China capacity expansion forecast to push the county into second place in the regional rankings in 2022, trailing only Taiwan in size.

In its Global Wafer Capacity 2020-2024 report, IC Insights breaks down the world’s installed monthly IC wafer capacity by geographic region (or country).  Figure 1 shows the installed IC capacity by region as of December of 2019.

To clarify what the data represents, each regional number is the total installed monthly capacity of fabs located in that region regardless of the headquarters location for the companies that own the fabs.  For example, the wafer capacity that South Korea-based Samsung has installed in the U.S. is counted in the North America capacity total, not in the South Korea capacity total.  The ROW “region” consists primarily of Singapore, Israel, and Malaysia, but also includes countries/regions such as Russia, Belarus, and Australia.

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A rare decline in IC unit shipments in 2019 expected to be followed by another drop in 2020.

Using its “baseline” assumptions shown in the April Update to the 2020 edition of The McClean Report—A Complete Analysis and Forecast of the Integrated Circuit Industry (MR20), IC Insights forecasts that worldwide IC unit shipments will register their first-ever back-to-back annual decline in 2020.

From 2013 through 2018, IC unit shipments were on a respectable growth path with an 8% increase logged in 2013, a 9% jump registered in 2014, a 5% increase displayed in 2015, a 7% increase shown in 2016, a double-digit growth rate of 15% in 2017, and a 10% increase in 2018.  In contrast to the double-digit increases in 2017 and 2018, 2019 marked only the fifth time in the history of the IC industry that IC unit shipments registered a decline (Figure 1).

Figure 1

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Coronavirus pandemic further reduces worldwide GDP and IC market outlooks.

When 2020 started, global economic conditions pointed to single-digit percentage sales growth in the IC market after it fell by 15% in 2019, based on worldwide market data compiled by IC Insights for the 2020 edition of The McClean Report—A Complete Analysis and Forecast of the Integrated Circuit Industry (MR20).  However, the world abruptly changed in 1Q20 with the rapid outbreak of the Covid-19 virus, which shut down nearly all countries and paralyzed global markets beginning in March 2020.

Figure 1 depicts the changes made to IC Insights’ 2020 total IC market forecasts as compared to the original MR20 forecast presented in January of this year.

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Hardest hit are ≤200mm wafer fabs, 70% of closures in Japan and North America.

Over the past decade, the IC industry has been paring down its older capacity as manufacturers have consolidated or transitioned to the fab-lite or fabless business models.  In its recently released Global Wafer Capacity 2020-2024 report, IC Insights shows that due to the surge of merger and acquisition activity in the middle of this decade and with more companies producing IC devices using sub-20nm process technology, suppliers have eliminated inefficient wafer fabs. Since 2009, semiconductor manufacturers around the world have closed or repurposed 100 wafer fabs, according to findings in the new report.

Figure 1 shows the number of fabs closed by geographic region while Figure 2 shows a distribution of those fabs by wafer size and year.

Figure 1

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Propelled by 51% share of IDM sales and 65% share of fabless sales, U.S. companies captured 55% of the total worldwide IC market in 2019.

Regional marketshares of IDMs (companies operating wafer fabs), fabless companies, and total IC sales were led by U.S. headquartered companies in 2019, according to data presented in the recently released March Update to The McClean Report 2020.

Figure 1 shows U.S. companies held 55% of the total worldwide IC market in 2019 followed by the South Korean companies with a 21% share, down six percentage points from 2018.  Taiwanese companies, on the strength of their fabless company IC sales, held 6% of total IC sales, one point less than the European companies.

Figure 1

South Korean and Japanese companies have an extremely weak presence in the fabless IC segment and the Taiwanese and Chinese companies have a noticeably low share of the IDM portion of the IC market. Overall, U.S.-headquartered companies showed the most balance with regard to IDM, fabless, and total IC industry marketshare.
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“Black Swan” is a commonly used phrase in the world of finance to describe an event that is unexpected and unknowable.  The recent surge of the spread of the coronavirus (Covid-19) and its anticipated negative impact on the global economy and IC market definitely fits the definition of a Black Swan event. Such events typically cause a great deal of uncertainty and that is certainly the case today.

Over a decade ago, Jeff Immelt, then-CEO of General Electric, coined the term “reset economy.”  He used this phrase to describe what he expected to be a very different world following the financial meltdown and ensuing global economic crisis of 2008-2009.

Fast forward to 2020. IC Insights believes that this “reset” philosophy can be applied to the global IC industry this year following the current worldwide disruption to trade and business and the expected subsequent slowdown of the global economy due to the Covid-19 outbreak.

After enduring a steep market decline in 2019, most believed the IC industry was poised for a reasonably robust recovery in 2020.  In fact, January 2020 global IC sales were up a solid 79% from one year earlier in January 2019.  IC Insights had originally forecast an 8% increase for the 2020 IC market in its McClean Report 2020 that was released this past January.

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