IC Market Growth Limited by Narrow Window of Global GDP Expansion
February 10, 2017 | IC InsightsEstimated reading time: 2 minutes
IC Insights’ 20th anniversary, 2017 edition of The McClean Report 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.
Figure 1
Some observations regarding worldwide economic growth (GDP) include the following.
• 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% 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%. 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% 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.
Figure 2 compares the actual annual growth rates of worldwide GDP and the worldwide IC market from 2011 through IC Insights’ 2017 forecast. It is worth mentioning that the same scale used in Figure 1 for both worldwide GDP growth (-2% to 5%) and IC market growth (-40% to 50%) was used for this chart. It is clear when looking at this specific timeperiod and using the historical growth rate scale end points, that IC market and worldwide GDP growth volatility from 2011 through 2017 is expected to be much more tame than in the past.
Figure 2
Worldwide GDP growth rates are expected to range from 2.5% to 3.0% from 2016 through 2021. IC Insights’ expects the IC market to mirror the narrow range of worldwide GDP growth with forecasted growth rates ranging from a low of 2% to a high of 7% through 2021.
Given the tight correlation between annual worldwide GDP growth rates and IC market growth rates, IC Insights believes that a significant and noticeable IC market cycle will not occur through 2021 unless there is a significant departure from trend, up or down, for worldwide GDP growth (e.g., <2% growth on the low side and >3.0% growth on the high side).
Suggested Items
Amphenol Reports Q1 2024 Results, Announces New Stock Repurchase Program
04/26/2024 | BUSINESS WIREAmphenol Corporation reported first quarter 2024 results. In addition, the Company is announcing a new three-year, $2 billion stock repurchase program.
Chinese Smartphone Market Maintains its Recovery Momentum at 6.5% Growth in 1Q24,
04/26/2024 | IDCAccording to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, China smartphone shipments grew 6.5% year over year (YoY) to 69.3 million units in 1Q24.
Nanotechnology Market to Surpass $53.51 Billion by 2031
04/25/2024 | PRNewswireSkyQuest projects that the nanotechnology market will attain a value of USD 53.51 billion by 2031, with a CAGR of 36.4% over the forecast period (2024-2031).
Technica USA Presents Inaugural Supplier Alliance Award at IPC APEX EXPO 2024
04/24/2024 | Technica USADuring IPC APEX EXPO 2024, Technica USA took the opportunity to thank all of their supply partners that made the effort to join them for the exhibition in their booth, as well to all of our SMT partners that had their own booths, with the latest in automation and process technology.
IDTechEx Report Unveils 3D Electronics Status and Opportunities
04/22/2024 | PRNewswire3D electronics is an emerging manufacturing approach that enables electronics to be integrated within or onto the surface of objects. 3D electronic manufacturing techniques empower new features, including mass customizability, greater integration, and improved sustainability in the electronics industry.