Market research institutions have revised down their 2008 global semiconductor industry growth forecasts due to the unexpected impact of the subprime mortgage crisis and the US economic slowdown on consumer demand. In early March, Gartner lowered its 2008 forecast from 6.2% to 3.4%. iSuppli is also expected to adjust its previous forecast soon, but has not yet specified the new growth rate. In-stat predicts the global market growth rate will decline to around 2.4% in 2008. However, the frequent adjustments in predictions by research institutions within a year mean that these growth rates do not fully capture the situation.

The decline in consumer demand due to the US economic slowdown is real, but its duration and actual impact are currently uncertain. We believe that the primary obstacles to growth in the global semiconductor market come from within the industry, specifically the drop in flash memory prices and excess capacity. Despite lowering the 2008 growth rate, the forecasts for 2009 and 2010 remain optimistic, with growth expected to rebound to around 10%, indicating that the foundation for growth in the semiconductor industry remains strong.

According to SIA, the global semiconductor industry achieved sales of $21.48 billion in January 2008, a year-over-year increase of only 0.03%, but the growth rate rose to 1.5% in February. SIA explained that the rapid growth in the global semiconductor market has been obscured by the sharp decline in NAND prices. Excluding the NAND market, Other semiconductor sectors have maintained annual growth rates of over 10%, with high consumer demand outside the US, including in Europe.

For the 2008 global semiconductor market, we anticipate a trend of starting low and finishing strong, based on the following reasons:

1. Rising Book-to-Bill Ratio (BB Value) for North American Semiconductor Equipment: The BB ratio continued to climb, with the bottom appearing in September 2007, followed by a significant increase in orders in December. As a leading indicator of the semiconductor market, this suggests positive developments.

2. Declining Excess Inventory: Recent data shows that global semiconductor market overstock is decreasing. With excess inventory under control, the market's supply-demand balance is expected to stabilize.

3. Stabilizing NAND Prices: The downward trend in NAND prices is unlikely to persist long-term, as manufacturers must consider their costs. Once NAND prices stabilize, the high growth rates in other markets will positively impact the overall semiconductor market.

In summary, while short-term challenges exist due to the US economic slowdown and internal market pressures, the medium-term outlook for the semiconductor industry remains positive. The industry's foundation for growth appears robust, and a recovery in growth rates is expected in the coming years.