LONDON – The global chip market will get a supporting tail-wind in 2012 thanks to the U.S. presidential elections taking place this year, according to IC Insights (Scottsdale, Ariz.). However, post-election 2013 is likely to show lower growth, the market analyst has said.
The global semiconductor market is set to show 7 percent growth in 2012 alongside a world economy with 3.4 percent GDP growth, according to IC Insights.
Historically, U.S. presidential election years have been very good for the semiconductor market as many administrations have attempted to pass mostly short-term legislation to boost the economy in order to look good in the eyes of voters and stand a better chance of getting re-elected, the analyst observed.
In the past 10 U.S. election years dating back to 1972, worldwide GDP growth averaged 4.0 percent while semiconductor industry growth has averaged 24 percent. In fact, the semiconductor industry has increased 10 percent or better in 8 of the past 10 U.S. election years.
However, in post-election years many of the subsidies and stimulus measures enacted during an election year are withdrawn or allowed to expire.
Over the past 10 post U.S.-election years, worldwide GDP growth averaged 3.1 percent while worldwide semiconductor industry growth averaged only 4 percent. Moreover, worldwide semiconductor industry growth exceeded 8 percent in only three of these 10 post-election years (1973, 1977, and 1993).
Presidential elections are also being held in Russia, South Korea, Taiwan, China, and France this year, IC Insights noted, giving politicians in these countries an incentive to boost their economies in 2012.
If the historical boost during an election year depends on enactment of short-term measures that stimulate the economy, then some people may be in for a disappointment this year. The political climate doesn't look very favorable to even more stimulus!
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