In 4Q08, General Electric’s chief executive Jeff Immelt coined the term “reset economy.” He used this phrase in an attempt to describe what he expected to be a very different world after the global economic crisis came to an end as compared to before the meltdown. His belief was that businesses, governments, and consumers would operate very differently in the post-crisis economy and that GE needed to adjust to this new environment.
IC Insights believes that this “reset” philosophy can be applied to the worldwide IC industry outlook. In only 12 months, the IC industry endured the most volatile quarterly swings in its history! While 4Q08 and 1Q09 set records for dramatic sequential quarterly IC unit shipment declines, 2Q09 and 3Q09 set records for the fastest-ever sequential quarterly growth for IC units! After such a period, it is probably best to step back and take a fresh look at the IC industry as it stands today and assess what can be expected for 2010.
Some key points regarding IC Insights’ outlook for the new environment in the “reset” IC industry are shown below:
• The Americas IC market was the only major region to show growth in 2009! Even the high-flying Asia-Pacific IC market declined in 2009. Why? Think memory market.
• Capital spending for memory devices is forecast to more than double in 2010! However, IC Insights believes this is not enough to avert memory shortages and significant price increases in 2010.
• Since late in 2008, IC Insights stressed that the 2009 IC market should be thought of in quarterly segments and not in total. IC Insights’ clients heard early in the year to expect a big finish to 2009. It should be noted that the worldwide 4Q09 IC market was 47% greater than it was in 1Q09.
• Overall, the worldwide IC market declined 10% in 2009. In contrast, the NAND flash memory market surged by 20% during the year! Even better growth is expected in the NAND flash market in 2010! Moreover, 2011 is forecast to show even stronger NAND flash memory growth than in 2010.
• DRAM average selling prices (ASPs) in 4Q09 were 65% higher than in 1Q09! Moreover, IC Insights believes this is only the beginning of the trend toward higher DRAM ASPs.
• PC unit shipments were flat in 2009! Considering that the global economy endured its worst recession in 63 years (since 1946) in 2009, flat PC unit shipments were quite an amazing accomplishment. Moreover, cellphone unit shipments were down only 5%. Now consider that both PC and cellphone unit volume shipments are forecast to increase at double-digit rates in 2010! What effect will this have on the IC industry? The industry could be on the cusp of an all-out IC market boom for 2010.
• Microprocessor sales reached almost $10.0 billion in 4Q09. This was an all-time record high, surpassing the previous high set in 4Q07! This record high was set during the worst global recession since 1946. What happens when the PC market takes off in 2010?
• China’s IC production accounted for 1.8% of the worldwide total market in 2009, up from 1.2% in 2004. As previously forecast by IC Insights, China is playing only a very minor role in IC production.
There has been a 180-degree turn in the fortunes of the IC industry in the 12 months from December of 2008 to December of 2009!
Its time to “reset” your outlook for the new and very different IC industry of the future!