We believe 2008 growth will be in the same general range as 2007. We are projecting 2008 connector growth at +7.5% versus 2007 growth of +6.6%. This will be the connector industry’s sixth consecutive year of growth.

The following table provides our 2008 forecast by geographic region of the world.

• World economies will remain strong, producing growth near current levels.
• There will be no U.S. recession. The housing downturn will bottom in mid 2008, and have minimal effect on consumer spending. Inflation will remain low and the Federal Reserve will hold interest rates steady throughout 2008.

World Economies Remain Strong

The consensus opinion of economists is no recession in any major consuming country in 2008. However, forecasts suggest slightly lower GDPs than those achieved in 2007.

The following table provides GDP by country, forecasting 2008 versus 2007.

In effect, economists are taking about a half point lower GDP growth in 2008.

However, the high and low ranges of GDP growth, for the major consuming countries, leaves room for the world economy to do better than the consensus average. For example, the U.S. high and low for GDP growth is 1.2 to 2.6%, Germany 1.9 to 2.4%, Great Britain 1.9 to 2.4%, and China 10.0 to 11.5%. So, it is possible that the consensus averages can be exceeded. It is our opinion that the U.S. economy will do better than expectations and the U.S. connector industry will not have two consecutive down years (connector sales declined in the U.S. -3.0% in 2007).

Semiconductors are Growing Again

The Semiconductor Industry Association (SIA) just reported September 2007 sales growth of +5.9%, and 3Q07 growth of +5.9%. This was the best quarterly increase in 2007. Their full year forecast has been raised to a growth of +3.8%.

Their outlook for 2008 is growth of +7.7%, 2009 +7.0% and +8.5% in 2010.

This is positive for connectors because semiconductor and connector fortunes rise and fall together. Generally the two components move in the same direction, at comparable levels and about the same time.

The following graphic shows this relationship.

In the following table, the SIA forecast is shown by year next to the connector industry forecast.

As information, our five-year CAGR of +7.4% growth for the connector industry exceeds the 25-year industry average growth of +6.5% per annum. This higher level of annual average growth is justified based on the increased use of electronic devices by the consuming public.

2008 Easy Comparisons

Throughout 2007 the connector industry was posting results against exceptionally strong demand for connectors in 2006. That is no longer the case. Throughout 2008, we will report against 2007 bookings that were in the low single digits. This is clearly shown in the following table.

In our opinion, the easier comparisons are worth at least a half point, on the upside, in GDP growth. Assuming no U.S. recession, the industry should be able to best the 2007 performance.

Bishop & Associates, Inc. publishes the Connector Industry Forecast twice a year. The eight chapter report forecasts connector demand for years 2008, 2009, 2010, 2011 and 2012. Connectors are forecast by geographic region and market sector within region. An annual subscription includes both reports which will publish in May and November 2008.

New subscribers receive the just released November 2007 report, and the May and November 2008 updates.

For more information, go to www.connectorindustry.com; or, call 630-443-2702.