Logo


Home Page buttonAbout IC Insights buttonProducts and Services buttonIn The News buttonUpcoming Events buttonSupport and Guestbook buttonUseful Links button

  > Home / In The News / Press Releases / September Release

In The News



Press Releases button



















Address

       
 

SEPTEMBER 20, 2001 RELEASE

Release PDF Icon

 

IC Insights Optimistic about the Future of the Electronics and IC Industries

Scottsdale, Arizona — September 20, 2001 — IC Insights has received numerous calls from its clients and the press regarding our opinion on both the near-term and long-term future of the IC industry. Our expectations for the future of the electronics and IC industries begins with our assumptions of macro economic conditions. Shown below is an outline of our assumptions as we attempt to assess the current situation.

Near-Term World GDP: There is little doubt that the tragic events of September 11th have harmed the economies of many countries. Before the attack, 2001 worldwide GDP was likely to show about 2.4 percent growth, right on the edge of a worldwide recession. It now appears that the 2001 worldwide GDP growth rate will drop to 1.8-2.0 percent, fully within the range of a worldwide recession.

Long-Term World GDP: IC Insights believes that the worldwide economy may show strong growth in 2002, especially in the second half of the year. While the exact timing of a strong worldwide economic rebound is unclear, IC Insights believes that there is a good chance it will begin in mid-2002. Worldwide GDP could be expanding at a 4.0 percent or greater growth rate in the second half of 2002.

The U.S. Federal Reserve slashed interest rates by a half-point on September 17 (its eighth cut in 2001) and may cut interest rates further at its next meeting in early October. The European Union, U.K., and Japan also cut interest rates during the week of September 17. IC Insights believes that this coordinated financial stimulus put forth by so many economically important regions will lay the foundation for an economic rebound in 2002.

One result of the tragedy has been the denouncement by almost every country in the world (including North Korea, Cuba, Syria, and Pakistan) of the terrorist attacks. Thus, about 99 percent of the world’s countries have agreed on an issue. This alone could be an historical first. The long-term positive of so many politically diverse countries finding some "common ground" may be an increase in cross-border trade and business.

Near-Term Electronic System Sales: Prior to the attack, IC Insights forecast that 2001 worldwide electronic system sales would decline 4 percent. We now expect worldwide system sales to decline 6 percent in 2001. While there has been a surge in cellular phone sales in the U.S. since the attack, we believe that short-term sales increases in selected electronic system segments will not be enough to offset the overall economic weakness expected in the fourth quarter.

Long-Term Electronic System Sales: The future will depend heavily upon electronic systems. This was true before last week’s attack and it may be even more true now. There is likely to be a surge in electronic "security" systems such as smartcard identification, government/military surveillance equipment, fingerprint recognition, etc. There may also be a large increase in computer usage and information data storage from intelligence gathering operations. Teleconferencing may finally become more prevalent than it has been in the past. Cellular phones may now be considered as much a personal safety device as a telecommunications system, expanding its adoption rate throughout society. In total, the world will become increasingly dependent upon electronic systems.

Near-Term IC Sales: As mentioned in our September McClean Report Update, the worldwide IC market in 3Q01 is expected to decline by about 15 percent from 2Q01. Although the uncertainty of the worldwide economy is extremely high entering 4Q01, we have assumed the IC market in 4Q01 will be flat with 3Q01. Using these 3Q01 and 4Q01 assumptions, the annual worldwide IC market would register a 34 percent decline in 2001, to about $117 billion.

Long-Term IC Sales: As mentioned previously, IC Insights expects a significant rebound in worldwide economic growth and electronic system sales to begin in mid-2002. This in turn should fuel a surge in IC sales. IC Insights believes that sequential IC market growth in both 3Q02 and 4Q02 could be 10 percent or greater. It should be remembered that there will be no significant IC inventory overhang hindering growth next year. The range for 2002 IC industry growth is expected to be 10-20 percent. Presently, IC Insights’ forecast for a 14 percent increase in the 2002 IC market is still in place.

Summary

Governments worldwide are focused on implementing policies that will eventually spur economic growth in their regions. Such policies typically have a significant lag-time before results are evident. Moreover, there is no precise formula outlining how much economic stimulus is enough. Thus, IC Insights believes that the foundation is currently being laid that will create an environment in which worldwide economic growth is likely to significantly exceed current expectations within the next 12 months.

While many electronic system purchases may be delayed in 4Q01, the important point to be made is that they will be delayed, not abandoned. Many companies and consumers worldwide will begin to upgrade and purchase new electronic systems at some point during 2002. Historically, "pent-up" demand has always been a good precursor to strong cyclical upturns.

IC Insights believes that the future is very bright for electronic system sales and the IC market. Worldwide GDP growth, electronic system sales, and the IC market are each very cyclical in nature — the events of last week have not changed this.

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 emerging markets for ICs.

Go to top of page


About Us | Products & Services | In The News | Upcoming Events | Support & Guestbook | Useful Links

Copyright © 2002-2004 IC Insights, Inc. All rights reserved.

Site problems/comments: .