IC Insights cautious, but still sees 2008 growth

By Suzanne Deffree, Managing Editor, News -- 9/29/2008

IC Insights has lowered its forecast for 2008 total worldwide IC market growth, noting shrinking demand from fabless suppliers, a weak memory market, and pricing issues that continue to plague the semiconductor industry.

Realistically, the market research company said growth will be between 1 and 5% in 2008 on 2007's total IC sales of $234.3 billion. IC Insights projected 7% growth in its mid-year forecast. (See table below.)

"It currently appears that demand from fabless IC suppliers has recently dropped in almost all end-use segments except for high-end cell phones. There is a possibility that Q4 pure-play foundry sales may be down as much as 20% from Q3. If a 20% sequential sales decline occurs in the pure-play foundry market in Q4, the total pure-play foundry market increase for 2008 would drop to 8%, down from IC Insights’ earlier expectations for 13% growth," the company said in a statement today.

"IC users are now being very cautious with regard to their orders and are planning to enter 2009 with conservative inventory levels," IC Insights continued.

In revising its forecast, IC Insights lowered its worldwide IC sales expectations by $6 billion as compared to its mid-year update. To be true, logic and NAND flash account for $5.2 billion of the total IC market reduction. "These large adjustments to the logic and NAND flash markets are primarily due to current and expected price erosion and not from a significant decline in unit volume shipments," IC Insights said.

On that, IC Insights has raised its 2008 IC unit volume forecast. The market research company now expects IC unit volumes to increase 9% in 2008, to 170.5 billion units, up 1% from its mid-year update. "Moreover, there is a good chance that IC unit volumes could increase 10% this year, which would make 2008 a record seventh year in a row of double-digit unit volume growth," IC Insights reported.

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Although unit volumes are on the up, IC Insights said the adjustment to its 2008 growth rate forecast came about primarily due to price degradation. The company reported it now expects a 4% dip in ASPs (average selling prices) for 2008 as compared to 2007 ASPs.

Meanwhile, IC Insights is holding steady on its 2009, 2010, 2011, and 2012 IC market growth rate forecasts of 8%, 11%, 13%, and 16% growth respectively. The company said that while lower worldwide GDP growth in 2009 as compared to 2008 might serve to reduce IC unit volume growth to only 7 to 8% next year, the large capital spending cutbacks for IC production this year are forecast to stabilize IC ASPs in 2009.

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