Demand forecast of semiconductor products based on technology diffusion

Demand forecast plays a critical role to determine capital investment for capacity planning. Given the involved uncertainties and long lead-time for capacity expansion, semiconductor companies have to predict future demands as a basis for related manufacturing strategic decisions. As semiconductor products in a consumer era become more diversified with shortening life cycle, demand forecast also becomes more complex and difficult. This study aims to develop a demand forecast model based on product life cycle and technology diffusion. While little research has been done to employ diffusion models to forecast the demands of semiconductor products. The proposed model modifies a multi-generation diffusion model incorporating marketing variables into the model for semiconductor product and uses nonlinear least square method to estimate the parameters. An empirical study is conducted to validate the proposed model with real data of semiconductor products. This research concludes with discussion on future research directions.