In a press conference today prior to Tuesday's ISS forecasting sessions, some analysts were more upbeat than others. For example, a veteran analyst with VLSI Research Inc. predicted that the worldwide IC market would grow by a healthy 20.6% in 2002 over revenues in 2001. Last year, the IC sales fell by staggering 31% from record revenues in 2000, according to VLSI Research.

Worldwide fab utilization rates are also expected to rebound in 2002, from about 75% today to 95% by year's end, said Risto Puhakka, who tracks the semiconductor equipment segment at San Jose-based VLSI Research. "We should see 95% by the fourth quarter of this year," Puhakka said, during the press briefing today.

The upturn in fab capacity utilization could provide a much-needed boost to the semiconductor equipment business, Puhakka said. "The recovery for equipment will be modest in the second half of 2002," he said.

Puhakka said VLSI Research currently estimates that chip assembly capacity worldwide is operating at 70% utilization. Test floors are running at 73% capacity and frontend wafer fabs at 75%, he said. "All of these manufacturing areas should cross the 95% point in the fourth quarter this year," he predicted.

In total, VLSI Research projects that the chip equipment market will decline 5% in 2002 from sales in 2001, which worldwide tool revenues plunged 37.6%.

But not all analysts were in agreement with VLSI Research's outlook. "They are looking for the market to skyrocket in 2002," said chip analyst Bill McClean, president of IC Insights Inc. of Scottsdale, Ariz. "We don't see it that way," added McClean in an interview with SBN after the press event.

McClean said he was a bit more conservative in terms of just how fast the business will recover. "I don't agree that fab utilization rates are going to be 90%," he said. "It's not going to be that kind of year."

He projected that worldwide fab utilization rates would rise from a current level of 60% to about 80-to-85% by the end of this year. IC Insights also projects the worldwide IC industry will grow by a modest 1% in 2002 over 2001. Last year, chip markets dropped 32%, according to IC Insights.

But believe it or not, there was some agreement among the industry analysts at the ISS press conference. "At the present time, we're seeing fab utilization rates of about 60%," said Klaus Dieter Rinnen, chief analyst and director of Dataquest Inc.'s semiconductor manufacturing group. "We will see that appreciate and reach 80% by the end of this year," added the San Jose-based analyst. Dataquest today released its newest forecast for semiconductor capital spending, predicting a 24% drop in 2002 (see today's story).

"Bear in mind going from below 60% utilization in the third quarter of 2001 to 80% utilization requires 30-to-33% increase demand for silicon run rates or minus the fabs existing the market due to cost cuts and attrition," Rinnen said.

And some analysts even agreed with perhaps the most controversial forecaster in the business today--Advanced Forecasting Inc., which claims to have been the world's only chip research house to have predicted the current downturn. "The recovery will be slow in 2002," said Moshe Handelsman, president of Advanced Forecasting based in Cupertino, Calif. "We don't expect the recovery to be a 'V' shape," he added.