Chip market will fall in 2016, says another analyst

March 18, 2016 // By Peter Clarke
Decline
The global semiconductor market is going to fall in 2016, compared with 2015, due to weakness in consumer equipment markets, according to market research firm Semico Research Corp. (Phoenix, Ariz.).

Semico has developed a method of analysis that it calls its Inflection Point Indicator (IPI), and it seems that IPI says the semiconductor industry is destined to repeat the pattern of 2011-2012 "albeit at a muted level," according to Semico. In calling the negative growth Semico is in agreement on this with another market watcher, TrendForce (see Chip market set to shrink in 2016, says analyst ).

In 2012 the global chip market fell by 2.7 percent to $291.6 billion from $299.5 billion in the previous year, according to data from World Semiconductor Trade Statistics (WSTS).

Semico has not quantified how much the market will fall. Back in December Taiwanese market analysis firm TrendForce said that falling memory average selling prices will drag down the overall chip market in 2016 and cause it to fall by 0.6 percent to $329 billion

To support its forecast Semico argued that over the last four-to-five years the major end markets served by the semiconductor industry – tablet and notebook computers and smartphones – have all matured causing growth rates to slow. In addition, compared with 2012, the global economic outlook is weaker for most of the world's geographic regions, with the exception of India, the firm said. Finally DRAM prices are expected to be weaker in 2016 than in 2012.

Such growth as the industry did enjoy in 2013 and 2014 was primarily due to a memory shortage and subsequent rising average selling prices (ASPs). Global semiconductor revenues in January 2016 were $25.94 billion, down 4.9 percent compared with January 2015, according to WSTS.

"In the past eight months the industry has seen ASPs in the $0.41 range five times. "One has to go back to May 2009 to find a lower price, and 2009 was not a good year," said Jim Feldhan, president of Semico, in a statement.

TrendForce also based its conclusion on the premise that the memory market will be