IC Insights: Industry Poised for Rebound
IC Insights Inc. reported that chip average selling prices (ASPs) increased 4% in January over the previous month, with NAND ASPs jumping 17% and MPUs also showing strong pricing. If traditional patterns hold true, the current downturn will be followed by strong growth in 2010 and 2011, IC Insights President Bill McClean told an IMAPS Global Business Council meeting in Arizona.
Philip Garrou, Microelectronics Consultants of North Carolina, Research Triangle Park, N.C. -- Semiconductor International, 3/12/2009
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With chip average selling prices (ASPs) on the rebound, the semiconductor industry is likely to bottom out in the first half of this year and be “poised for a quick rebound,” said Bill McClean, president of IC Insights Inc. (Scottsdale, Ariz.). In a report issued yesterday, IC Insights said total IC ASPs in January were up 4% compared with December 2008, the highest ASP level since November 2007.
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| Worldwide GDP may show no growth this year from $55T in 2008. (Source: IC Insights) |
Speaking at the Global Business Council meeting of the International Microelectronic and Packaging Society (IMAPS) in Scottsdale, McClean addressed ~70 business development managers at the biannual gathering. Recessionary periods, McClean said, have been followed by very strong periods of growth, typically ~20% growth in the year after the recession, followed by 30-40% in the subsequent year. If this holds true for the current downturn, the industry is poised for a period of strong growth in 2010-2011.
The worldwide downturn is likely to mean zero growth in worldwide gross domestic product (GDP) this year. In 2008, worldwide GDP was ~$55T, of which ~$1.25T was for electronic systems, $266B was in semiconductors and, peeling the onion back further, ~$42B was semiconductor materials. This year, McClean is predicting a 16% decrease in the semiconductor industry and a 10% decrease in the electronic materials market.
The chip industry should be ready to capitalize on the expected upturn, when there will be money to be made, McClean told the IMAPS business gathering, which included managers from Asahi Glass, Amkor, DuPont, Intel, IBM, Kyocera, Rohm & Haas and other companies. The business-oriented meeting is being held in parallel with an IMAPS technical meeting, the Device Packaging Conference, which will consider 3-D interconnect challenges.
ASPs rising
IC Insights issued a report Wednesday arguing that “conditions are lining up throughout the industry that suggest ASPs will begin to improve — perhaps dramatically — in the coming months.” McClean said low IC inventory levels at electronic system producers and any uptick in orders would put upward pressure on prices. Also, he said that factory utilization at 300 mm fabs is currently at 85%, a relatively high level for a period of weak demand. Older 200 mm factories are being taken off-line, and suppliers are making “dramatic reductions” in 2009 capital investments.
IC Insights compared January ASPs to December 2008 ASP levels, and found rising ASPs across the board, including a 10% increase for analog products, a 23% gain for microprocessors, and a 5% gain for microcontrollers. Logic ASPs were up only 2% compared with December 2008, but that marked the first time they exceeded $2 in more than two years, he said.
Average prices for DRAMs were up 5%, while NAND flash ASPs were up 17% compared with the previous month. The NAND ASP was the highest since June 2008.
“It is too early to say with certainty if IC ASPs have reached their low points, but IC Insights firmly believes that IC ASPs will rebound throughout 2009 and into 2010,” he said. ASP increases could accelerate in the second half of this year when system demand normally reaches a seasonal high.
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