Brexit vote prompts reduced global chip market forecast

July 13, 2016 // By Peter Clarke
IC Insights has lowered its 2016 semiconductor market forecast from 2 percent growth to an annual decline of 1 percent.

The market analysis firm said the reasoning was based on a weak global economy and poor DRAM market.

The significance of consumer electronics means that its market and the semiconductor market that supplies it are increasingly linked to gross domesic product (GDP) and the overall economy. IC Insights forecasts that the 2016 global GDP will grow by 2.3 percent, which is below the 2.5 percent level that is considered to be a threshold benchmark for global recession.

China, the world's leading market for personal computers, digital TVs, smartphones, new commercial aircraft, and automobiles, is forecast to continue to lose economic momentum in 2016.  Its GDP is forecast to increase 6.6 percent in 2016. This may sound healthy but compares with a GDP growth rate in excess of 10 percent in 2010, said IC Insights.

IC Insights said it believes that the worldwide economy will be negatively impacted, over the next year or two at least, by the decision of the United Kingdom to leave the European Union. The main reason for that negative impact is the uncertainty that surrounds the details of the UK's exit and whether the UK will prompt other countries to follow its example.

The other factor influencing the 2016 semiconductor market is the DRAM component category. The DRAM market will be worth $36.5 billion in 2016, a fall of 19 percent from $45.0 billion in 2015. Semiconductor market growth excluding DRAM is expected to be 2 percent.  

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