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Cowan LRA model: Time to “think about” June 2010 global semicon sales (and 2Q10 also)!

July 19, 2010

This is a continuation of my coverage of the fortunes of the global semiconductor industry. I would like to acknowledge and thank Mike Cowan, an independent semiconductor analyst and developer of the Cowan LRA model, who has provided me the latest numbers.

Mike Cowan has shared with us an additional feature of the Cowan LRA Model for forecasting worldwide semi sales; namely, the capability to provide a “look ahead” scenario analysis for 2010’s global semi sales forecast update as a function of next month’s (in this case June’s) actual sales normally published by the WSTS (expected on Thursday, August 5, 2010).

The specifics of the scenario analysis are discussed in the following paragraphs and detailed in the tables.

In order to illustrate this capability, Cowan selected a possible range in June 2010 sales — in this particular scenario, a range from $24.29 billion to $29.79 billion in increments of $0.5 billion — as listed in the first column of the table included below.

This chosen range of actual sales is “centered around” the actual June sales forecast estimate of $28.291 billion as determined by last month’s May run of the model. The corresponding June 3MMA sales forecast estimate is $25.230 billion.

The overall year 2010 sales forecast estimate for each assumed, estimated sales number of the selected range of June actual sales is calculated by the model, and is shown in the second column of the table.

The third column reveals the resulting yr-o-yr sales growth estimates compared to year 2009 actual sales (of $226.3 billion).

Finally, the fourth and fifth columns show the corresponding 3MMA, three Month Moving Average, sales estimate and the associated yr-o-yr sales growth relative to June 2009’s 3MMA sales (of $17.483 billion), respectively.

Table I: Cowan LRA Model
Sources: Cowan LRA Global Semiconductor forecasting model and SIA/WSTS.

Sources: Cowan LRA Global Semiconductor forecasting model and SIA/WSTS.

Therefore, as the table reveals, depending on the actual WSTS to-be-released June 2010 global semiconductor sales number, the forecasted 2010 sales estimate, as determined by the model, could vary between $296.01 billion and $307.60 billion with the corresponding 2009=>2010 sales growth estimate varying between 30.8 percent and 35.9 percent, respectively.

Note: The previously published Cowan LRA Model’s 2010 sales forecast update, which was based upon May 2010’s actual sales (of $24.007 billion), came in at $304.70 billion corresponding to a sales growth forecast estimate of 34.6 percent as presented earlier (on July 9, 2010).

Therefore, using this analysis capability, the model allows a “sensitivity output” of the “expected” 2010 sales (and year-on-year forecasted sales growth) as a function of the yet-to-be-published actual June sales number.

Therefore, employing the table, one can a-priori “select” a June sales number (in the range shown) and immediately see what the model would predict for a 2010 sales forecast estimate along with its corresponding sales growth expectation in advance of the actual to-be-published final June sales result.

Stay tuned for the WSTS to publish (expected on August 5, 2010) their actual June 2010 sales number. One can then ascertain the model’s latest forecast outlook as abstracted (or extrapolated) from the attached table even before Cowan publishes his updated monthly numbers.

PS: Relative to the possible 2Q10 sales estimate result, Mike Cowan has put together the following look-ahead table that summarizes the corresponding 2Q10 sales estimate for each of the a-priori selected June sales estimates.

Table 2
Source: Cowan LRA global semiconductor forecasting model.

Source: Cowan LRA global semiconductor forecasting model.

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