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2011 IC growth forecast pegged at 8.9%

Posted: 07 Mar 2011     Print Version  Bookmark and Share

Keywords:IC market  DRAM prices  large-sized LCD panels  CMOS image sensors 

VLSI Research Inc. ups the growth rate forecast of the IC market to Rs.12.42 lakh crore ($270.7 billion) at an 8.9 per cent increase compared to its earlier projection of Rs.12.32 lakh crore ($268.7 billion) at an 8.1 per cent y-o-y growth in 2011.

Last year, the IC market grew 30.9 per cent, according to the firm. Meanwhile, there are mixed signals in the IC market. ''Order activity turned lower for the first time this year,'' according to VLSI, in a newsletter.

''It's driven largely by the weakness in the memory market, according to the firm. ''DRAM orders have fallen to low levels and they've yet to bottom. NAND flash is doing well and it's picked up some of the slack, though it has not been enough to offset the weakness in DRAM. The rebound of DRAM prices early in the year brought hopes that this market has turned the corner and that spending would pick up in the second half of the year. However, the recent slide of DRAM spot prices is troublesome, putting a big question mark for future spending plans,'' VLSI explained.

There is more bad news for DRAM. ''DRAM spot prices plunged for the second straight week despite rumours of supply disruptions. These rumours failed to drive prices higher because some DRAM manufacturers were releasing supply in the spot market. As a result, the earlier optimism among traders has turned into caution. NAND flash fared better than DRAM. Still, slow demand is a nagging issue for NAND and it's putting ASPs under pressure despite tight supply in the spot market,'' according to the firm.

NAND and other chips could get a boost, thanks to Apple Inc.'s iPad2 recent announcement. ''Regarding the iPad, our contacts see an improved iPad 2 production forecast for both 1Q11 and 2Q11. 1Q11 iPad production is now set at 55 lakh units, up from 51 lakh units previously, with iPad driving about 20 lakh units of that total (up from about 3,00,000 units previously),'' said Craig Berger, an analyst with FBR, in a report. ''For 2Q11, our contacts now see 72 lakh units of iPad production, with almost all of that production of iPad 2 devices, meaningfully ahead of the prior iPad 2 production ramp plans.''

But for the most part, there is a lull in the quarter. ''Regarding updated back-end assembly/test checks, we see stability in aggregate versus prior checks, with 1Q11 production set to seasonally fall about 6.5 per cent quarter-over-quarter, with slight positive production revisions by Broadcom, AMD, and Xilinx not fully offsetting production declines by Mediatek and Marvell,'' he said.


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