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Ten
Reasons Why IC Insights is Optimistic About the
2H99 IC Market
Scottsdale,
Arizona -- September 13, 1999 -- The following
are ten reasons why IC Insights is optimistic about
the IC industry for the remainder of 1999 and in
2000.
- Morgan
Stanley increased its Korean GDP forecast for
1999 to 8.6% from 4.8%. The Asia-Pacific region
recovery appears to have begun.
- Dell
Computer stated that following a recent survey
by the company of its major business computer
buyers, it does not expect a fourth-quarter
cutback on PC purchases. There appears to be
diminishing concern over the possibility of
severe computer purchase cutbacks in advance of
Y2K.
- U.S.
Department of Commerce data showed that July's
U.S. computer bookings (in dollars) surged 19%
compared to June. This was one of the biggest
one-month increases on record!
- NEC
Electronics announced that it would begin to
build up additional IC inventory to guard
against supply disruptions from Y2K effects.
This could signal the start of a significant IC
inventory build by electronic system
suppliers.
- Flash
memory maker SST announced that it expects very
strong 4Q99 financials based upon its customers
telling it they plan to build Y2K "buffer
inventory." Another sign of Y2K "IC inventory
mania" building.
- After
a slow 2Q99 IC market, July results were very
strong (e.g., the July 99/July 98 flash memory
market increased 100%). IC Insights believes
that the 3Q/2Q 1999 IC market could show a 10%
increase. If this occurs, it would be the
largest 3Q/2Q IC market increase in the
1990's!
- July's
worldwide IC market, expressed in U.S. dollars,
used a 119¥ per dollar exchange rate for
the Japanese market. The average yen per dollar
exchange rate in August was 113 and on September
13, it slid to 106. Expect an August and
September surge in the Japanese IC market to
occur as these exchange rate fluctuations begin
to impact the market figures as reported in U.S.
dollars.
- As
mentioned in IC Insights' previous McClean
Report updates, 2Q99 was labeled the
"marketshare quarter" for the MPU and DRAM
suppliers. It is interesting to note that MPU
average selling price (ASP) went from $71.70 in
June of 1999 to $89.80 in July of 1999---a
one-month ASP increase of 25%! Amazing what
decreased competition can do to pricing!
- The
major IC foundries (e.g., TSMC, UMC, etc.) are
at 100% capacity utilization for their
0.35µ and finer processes. The FSA's
(Fabless Semiconductor Association) most recent
company member survey indicated a 50% 1999/1998
increase in wafer demand (up from a 41% increase
according to an earlier 1999 survey).
- Worldwide
MOS IC capacity utilization jumped from 85.9% in
1Q99 to 91.5% in 2Q99. MOS IC capacity
utilization in 2Q99 for ICs with feature sizes
of less than 0.4µ was 95%!
Even
after considering the recent events described
above, our forecast of 14 percent growth for the
1999 IC market still appears sound. However, we are
keeping close watch on the building momentum for IC
inventory accumulation as well as for additional IC
capacity shortfalls. Under the right circumstances,
these two factors alone are enough to trigger the
next IC industry "boom" period.
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 October 1997, IC Insights
offers coverage of global economic trends, the IC
market forecast, capital spending and fab capacity
trends, product market details, and technology
trends, as well as complete IC company profiles and
evaluations of emerging markets for ICs.
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