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Analysis |
IC market growth limited by narrow window of global GDP expansion
IC Insights shows that since 2010, worldwide economic growth has been the primary influencer of IC industry growth.
In this “global economy-driven” IC industry, factors such as interest rates, oil prices, and fiscal stimulus are the primary drivers of IC market growth. This is much different than prior to 2010, when capital spending, IC industry capacity, and IC pricing characteristics drove IC industry cycles.
Figure 1 plots the actual annual growth rates for worldwide GDP and the IC market from 1992 and includes IC Insights’ 2017 forecast. As shown, both of these categories displayed extremely volatile behavior from 1992 through 2010 before registering much more subdued growth rates from 2011 through 2016. Moreover, IC Insights forecasts similar restrained annual growth rates for worldwide GDP and the IC market through 2021.
- Since 1980, the annual worldwide GDP growth has averaged 2.8%. The average annual worldwide GDP growth rate has declined every decade since the 1960s with a slight rebound forecast to be registered in the first seven years of the current decade.
- Worldwide GDP growth of 2.5 percent or less is currently considered by most economists to be indicative of a global recession, which puts 2016’s growth right at the threshold. The 2017 global growth rate is forecast to come in only slightly better at 2.6 percent. Prior to the late 1990s, when emerging markets like China and India represented a much smaller share of the worldwide economy, a global recession was typically defined as 2.0 percent or less growth. The global recession threshold has never been a “hard and fast” rule, but the guidelines discussed here are useful for this analysis.