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January 30, 2012

2012 IC Market Forecast

2012 IC Market Forecast
Ken Cavallaro, Business Manager, Semiconductor Packaging News
We were invited to attend an IC Insights seminar on the "The McClean Report" last week in Boston. The seminar was hosted by Bill McClean and Trevor Yancey for IC Insights and provided an excellent update on the semiconductor markets for 2012.

The presentation included over 100 slides with analysis and forecast for the IC industry. I've summarized the highlights of the seminar for our readers, but for a complete report, visit the IC Insights link below. The key elements of the presentation were the market status & forecast, discussion on the suppliers and foundries, review of CAPEX and capacity trends and IC product highlights.

IC Insights is forecasting 7% IC unit growth for 2012 which will also generate 7% growth in materials to support this increase in units. With global GDP forecasted to rise 3.4% in 2012, Bill thinks there could be an upside to this IC growth rate if long term Worldwide GDP reaches 3.5%.

2012 IC Market Forecast
Bill McClean, President, IC Insights
For 2012 Ė 2016, IC Insight projects semiconductor industry growth of 7 -14% unit growth over the 5 year period with less volatility than previous cycles. This forecast is based on a worldwide GDP growth of 3.5% equating to a 6-10% growth for the semiconductor industry unit growth.

Bill commented on the growth in China as the population continues to develop a taste for western products. Chinaís markets in PC's, Cell phones, Automobiles and Digital TVís are all expected to grow in 2012 and this means more semiconductor devices than 2011. While China continues to consume more IC chips each year, the production of semiconductor devices in China is not growing as quickly and Bill predicts only 7-8% of Chinaís demand is created built in China. Bill commented that China and India will not realize the production of ICís as they had planned years ago.

IC Insights is forecasting a new trend line for IC unit growth shipments over the next 5 years. Bill forecasts the unit growth will be 8% through 2016 and this is largely due to price stability. Bill comments that with supply and demand almost equal, this will create less pricing pressure. As the unit growth rate continues at 7%, revenue growth should also grow 7% which is good for the industry.

CAPEX has been in the news lately with some experts predicting a decline of 15%, but IC insights is predicting a much smaller decline based on the Intel and Samsung 2012 CAPEX budget increases. Bill thinks the decline could be as low as 6% which is not bad after a growth of 15% in 2011. Recent news from ASML, Lam Research, and KLA-Tencor support this idea as these companies forecast better revenue than expected due to increasing orders.

Bill commented, the "big keep getting bigger" and the top 5 companies in IC spending now account for almost 60% of all spending compared to 40% in 2005.  He is forecasting CAPEX spending growth in 2013 through 2016 to average 11%. Bill is also forecasting tight foundry capacity as more companies go "fabless" and this capacity could get even tighter through 2016 causing price increases and capacity shortages.

IC Insights is forecasting 468 million PC shipments in 2012 which include 43% for notebooks, 33% for desktops, 22% for tablet PC''s and only 2% for netbooks. In Bill's opinion, the PC is not declining, it's just changing formats.

As the seminar wrapped up they talked about 450mm development and compared this technology advance to the previous 200mm and 300mm wafer developments. According to Trevor Yancey, from IC Insights, the global market includes 70 companies running 200mm fabs, but only 30 companies running 300mm fabs. IC Insights estimates 10-12 companies capable of running 450mm fabs including the early adopters such as Intel, Samsung, TSMC and Global Foundries. IC Insights projects the pilot development will take place in 2013 through 2016 and volume production could begin in 2017.

This was a very interesting seminar and I thank IC Insights for allowing us to participate. To learn more about The McClean Report, visit this link: http://www.icinsights.com/services/mcclean-report/report-contents/



Ken Cavallaro , Business Manager
Semiconductor Packagning News