPI points to the December 2005 and January 2006 timeframe. Revenue shipments are expected to peak in November. Additional analysis indicates that although December is forecast to be weaker than November, revenue shipments will still be amongst the highest all year, resulting in fourth quarter growth. We remain cautious about pricing and inventory levels in the second and third quarters. April data showed a fairly significant softening in pricing, with aggregate ASPs falling 9.5%, from $0.53 to $0.48. As a result, we continue to forecast the second quarter to be weaker than the first quarter, with revenues declining just under 2%. Third quarter will mark the period in which OEMs and ODMs place orders to replenish inventory, but the bulk of these shipments will not occur until the fourth quarter. Semico forecasts a slight revenue dip of 1.1% in 3Q05, followed by positive growth of 2.1% in the fourth quarter. http://www.semico.com/press/press.asp?id=144 Publ 20050621