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IC Insights Lowers Its 2001 IC Market and Capital Spending Forecasts to Under 10%

McClean Report 2001 to Detail Anticipated Start of Cyclical Slowdown

Scottsdale, Arizona — December 7, 2000 — IC Insights believes that the start of the sixth cyclical slowdown since 1970 will begin in the IC industry in 2001. Over the past 30 years, the IC industry has encountered six boom-bust cycles. The downturn portion of an IC industry cycle is usually triggered by global economic recession, IC industry overcapacity, or IC inventory corrections. In 2001, IC Insights believes that the IC industry will be affected by all three "triggers."

Although the IC market is forecast to grow 35 percent and capital spending 79 percent in 2000, IC Insights believes that the stage is set for the next slowdown. The reasons for this expected slowdown are shown below.

Economic Conditions — Worldwide GDP is forecast to slow from 4.8 percent growth in 2000 to 3.5 percent or less in 2001. Although not a worldwide recession, the reduction in growth will negatively impact electronic system sales in 2001.

Overcapacity — Worldwide MOS IC wafer capacity is likely to increase 24 percent in 2000. This surge is greater than the 21 percent increase registered in the "boom-year" of 1995! The main cause of this capacity surge was a 79 percent increase in capital spending by IC suppliers in 2000. IC Insights forecasts that worldwide IC capital spending will increase by less than 10 percent in 2001.

Inventory Correction — Many electronic system producers accumulated excess IC inventory throughout 2000. The IC inventory adjustment period is expected to last though the first half of 2001. Inventory corrections and overcapacity usually lead to IC pricing weakness.

Summary — Although a cyclical IC industry slowdown is anticipated to begin in 2001, IC Insights believes that it will be short-lived. After modest growth in 2001 and 2002, IC Insights expects the IC market to increase 20 percent or more beginning in 2003. Further details of IC Insights’ forecasts will be included in The McClean Report — 2001 Edition, due for release in January 2001.

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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