SARATOGA, CA – The average selling price for ICs is expected to resume growth in the first quarter of 2006, following a 15% decline from a high in January 2005 and a stagnation in August at $1.58. Advanced Forecasting Inc. predicts that the continued increase in sales of IC units will strengthen fab capacity utilization rates, driving ASPs upward, thus fueling a forecasted upswing in the semiconductor cycle in 2006.

Although the ASP decline since February strongly resembles that of the 2001 recession, AFI said, today’s situation is different and substantially more optimistic. “Overheating of IC revenues and IC units relative to their forecasted underlying demand is a non-issue, whereas in 2000 it was significant,” said Rosa Luis, director of marketing and sales.

The situation also differs from 2000 in which the forecasted growth rate of underlying demand sustained a decline while at the same time IC sales continued to soar, exacerbating the gap between the true demand and actual shipments.

“The current robustness of IC unit sales corroborates our forecast for fab utilization that showed growth into Q4 2005. As IC units continue to grow, fab utilization rates will increase until supply is constrained, forcing prices upward,” said Luis.

“Fab capacity utilization has been an accurate measure of the health of the semiconductor industry. Fab capacity stood at 1.44 million wafers per week (8” equivalent) and its utilization reached 89% in Q2 2005, up from an 86% minimum point in Q1 2005, in line with our forecast,” said Luis.

In comparison, foundries were operating at 83% utilization in September, significantly lower than the 99% level of a year ago, and partially due to the increased foundry capacity of 35% during the last year.

State-of the-art (300mm) fab capacity doubled since Q1-04 to 100K wafers per week. Its utilization hovered around 91% in Q2-05, slightly below the previous quarter’s level of 93%.

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