- Is the current semiconductor industry growth rate sustainable?
The discussion that follows is taken from the IC Knowledge - 2002 IC Economics report.
- The relative size and growth rates of worldwide GDP, electronic systems and semiconductors are illustrated in figure 1. At the top level is world-wide Gross Domestic Product (GDP) of $46.8 trillion dollars. The next level down is world-wide electronic systems production of $879 billion dollars. At the bottom level there is $139.5 billion dollars in world-wide semiconductor revenue [1].
- From 1980 to 2000, the world-wide GDP, electronic systems and semiconductor outputs grew at 3.2%, 7.1% and 14.1% respectively, see figure 1. Prior to 1980, electronic systems were growing at a faster rate but since 1980 the growth rate has been slower. From the difference in growth rates it can be seen that electronic systems have increased as a percent of GDP from approximately 0.8% to 1.6%, and semiconductors as a percentage of electronic systems from approximately 5.4% to 19.0%. If current growth rate trends continue until 2010, electronics systems will represent 2.6% of GDP and semiconductors will represent 25.8% of electronic systems on a world-wide basis - see figure 2. If these market penetration percentages are not achievable at the GDP and electronic systems level, then the growth rates at the semiconductor level will slow
- The key question becomes, is 2.6% of GDP achievable for electronic systems, and is 35.8% of electronic systems achievable for semiconductors.
- At IC Knowledge we believe that 2.6% of GDP is a reasonable level for electronic systems. Electronics systems continue to become increasingly important in our daily lives, and electronics have already become the largest industrial segment in the US.
- Many observers believe that 30% is an upper limit for semiconductor content in electronic systems. At IC Knowledge we believe that in the short term 30% is too aggressive. Although there are some newer electronic systems such as digital cameras, set top boxes, internet game consoles and internet access devices that have semiconductor content between 30% and 35%, the vast majority of systems fall in the 15% to 25% range, and some older electronic systems such as color televisions, car radios and video cameras have semiconductor content <10%. The higher semiconductor content products are certainly in the hot growth markets, but it will take time to bring the average up. IC Insights is forecasting that semiconductor content in electronic systems will not exceed 20% through 2006 and will then begin growing again at an average of approximately one percentage point per year. In fact the last two peak years for the semiconductor industry have produced peak semiconductor content in electronic systems of 21.6% and 21.0% before falling back [1].
- This analysis suggests average semiconductor growth over the next few years of 8% to 9% in-line with electronic systems growth, followed by a period of 10% to 11% growth as semiconductors pick up more share in electronic systems again. The years of 15.1% per year semiconductor growth may be coming to an end.
- References
- [1] "The McLean Report 2002 Edition: An In-Depth Analysis and Forecast of the Integrated Circuit Industry," IC Insights (2002).
- Related Articles
- The relative size and growth rates of worldwide GDP, electronic systems and semiconductors are illustrated in figure 1. At the top level is world-wide Gross Domestic Product (GDP) of $46.8 trillion dollars. The next level down is world-wide electronic systems production of $879 billion dollars. At the bottom level there is $139.5 billion dollars in world-wide semiconductor revenue [1].
- Revenue trends - trends in worldwide semiconductor revenue.
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