Archive for July, 2018
Tuesday, July 31st, 2018
Correlation coefficient expected to reach a very high level of 0.95 in the 2018-2022 timeframe.
In its recently released Mid-Year Update to The McClean Report 2018, IC Insights forecasts that the 2018-2022 global GDP and IC market correlation coefficient will reach 0.95, up from 0.88 in the 2010-2017 time period. IC Insights depicts the increasingly close correlation between worldwide GDP growth and IC market growth through 2017, as well as its forecast through 2022, in Figure 1.
As shown, over the 2010-2017 timeframe, the correlation coefficient between worldwide GDP growth and IC market growth was 0.88, a strong figure given that a perfect correlation is 1.0. In the three decades previous to this timeperiod, the correlation coefficient ranged from a relatively weak 0.63 in the early 2000s to a negative correlation (i.e., essentially no correlation) of -0.10 in the 1990s.
IC Insights believes that the increasing number of mergers and acquisitions, leading to fewer major IC manufacturers and suppliers, is one of major changes in the supply base that illustrate the maturing of the industry that is helping foster a closer correlation between worldwide GDP growth and IC market growth. Other factors include the strong movement to the fab-lite business model and a declining capex as a percent of sales ratio, all trends that are indicative of dramatic changes to the semiconductor industry that are likely to lead to less volatile market cycles over the long term.
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Tags: IC, IC manufacturing, ICManufacturing, McClean Report, Semiconductors, Worldwide GDP
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Wednesday, July 18th, 2018
Semi content to surpass 30% this year, smashing the previous record high set just last year.
In its upcoming Mid-Year Update to The McClean Report 2018 (to be released at the end of July), IC Insights forecasts that the 2018 global electronic systems market will grow 5% to $1,622 billion while the worldwide semiconductor market is expected to surge by 14% this year to $509.1 billion, exceeding the $500.0 billion level for the first time. If the 2018 forecasts come to fruition, the average semiconductor content in an electronic system will reach 31.4%, breaking the all-time record of 28.8% that was set in 2017 (Figure 1).
Figure 1
Historically, the driving force behind the higher average annual growth rate of the semiconductor industry as compared to the electronic systems market is the increasing value or content of semiconductors used in electronic systems. With global unit shipments of cellphones (-1%), automobiles (3%), and PCs (-1%) forecast to be weak in 2018, the disparity between the moderate growth in the electronic systems market and high growth of the semiconductor market is directly due to the increasing content of semiconductors in electronic systems.
While the trend of increasing semiconductor content has been evident for the past 30 years, the big jump in the average semiconductor content in electronic systems in 2018 is expected to be primarily due to the huge surge in DRAM and NAND flash ASPs and average electronic system sales growth this year. After slipping to 30.2% in 2020, the semiconductor content percentage is expected to climb to a new high of 31.5% in 2022. IC Insights does not anticipate the percentage will fall below 30% any year through the forecast period.
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Tags: Electronic system, Forecast, IC manufacturing, ICManufacturing, Semiconductors, technology
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Tuesday, July 10th, 2018
Overspending by the major NAND suppliers expected to further cool NAND flash prices this year.
IC Insights will release its 200+ page Mid-Year Update to the 2018 McClean Report later this month. The Mid-Year Update revises IC Insights’ worldwide economic and IC industry forecasts through 2022 that were originally published in The 2018 McClean Report issued in January of this year.
Figure 1 compares the estimated required capex needed to increase NAND flash bit volume shipments 40% per year, sourced from a chart from Micron’s 2018 Analyst and Investor Event in May of this year, versus the annual capex targeting the NAND flash market segment using IC Insights’ data. As shown, Micron believes that the industry capex needed to increase NAND flash bit volume production by 40% more than doubled from $9 billion in 2015 to $22 billion only two years later in 2017! This tremendous surge in required capital was driven by the move to 3D NAND from planar NAND since 3D NAND requires much more fab equipment and additional cleanroom space to process the additional layers of the device as compared to planar NAND.
Most of the five major NAND flash suppliers have stated that they believe that NAND bit volume demand growth will average about 40% per year over the next few years. Figure 1 shows that the capex needed to support a 40% increase in NAND bit volume shipments was exceeded by 27% last year and is forecast to exceed the amount needed by another 41% this year (NAND bit volume shipments increased 41% in 2017 but 1H18/1H17 bit volume shipments were up only 30%). As a result, it is no surprise that NAND flash prices have already softened in early 2018. Moreover, the pace of the softening is expected to pick up in the second half of this year and continue into 2019.
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Tags: McClean Report, micron, NAND
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