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Electronics Production | December 18, 2006

Semiconductor market to reach<br>$400 billion in 2011, says IC Insight

The worldwide semiconductor market is forecast to register a double-digit 2006-2011 average annual growth rate (CAGR) of 10.1% to reach $400 billion in 2011, according to IC Insights' upcoming 2007 edition of The McClean Report, A Complete Analysis and Forecast of the Integrated Circuit Industry.

IC Insights believes that this milestone will come only three years after the market exceeds $300 billion for the first time in 2008 (Figure 1). As shown in Figure 1, the worldwide semiconductor market first exceeded $200 billion in the boom year of 2000 and $100 billion six years earlier in 1994. IC Insights expects that the semiconductor market will reach $247 billion this year, a 9% increase over 2005. From 1990, when the market first exceeded $50 billion, through 2006, the worldwide semiconductor industry registered a CAGR of 10.4%. This historical 16-year CAGR is only slightly higher than IC Insights' 10.1% CAGR forecast for the 2006-2011 timeperiod. To serve the fast-growing semiconductor market, semiconductor vendors must invest significant amounts of capital for new equipment (fabrication, assembly, test, etc.) and facilities. Figure 2 shows the milestone years for semiconductor industry capital spending beginning with 1989, the first year capital outlays exceeded $10 billion. IC Insights expects that semiconductor industry capital spending will reach $53 billion in 2006, a 14% increase over 2005. The capital spending record ($60 billion), that still stands today, was set back in the boom year of 2000. As shown in Figure 2, IC Insights believes that semiconductor industry capital spending will exceed $80 billion in 2011. At this level, the capital spending as a percent of semiconductor sales ratio would be similar to the 2006 ratio of 21%.
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