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IC market to rebound in second half of '09

Posted: 14 Apr 2009     Print Version  Bookmark and Share

Keywords:IC market  ASP  IC industry 

The IC market is expected to rebound in the second half of 2009 and will show double-digit growth in 2010 and 2011, according to research firm IC Insights, Inc. This is due to the pent-up electronic system demand and rising average selling prices (ASPs).

Chip industry revenue in 2011 will surpass 2007 totals, according to the firm's current forecast, which is more optimistic than many others in the space in recent months. Gartner Inc. said in February that it does not see chip revenue returning to 2008 levels until 2013.

IC Insights (Scottsdale, Ariz.) is currently forecasting that overall IC industry revenue will decline 17 per cent in 2009, followed by growth of 15 per cent in 2010 and 19 per cent in 2011. The projections are largely the same as the firm issued in January.

Bill McClean, president of IC Insights, told EE Times that his firm has been predicting double-digit growth for 2010 and 2011 for some time. A severe decrease in chip industry capital spending—the firm is now projecting it will decrease 39 per cent in 2009—will result in a rapid increase in ASPs when demand begins to recover, he said.

"These supply issues are going to start turning the other way," McClean said. "When we see some seasonal strength in things like cell phones and consumer devices at the end of the year, I think people are going to be surprised about how quickly the market turns."

McClean said DRAM vendors are planning to spend, in total, Rs.19,887.68 crore ($4 billion) to Rs.24,859.60 crore ($5 billion) on capex in 2009, and the four leading foundries are planning to spend about Rs.9,943.84 crore ($2 billion) in total, both dramatic decreases from recent years. The result will be increases in average selling prices that have already begun, he said, adding that 2008 was the first year since 2004 that foundries showed increases in revenue per wafer.

"IC suppliers, I think there main focus is to get better pricing," McClean said. "These capex cutbacks are really going to force the issue."

Any surge in leading-edge IC unit demand could very quickly push 300-mm fab utilisation rates to 90 per cent or beyond, with an increase in ASPs trailing closely behind, IC Insights said. While first quarter utilisation rates for 200-mm facilities hovered at only about 50 per cent, 300-mm fab utilisation rates for the first quarter ran at a fairly healthy 80 per cent, the firm said.

A severe inventory burn in the first quarter of 2008 and first quarter of this year caused IC users to cut their order rates far below what is needed to sustain future electronic systems requirements, according to IC Insights. With IC inventory adjustments expected to be finished in the first half of the year, unit demand for ICs is expected to accelerate in the second half, the firm said.


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