SUNNYVALE, Calif. – It’s a sad sign of the times when the most bullish market researcher predicts 4% growth. Even worse when the veteran analyst further explains he has a 70% confidence growth will be in the 2-6% range, and notes a few wild cards like the gyrating China stock market and plummeting price of oil.
Like it or not, that’s the good news for semiconductors in 2016, according to Bill McClean, president of IC Insights. In his semi-annual report to Silicon Valley, McClean did sound some upbeat notes.
The low oil price is good for the U.S. economy which is driving global growth which is closely correlated to chip sales. Fluctuating exchange rates, which depressed chip sales 4% last year, are likely to be more stable this year.
At the industry level, the world’s biggest foundry, TSMC, says inventories are low. Generally tight supply conditions and a lack of major new players could keep average selling prices of chips about flat.
Windows 10 is likely to bolster PC sales a bit this year and even next. And the world’s biggest chip maker, Intel, also predicts mid-single-digit growth this year, forecasting a PC market that is at least more stable than it was in 2015.
Overall electronic system production went down 2% last year for only the fourth time in history. McClean expects it will bounce back 2% this year.
The bad news is McClean likes to watch one bright economist who currently predicts the U.S. stock market could fall 30% soon. McClean is not predicting the U.S. could be headed for a recession, but he does note the stock market dives in China and to a lesser extent the U.S. are related to fears China’s growth engine could be sputtering.
Next page: Breakdowns for analog, memory and logic
All Images: Courtesy of IC Insights