JANUARY 9, 2006 BULLETIN
China Became the World's Largest IC Market in 2005
Figure 1 shows that total semiconductor industry capital spending, similar to the IC market, has typically been unable to achieve a cyclical "soft landing." Moreover, because of the momentum in semiconductor capital spending and capacity that is carried into the first and second years after the peak, capital spending in the second year after the peak is also usually weak.
Semiconductor industry capital spending is forecast to increase 5% in 2006 according to IC Insights' 2006 edition of The McClean Report. In 2004, semiconductor capital spending increased 55% and represented the peak-spending growth year in the current cycle. Although 2006 semiconductor industry capital spending is expected to increase only 5%, it would still be the highest growth rate in the second year after the cyclical peak year of any of the cycles shown!
Although annual semiconductor industry capital spending was flat in 2005, the quarterly results were much less tame. After a 12% sequential increase in capital spending in 1Q05, 2Q05 spending registered a very steep 19% drop. The two final quarters of 2005 displayed less volatility with a 5% decline in 3Q05 followed by a relatively flat 4Q05. However, this pattern resulted in a 4Q05 capital expenditure level that was 22% less than witnessed in 1Q05.
For 2006, quarterly capital expenditures are forecast to show steady growth throughout the year. IC Insights believes that total 2006 semiconductor industry capital expenditures will grow at a rate similar to the increase in the total 2006 semiconductor market (i.e., 5-15%).
Additional information on capital spending and IC market trends can be found in the 2006 edition of IC Insights' McClean Report. The report provides a complete analysis and forecast of the IC industry through 2010. Packed with 700 tables, graphs, and illustrations, The McClean Report is available in both a three-ring binder and on CD-ROM, costing $2,685 for the first set. Additional individual copies of the disk or binder sell for $495 each. A single CD-ROM or binder copy is available for $2,190. The report is also available under a multi-user corporate license for $5,490. Moreover, attendance to IC Insights' McClean Report seminars in January and February is free with purchase of the report.
About IC Insights
IC Insights, Inc., based in Scottsdale, Arizona, is dedicated to providing high-quality, cost-effective market research for the integrated circuit industry. Founded in 1997, IC Insights offers coverage of global economic trends, IC market forecasts, capital spending and fab capacity trends, product market details, and technology trends, as well as complete IC company profiles and evaluations of end-use applications driving demand for ICs.