A new semiconductor sales forecasting model has been developed to facilitate the determination of future global sales of the semiconductor industry. The Cowan LRA (Linear Regression Analysis) Model, which forecasts global semiconductor sales, is a mathematically based model that features statistical analysis of the past 24 years of historical, monthly global semiconductor sales numbers that are collected and published by the World Semiconductor Trade Statistics (WSTS) organization. It is a dynamic, mathematically pure view of near-term worldwide semiconductor sales looking forward over the next five quarters.

The model is devoid of economic assumptions or emotional biases. It exploits linear regression analysis operating on the "appropriately transformed" actual monthly semiconductor sales numbers, thereby "rendering" the global semiconductor sales data highly linear and, therefore, very amenable to linear regression statistical analysis techniques. The numerical transformation of the past 24 years of monthly actual sales numbers -- from 1984 through 2007 -- that is invoked is not a complicated mathematical expression but very straight forward and "makes sense physically," yielding extremely high linear regression correlation coefficients of 0.97 and greater. In exercising the forecasting model each month, a total of five distinct sets of linear regression parameters (of the format y=mx+b) are employed to calculate the resulting global semiconductor sales forecast estimates for each of the next five quarters associated with the model's forecast horizon.

It is emphasized that each month's actual global sales number released by WSTS is a "lagging indicator" because it is published a full month after the fact. The Cowan LRA Model, however, "turns" this lagging monthly sales result into a "leading indicator" by virtue of its near-term forecasting capability looking out over the next five quarters. This is the "beauty" of the model and, therefore, makes it dynamic in the sense that it can be run each month using the most recent actual global S/C sales number. Thus it can rigorously "track" the near-term sales forecast outlook of the global semiconductor industry on a real-time basis. Consequently, the model's monthly sales forecast does not "sit still" but evolves each month because conditions change rapidly and unexpectedly in the semiconductor industry, and market forecasts are hard pressed to keep up with these changes. How can industry management be sure that a forecast issued two, three or more months ago is still relevant to what's happening in today's market?

Mike Cowan, the developer of the Cowan LRA Model, is a 45-year semiconductor industry veteran. He has a 36-year career history at IBM's Microelectronics Division in East Fishkill, N.Y., where he was involved in many facets of semiconductor development and manufacturing engineering, including both technical and management responsibilities. Over his last ten years at IBM, as a senior technical staff member, he has been involved in strategy development and competitive analysis focused on the semiconductor industry, and has developed a number of top-down and bottom-up models to predict the dynamics of the semiconductor industry. After retiring from IBM in 2002 he became an independent semiconductor industry analyst and launched his monthly semiconductor forecast service. Cowan earned both BS and MS degrees in physics at Wayne State University in Michigan, and an MS in electrical engineering at Syracuse University in New York. For more information regarding the model or the results, please contact Mike directly at mikedcowan@verizon.net.

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