The global IC market forecast has been revised down from one percent growth to negative one percent, according to IC Insight’s October update to The McClean Report. The market researcher attributes the weaker IC market outlook to a slowing China economy, strong U.S. dollar, and falling DRAM average selling prices (ASPs). However, IC Insights is forecasting mid-single digit growth for 2016.
IC Insights is not the only market researcher to lower its semiconductor forecast for this year. Gartner recently lowered its forecast of 2.2 percent growth in 2015 to a decline of 0.8 percent. The market researcher attributed it to weakness in several electronic sectors.
The significant strengthening of the U.S. dollar versus most of the major currencies this year is expected to deflate the 2015 worldwide IC market growth rate by at least three percentage points, said IC Insights. “This ‘deflation’ presents itself in the form of lower IC ASPs, which are forecast to register a steep five percent decline this year when reported in U.S. dollars.”
The year started out very strong with the January 2015/2014 IC market showing year-over-year growth of more than 10 percent. In fact the 1Q15 IC market ended up 6.5 percent higher than the previous year in the same quarter. IC Insights also reported similar year-over-year IC growth in the second quarter.
The market researcher started to see a change in June when the IC market was 3.1 percent lower than June 2014. The downturn continued into July and August with the same year-over-year trends.
However, the average second half versus first half of the year growth rate in the IC market since 1990 is 9.2 percent, said IC Insights. The market researcher is forecasting that the second half 2015 IC market will be down one percent as compared to the first half of 2015.
“If this occurs, it would be only the fifth time since 1990 that the second half of the year IC market was worse than the first half (the other years being 1996, 2001, 2008, and 2011),” said IC Insights. “This weak second half market has resulted in IC Insights lowering its full-year 2015 IC market forecast from one percent to negative one percent.”
But there is good news. IC Insights expects the worldwide IC market will grow in the mid-single digits in 2016 for several reasons as follows:
- The current excess IC inventory is forecast to be under control by early next year.
- Worldwide GDP growth in 2016 is expected to show some improvement as compared to 2015.
- The U.S. dollar is unlikely to show nearly as much strength against the major foreign currencies next year as it did this year.