2013 IC Market Forecast

Ken Cavallaro, Business Manager, Semiconductor Packaging News

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.

Bill McClean, President, IC Insights

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/