Malcolm Penn, founder and principal analyst with Future Horizons is feeling more optimistic about the future of the global chip industry in 2010.

He previously thought it would grow 31 per cent. Now he thinks it will grow by 36 per cent. Next year will not be so good. Penn dropped his prediction for 2011 to 14 percent from 28 percent. Penn said the change was the result of recalibrating the speed of the recovery from the chip market pause caused by the financial crisis of 2008.

The recovery in electronic and semiconductor sales had been steeper than expected. The fact that 2010 is higher automatically makes the percentage increase in 2011 lower, he said. Speaking at a mid-year semiconductor market forecast organised by his company Future Horizons Penn said that it was a three-quarter pause, not a boom-bust recession.

He criticised the majority of chip company CEOs for misreading the situation as a classical chip industry bust and allowing that prognosis to inform their risk aversion. "The industry did an appallingly lousy job of managing the experience; too quick to cut back and too slow to resume spending," said Penn.