Yes, 40%, Most Likely

What does your model say?

What does your model predict?

Even though this sounds like the start of a Carnac the Magnificent comedy act, these are some of the answers from my Probe Card Market model. I keep my model current so I know both industry and company specific performance as well as to make predictions. You don’t have a model? Are you reacting instead of predicting?

So here are the “questions” being answered:

Yes – There will be continued pressure to decrease the average selling price of probe cards. As long as Moore’s Law continues to drive the performance and cost reductions of integrated circuits, this will be the case.

40% – If management estimates hold true, the top three probe card companies – FormFactor, Micronics Japan Co (MJC), and Japan Electronic Materials (JEM) – will each report increased sales of approximately 40% for 2010. MicroProbe disclosed last week that their 2010 total sales was an astounding $60 M or 165% year over year (YOY) clearly putting them in fourth.

Overall market growth is likely to be closer to 40% than the 26% previously estimated by VLSI Research. Most industries would be overjoyed with 40% growth, however this growth comes on the tail of declines of 24% in 2008 and 29% in 2009. And the 40% growth did not translate directly to the bottom line for each of the companies. Stay tuned for the particulars: the public companies will shortly be announcing their results for the last quarter of 2010 starting on Tuesday with FormFactor’s results.

Most Likely – Based upon FormFactor’s recent warning about 2011 Q1 revenue and MJC’s growth estimates for 2011, MJC will pass FormFactor in total revenue this year. And as each company reports their results and guidance a clearer picture of 2011 will emerge.

Knowing how the market has changed and predicting how it will change is important. This needs to be a key element in your planning and executing to stay ahead of your competitors and improve your company’s financial performance. The most successful companies will change in advance of market changes.

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