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Analysis: Effect of quake on semiconductor industry

Posted: 04 Apr 2011     Print Version  Bookmark and Share

Keywords:2011 worldwide GDP  2011 electronic system sales  global chip market value  IC supply chain issues 

IC Insights Inc. president, Bill McClean presents five predictions based on his analysis of the effects of the Japan quake on worldwide GDP, electronic system sales, and the worldwide semiconductor market.

1. GDP will fall
''Japan represented 7.5 per cent of worldwide GDP in 2010. Early estimates indicate that the earthquake and tsunami damage will cause Japan's GDP to decline by 1 to 3 per cent in 2011. IC Insights believes that the resulting supply chain disruptions from the earthquake could still cause worldwide GDP to drop to 3.4 per cent, and still result in a Rs.11.83 lakh crore ($260 billion) shortfall in worldwide GDP this year as compared to our original 3.9 per cent forecast. IC Insights' current worldwide GDP forecast (is) 3.6 per cent.''

2. Electronic systems will take a hit
''Electronic system sales were Rs.56.26 lakh crore ($1,237 billion) in 2010, which represented only 2.2 per cent of worldwide GDP. Taking the pessimistic situation of a 3.4 per cent worldwide GDP growth rate in 2011, and the associated Rs.11.83 lakh crore ($260 billion) negative impact on worldwide GDP, and multiplying it by 2.2 per cent yields an electronic systems sales loss of Rs.25,924.11 crore ($5.7 billion). Subtracting Rs.25,924.11 crore ($5.7 billion) from IC Insights' current 2011 electronic system sales forecast of Rs.61.31 lakh crore ($1,348 billion) would put electronic system sales at about Rs.61.04 lakh crore ($1,342) billion for this year, an 8.5 per cent increase over 2010 compared to our current forecast of 9.0 per cent.''

3. There will be no change in IC forecast
''Using the 'pessimistic' scenario (i.e., 3.4 per cent worldwide GDP and a loss of Rs.25,924.11 crore ($5.7 billion) in electronic system sales) and subtracting Rs.6,367.33 crore ($1.4 billion) from IC Insights' current 2011 forecast of Rs.15.77 lakh crore ($346.8 billion) for the worldwide semiconductor market, puts the global chip market at Rs.15.71 lakh crore ($345.4 billion), still a 10 per cent increase over 2010.''

4. Supply chain issues will be resolved
''IC Insights believes that current levels of inventory of (silicon) wafers and packaging materials will help to avert serious shortages. Also, materials facilities (e.g., raw wafers, plastic resin, etc.) can oftentimes be brought back on-line much quicker than IC fabs. IC Insights expects that over the next six months, many electronic system producers will attempt to acquire extra IC inventory, especially in anticipation of the seasonally strong second half of the year.''

5. Supply will be constrained but impact on demand will be slight
"In the final analysis, there is no doubt that supply will be constrained in numerous areas relating to the electronic system and semiconductor industries due to the earthquake and tsunami in Japan. However, on a worldwide basis, demand for electronic systems and semiconductors is expected to be only slightly lessened due to the disaster in Japan. Moreover, any lessening of system or semiconductor demand in 2011 due to the earthquake is forecast to be delayed and pushed into 2012, but not destroyed."

- Mark LaPedus
  EE Times

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