© IC Insights Analysis | August 02, 2017
DRAM, NAND flash memory markets drive double-digit upturn
IC Insights has revised its outlook and analysis of the IC industry. Entering the second half of the year, it is clear the IC industry is on course for a much stronger upturn than was initially forecast in January.
IC Insights now expects the IC market to increase 16 percent in 2017 due to exceptional growth in the DRAM and NAND flash memory markets. The DRAM market is now forecast to grow 55 percent and the NAND flash market is now expected to rise 35 percent this year—in both cases, almost entirely due to fast-rising prices rather than unit growth. Excluding these two markets, the overall IC market growth is forecast to show just 6% year-over-year growth. The expected 16 percent increase would be the first double-digit gain for the IC market since it expanded by 33 percent in 2010—the recession-recovery year—and the fifth double-digit increase for the IC market since 2000. The DRAM market has had a notable impact on total IC market growth in recent years. With market surges of 32 percent and 34 percent in 2013 and 2014, respectively, the DRAM market alone boosted the worldwide IC market growth rate by three percentage points in 2013 and four percentage points in 2014. At USD 64.2 billion, the DRAM market is forecast to be by far the largest single product category in the IC industry in 2017, exceeding the expected second-ranked MPU market for standard PCs and servers (USD 47.1 billion) by USD 17.1 billion this year. Overall, IC Insights’ global economic outlook remains on course with initial projections covered in The McClean Report. Electronic system production, capital spending as a percent of sales, and IC wafer capacity added were unchanged from the original outlook. However, other factors and conditions that contribute to the forecast were upgraded slightly in the Mid-Year Update. For example, the worldwide GDP forecast was upgraded by 0.1 point to 2.7 percent for 2017, marginally ahead of what is considered to be the global recession threshold of 2.5 percent growth. IC Insights believes that through the forecast period, annual IC market growth rates will closely track with the performance of worldwide GDP growth. Following a fairly strong first half of growth, China’s 2017 GDP was raised to 6.8 percent for 2017 from the original forecast of 6.3 percent. Also, IC Insights upgraded its U.S GDP forecast to 2.1 percent in the Mid-Year Update from 2.0 percent in January. While the U.S. economy is far from perfect, it is currently one of the most significant positive driving forces in the worldwide economy. A falling unemployment rate, PMI figures of 57.0 and 55.8 in the first and second quarters of this year, and relatively low oil prices should help the U.S. economy sustain its modest growth in the second half of this year. Growth rates for IC unit shipments, IC average selling price, and semiconductor capital spending were also revised slightly higher.