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January 21, 2015

IC Market CAGR Rebounds But Growth Remains Below 30-Year Average

Strong mobile market, IoT not enough to spur stronger IC growth increases.

Figure 1 shows the IC market size at the beginning and end of each decade since the 1980s and the corresponding CAGR for each 10-year period.  IC Insights recognizes the importance of the endpoints chosen for each CAGR and how they can easily sway the data to look very good or simply mediocre.  For this figure, end points were selected based solely on the start and end of each decade.

 The 1980s were characterized by the relatively new but rapidly growing personal computer market and strong demand for computer memory like DRAM.  IC market CAGR was nearly 17% in the 1980s.

 In the 1990s, Intel and AMD battled in the microprocessor space to provide the greatest PC MPU horsepower. Meanwhile, Microsoft introduced new operating systems every two to three years and each upgrade required a big boost in DRAM to run the systems efficiently.  CAGR averaged 13.6%.

Figure 1

 The first decade of the new century was not kind on the IC market.  Things started great in 2000 with 35% IC market growth, but two global recessions—one in 2001 due to the dot.com bust and the other due to the severe financial meltdown in 2008 2009—resulted in the IC market showing a paltry 0.5% CAGR from 2000-2009.  Flat or falling IC ASPs later in the decade prevented the market from gaining any traction.  These setbacks started a trend of significant consolidation within the IC industry.

 Following the recession in 2009, the IC market rebounded with 33% growth in 2010.  Fewer suppliers and modest capital spending have had a positive impact on IC ASPs since then.  While demand for standard PCs (desktops and notebooks) has declined, the market for tablet computers and smartphones has surged. Sharing data on mobile/wireless devices and growing interest in the Internet of Things—connectivity to everything—will give a boost to IC market. Total IC market growth this decade is forecast to average 4.1% per year.

Over the past 30 years, the IC market has averaged 9% annual growth, but over the past 10 years, it has exceeded that 30-year average growth only one time (in 2010).  Annual IC market growth rates are forecast to remain at or below the 30-year average (9%) through 2019.

Additional details regarding IC Insights’ 2015-2019 IC industry market forecasts are provided in The 2015 McClean Report.

Report Details:  The 2015 McClean Report

The McClean Report—A Complete Analysis and Forecast of the Integrated Circuit Industry (released in January 2015) features more than 400 tables and graphs covering all aspects of the IC industry.  A subscription to The McClean Report includes free attendance to an upcoming McClean Report half-day seminar that will be held in the following locations:

 Sunnyvale, California on Thursday, January 22

 Boston, Massachusetts on Thursday, January 29

In addition to the seminar, a subscription to The McClean Report includes free monthly updates from March through November (including a 250+ page Mid-Year Update), and free access to subscriber-only webinars throughout the year.  An individual-user license to the 2015 edition of The McClean Report is priced at $3,590 and includes an Internet access password.  A multi-user worldwide corporate license is available for $6,590.

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