2011, a strange year
2011 was one of the strangest years in the semiconductor industry, said McClean.
First, higher oil prices are always a bad thing for the economy. Second, there were eleven natural disasters last year, more than in a decade in the 90s. These include the Arab Spring, the earthquake and Tsunami in Japan, flooding in Thailand, and the surge of natural disasters in the United States.
Uncertainty is the worst thing, said McClean. “Uncertainty is worst than bad news because people adjust. If you say it is uncertain then people do nothing. Hopefully, things will get away but we are in the uncertainty stage right now.”
Inventories are now well-adjusted and are back, McLean continued. “Many companies now have seen the bottom, and we see a strong pick-up for the rest of this year.”
Worldwide GDP grew by 4.3 percent in 2010, by 3.3 percent in 2011, he said. The forecast is 3.4 percent for 2012. In 2012, IC Insights anticipates that the growth of the IC industry in 2012 will be highly dependent on the GDP growth – Near average 2012 worldwide GDP growth is expected to drive 7 percent IC market growth.
Source: IC Insights
Over the next ten years, McClean said he expects that the IC average selling price will not continue to go down. It will stabilize and lead to IC market CAGRs of 8 to 9 percent.
Taking a geographical look at world data, McLean said Europe is still the wildcard while China and India are expected to help drive future growth.
He continued: “When I started in this industry, Japanese companies and Korean companies came in. Chinese companies are the last group of newcomers. Nobody is coming now. There are fewer companies chasing the market. What we have now is a closed system. With no entry-point opportunities, the IC industry is closed to new major manufacturing startups.”