Semiconductor outlook slashed

DRAM DRAG::IC Insights said that ‘local economies have slowed’ around the world, adding that China is forecast to continue to lose economic momentum this year

By Lisa Wang  /  Staff reporter

Sat, Jul 09, 2016 - Page 11

Market researcher IC Insights yesterday slashed its revenue forecast for the global semiconductor industry this year to minus-1 percent due to staggering global economy and a slump in the DRAM industry.

In February, the researcher estimated industry revenue would grow 4 percent annually from last year’s US$353.6 billion.

IC Insights’ latest projection was worse than Taiwan Semiconductor Manufacturing Co’s (台積電) forecast of 1 percent annual growth and Gartner Inc’s prediction of a 0.6 percent yearly increase.

The downward revision came after IC Insights cut its forecast for global GDP growth for the year from 2.7 percent to 2.3 percent, with the researcher saying the global semiconductor industry’s growth is closely correlated with economic growth worldwide.

“In many areas of the world, local economies have slowed. China, which is the leading market for personal computers, digital TVs, smartphones, new commercial aircraft and automobiles, is forecast to continue to lose economic momentum in 2016,” IC Insights said in a report.

China’s economic growth is forecast to grow 6.6 percent this year, extending a slide from 2010 when the its GDP growth exceeded 10 percent, it said.

The UK’s vote to leave the EU would negatively affect the global economy at least over the next one to two years, IC Insights said.

The “biggest negative effect on economic growth is the uncertainty of the entire situation,” IC Insights said.

The other major culprit dragging down semiconductor industry growth this year is the weak DRAM market, the report said.

The DRAM market was the largest single product category in the semiconductor industry last year, with revenue of US$45 billion, it said.

The global DRAM market is expected to plunge 19 percent year-on-year to US$36.5 billion this year, stripping 3 percentage points from the world semiconductor industry’s growth this year, IC Insights said.

The forecast contraction is due to a steep price decline in average selling price for DRAM products, with the fall forecast to be 16 percent annually from US$3.03 last year to US$2.55 per unit this year, the report said.

Excluding the DRAM industry, the global semiconductor market is expected to expand 2 percent annually this year, IC Insights said.