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February 1, 2013

2013 IC Market Forecast

2013 IC Market Forecast
Ken Cavallaro, Business Manager, Semiconductor Packaging News
Semiconductor Packaging News attended an IC Insights seminar featuring the "The McClean Report" this week in Boston. The seminar was hosted by Bill McClean of IC Insights and provided updates on the semiconductor markets for 2013. The presentation included analysis and forecasts for the IC industry with over 100 slides. This report gathers data from the Industry suppliers, foundries, industry and economic date and includes a review of CAPEX and capacity trends.

IC Insights forecasts 6% IC unit growth for 2013 based on expectations of global GDP to rise to 3.2%, but there could be adjustment up or down based on the global economic recovery. There was significant drag to the 2012 economy from Europe, China and the USA which caused the 2012 global GDP rate of 2.6% which was lower than expected last January. Bill is looking for a rebound in GDP for Europe and China for 2013 with increased economic output while expecting the USA to remain in the 2.5% GDP growth range.

2013 IC Market Forecast
Bill McClean, President, IC Insights
IC Insights thinks 2012 was a trough in the IC cycle and predicts another up cycle beginning in 2013 and lasting through 2016.  IC Insight projects semiconductor industry growth of 6 -12% unit growth over the 5 year period with less volatility than previous cycles. This forecast is based on a worldwide GDP growth stabilizing and continued growth for mobile technology.

IC Insights is forecasting a lower trend line for IC unit growth shipments over the next several years compared to the last cycle. The supply and demand are almost equal, while the leading edge capacity cannot keep up with demand. This situation will create less pricing pressure and average ASP's should stop dropping and become flat to plus 1.5% for the next 10 years.

There was an interesting discussion regarding the effects "Fabless and Fab-Light" companies are putting on the IC manufacturing process. With Semiconductor Fabs costing $3.-5 billion the trend of subcontracting your IC design continues to grow. The problem may develop that unit growth will exceed capacity in the peak cycles causing longer lead times, double ordering and shortages. The growth of fabless and fab-light may ultimately cause capacity issues at the foundry level, especially for leading edge designs. Bill mentioned a new phrase which may cause concern for some industry companies, "Fab-Tight".

IC insights is predicting CAPEX budget increases, not for increased wafer starts, but for leading edge capacity. Recent investments from Intel and others into ASML provide them access to advanced technologies required for leading edge production and 450 mm development. Bill expects CAPEX to be 15% of revenue for the next few years, which is lower than previous cycles. Bill commented, the "big keep getting bigger" and the top 5 companies in IC spending now account 60% of all CAPEX spending compared to 40% in 2005. He expects more capacity to move to upstate NY and the potential of Apple to team up with a supplier to subcontract manufacturing to the USA and move away from Samsung.

We thank IC Insights for allowing us to participate in this presentation. To learn more about The McClean Report, visit this link: http://www.icinsights.com/services/mcclean-report/report-contents/

Ken Cavallaro, Business Manager
Semiconductor Packaging News


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