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September 18, 2012


Long-Term Forecast Improves for IC Market

Amid economic uncertainty and technology challenges, average selling prices seen trending up.

The market for integrated circuits is forecast to post much stronger average annual growth through 2021 compared to the average market growth over the past 15 years, according to an analysis recently completed by IC Insights. Though IC unit growth is expected to slow, the IC average selling price (ASP) is expected to jump into the positive range, and help boost average annual IC market growth to 8.0% per year from 2011-2021, an increase of 54% compared to the 5.2% annual growth the IC market averaged in the period between 1996 and 2011 (Figure 1).

Figure 1

Clearly, there are significant obstacles facing the industry including troubled global economies and numerous technology hurdles to improve the manufacturing process, yet IC Insights believes that IC market growth will improve despite these and other challenges.

As shown in the figure, IC unit shipments have been the foundation for growth in the IC industry over the past 15 years, averaging 9.5% growth per year.  Over the next 10 years, the average annual growth rate for IC units is forecast to slow to 7.0% per year as lackluster global GDP cools demand for electronic systems and integration results in more functions on a single chip.

However, offsetting slower unit growth is a big upward swing in the IC average selling price, which is forecast to be the driver for the increasing IC market through 2021.  IC average selling prices declined an average of 4.0% annually from 1996-2011.  However, through 2021, IC ASPs are forecast to increase by an average of 1.0% per year, resulting in an 8.0% average IC market growth rate from 2011-2021.

Improving IC ASPs can be attributed to several factors including:

•With no new entry-point opportunities, the IC industry is now closed to new major manufacturing startups. This will help moderate over-investment in new fabs.

Fab-lite foundry movement.  This should lead to less overspending for IC fabrication capacity.

Capex as a percent of sales.  After reaching 21% in 2011, the ratio is forecast to decline to 19% in 2012 and to 15% by the end of the decade.

Delays in moving production to 450mm.  Will delay the next cost reduction phase for IC manufacturing (14nm, EUV, 3-D transistor structure, etc.).

As a result of these and other industry trends, long-term IC ASPs are forecast to stabilize and lead to IC market growth of 8.0% annually through 2021.

Report Details:

The 2012 McClean Report

IC Insights’ 200+ page Mid-Year Update to the 2012 edition of The McClean Report refreshes the outlook for IC markets through 2016 and examines important new trends impacting the semiconductor industry this year.  In addition to the Mid-Year Update, a subscription to The 2012 McClean Report also comes with monthly updates for the year (March-November) as well as three subscriber-only webcasts.  An individual-user subscription to the 2012 edition of The McClean Report is priced at $3,290 and includes an Internet access password.  The subscription is also available under a multi-user worldwide corporate license for $6,290.

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