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Falling prices in NAND, DRAM & MPU impacting growth; IC Insights cuts forecast |
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Apr 17, 2007 at 01:52 PM |
 IC Insights has drastically cut its semiconductor growth projections for 2007 citing severe pricing pressures in the NAND flash memory market as well as the continued decline in microprocessor prices. However, the market research firm has added that a major DRAM price collapse has also started and will also affect market growth this year. As a result, the firm has lowered its forecast to 2 percent growth compared to its previous forecast of 7 percent growth for 2007.
Only two weeks ago, Semico Research lowered its semiconductor forecast for the second time this year citing poor prices even though unit demand remained strong, and now projects only 1.8 percent growth for 2007. In March, Semico had projected growth of 5.8 percent compared to a projection at the beginning of the year that the semiconductor industry would grow by 7 percent.
IC Insights noted that the decline in sales in February this year was the largest sequential decline seen in the past 30 years and may have been the largest February/January decline in the history of the IC industry!
IC Insights noted that:
‘Over the past 30 years, the average sequential monthly decline in the actual (not three-month average) IC market in January as compared to December was about 17%. Such declines are looked upon as being normal considering that December is a five-week accounting month (as are all of the quarter-ending months like March, June, and September) and January is a four-week month. Thus, the 18% January 2007/December 2006 IC market decline was viewed as typical and, correctly, did not receive much attention.'
In comparison to the "normal" January sequential IC market results, however, February's IC market data was at the opposite end of the spectrum. As shown in Figure 1, the February 2007/January 2007 actual IC market plunged 8.0%!
This was by far the largest February sequential decline in the IC market in the past 30 years and may have been the largest February/January decline in the history of the IC industry! It was also only the fourth February/January IC market decline in the past three decades.
IC Insights believes this indicates a slow down and inventory correction phase though the second-half year performance may not be adversely affected. However the market research firm also noted that;
‘If the March 2007 IC market registers a typical sequential increase of 21%, the total 1Q07 IC market would be $49.6 billion, representing a steep 11% decline from 4Q06 ($55.7 billion). If the March 2007 IC market matches the highest March/February increase that occurred within the past 30 years (i.e., +36.6% logged in March 2002), the total 1Q07 IC market of $52.0 billion would still represent a significant 7% drop from 4Q06.'
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