IC Insights Lowers Its 2016 Semiconductor Market Forecast to -1%
July 8, 2016 | IC InsightsEstimated reading time: 2 minutes
The health of the semiconductor industry is increasingly tied to the health of the worldwide economy. Rarely can there be strong semiconductor market growth without at least “good” worldwide economic growth to support it. Consequently, IC Insights expects annual global semiconductor market growth rates to continue to closely track the performance of worldwide GDP growth. In its upcoming Mid-Year Update to The McClean Report 2016 (to be released at the end of July), IC Insights forecasts 2016 global GDP growth of only 2.3%, which is below the 2.5% level that is considered to be the global recession threshold.
In many areas of the world, local economies have slowed. China, which is the leading market for personal computers, digital TVs, smartphones, new commercial aircraft, and automobiles, is forecast to continue to lose economic momentum in 2016. Its GDP is forecast to increase 6.6% this year, which continues a slide in that country’s annual GDP growth rate that started in 2010 when growth rates exceeded 10%.
IC Insights believes that the worldwide economy will be negatively impacted, at least over the next year or two, by the Brexit vote this past June. At this point, since the U.K. is unlikely to officially be able to leave the European Union (EU) for a couple of years, the biggest negative effect on economic growth is the uncertainty of the entire situation. Some of the uncertainty created by the vote includes:
• Whether the U.K. will actually leave the EU. Since the Brexit vote is not legally binding, and still needs to be approved by the U.K. government, there is uncertainty if its departure from the EU will actually happen.
• Whether the U.K. will come apart itself. There are rumblings about Scotland breaking away from being a part of the U.K. in order for it to remain as part of the EU.
• What trade deals will be made by the U.K. if it does leave the EU? As part of its exit from the EU, the U.K. will need to establish numerous new trade deals with the EU. There is tremendous uncertainty regarding whether these deals would have a positive or negative effect on the U.K. economy.
• Will other countries follow the U.K. and depart from the EU? Anxiety persists over whether the EU will fall apart as other countries attempt their own exit. Some countries mentioned as possibly following the U.K. out of the EU include the Netherlands (Nexit), France (Frexit), Italy, Austria, and Sweden (Swexit).
The other major “culprit” dragging down semiconductor industry growth this year is the very weak DRAM market. At $45.0 billion, the DRAM market was the largest single product category in the semiconductor industry in 2015. IC Insights forecasts that the DRAM market will register a 19% drop of $8.5 billion this year to $36.5 billion. The DRAM market alone is forecast to shave three percentage points off of total semiconductor market growth this year. Semiconductor market growth excluding DRAM is forecast to be +2%.
Most of the DRAM market decline expected for this year is due to a rapid decline in DRAM pricing over the past 18 months. For 2016, the average price for a DRAM device is forecast to drop to $2.55, a steep 16% decline as compared to 2015’s DRAM ASP of $3.03.
Suggested Items
Magnachip Celebrates the Grand Opening of Magnachip Technology Company in China
05/16/2024 | MagnachipMagnachip Semiconductor Corporation celebrated the opening ceremony of Magnachip Technology Company, Ltd. (MTC) yesterday at its headquarters located in Hefei, China. MTC is a subsidiary of Magnachip, established on December 20, 2023, to expand the Company’s display driver IC and power IC businesses in China.
Real Time with… IPC APEX EXPO 2024: Saki America's Inspection Solutions and Market Expansion
05/15/2024 | Real Time with...IPC APEX EXPOCraig Brown, GM of Saki America, speaks with Editor Marcy LaRont about Saki's comprehensive inspection solutions, metrology, quality control, and software integration. He also touches on the company's recent X-ray machine award, the 3Di-LS3 machine, and their growing presence in the US and Mexico markets.
Real Time with... IPC APEX EXPO 2024: Electra's Passion for Inkjet Solder Mask Technology
05/15/2024 | Real Time with...IPC APEX EXPODon Monn, national sales manager for Electra Polymers, discusses his transition to Electra and the benefits of inkjet solder mask technology. He emphasizes the significance of product passion and understanding customer issues. Don also outlines Electra's mission and expansion plans, and addresses the current state of the PCB market and the importance of education.
SiPearl: Partnership with Samsung Electronics for built-in HBM in Rhea
05/14/2024 | BUSINESS WIRESiPearl, the company building the high-performance low-power European microprocessor for HPC and AI inference, has signed a partnership with Samsung Electronics Co. Ltd., a world leader in advanced memory technology, to equip its Rhea series with Samsung’s advanced memory solution ideal for HPC and AI applications.
LPKF is Ready for Increasing Demand for Glass Substrates in the Semiconductor Industry
05/13/2024 | LPKFThe semiconductor industry is shifting towards glass to package the most advanced semiconductor chips. LPKF’s mature LIDE technology is enabling that transition into this new era from ramp-up to high volume manufacturing.