Sustained demand for smart phones and recovery in PC demand will combine to lead the upturn in revenues. Automotive market will help, too. But, DRAM chip makers will face uncertain future in 2016, as an overhang of supply glut is driving down DRAM prices.
Yet, overall growth in other sectors than DRAM chip would be fast enough to offset setbacks in DRAM sales.
As a result, the CAGR, or compounded average growth rate will stay above 5.6% between 2015 and 2018. .
At a press conference held in Seoul, Risto Puhakka, president with market research firm VLSI research said, “Look at the history in 2014 and 2015, and you can see worldwide electronics sales grow by only 2.2% during the last two years in terms of CAGP. At the same time, IC sales grew by 5%. Essentially, that difference can’t be sustained for a long time. What we saw was market corrections. What we saw IC sales decline 1.3% in 2015, electronics grew only half percent. Essentially what we saw during the last 6 months were corrections of this difference. Going forward to 2016, we do expect IC sales to grow 4.1% and electronics sales to grow 3.7%.”
semicon korea 2016_press conference, Risto Puhakka, president with VLSI research
Yet, he presents dismal pictures for semiconductor equipment sales, as capital expenditures on DRAM fabrication facility would be significantly curbed on concerns that supply would outgrow demand. Worse yet, there are no other sectors in sight to take up the slowdown.
“In 2015, worldwide IC equipments sales came down 0.6%. We do expect reasonably difficult year in 2016 with a 5% decline in 2016, mainly driven by two critical factors. DRAM capital expenditures would come down significantly in a 20% to 30% range. At the same time, we don’t see any other segment really picking up that difference. Only really strong, we see, NAND investments, especially 3D (NAND). Without that investment, (there would be) much worse numbers, “added he.
By applications, smart phones would continue to remain the biggest demand for semiconductor chips. PC demand will bounce back, too, driving up C sales. Automotive market will also drive the semiconductor sales significantly going forward in terms of overall volume, but as a share of total dollar-based semiconductor sales, will still remain small. Yet, IoT and wearable markets won’t do much to boost semiconductor sales, as demand will remain limited.
By product, analog and discrete, opto and others like power management ICs would remain bright spots, growing 5.4% and 4.7%, respectively. Sales of microprocessor units, or MPUs would rebound to grow by 3.4%, reversing a projected year-on-year 3.9% decline in 2015. Sales of NAND flash memory chips are forecast to jump by 8.4% following the projected 3.8% rise in 2015.
Yet, sales of DRAM chips would keep slumping by 3.6% year-on-year for two consecutive yearly drops, following the projected 3.1% decline in 2015. Much of the sales slumps are blamed on over-capacity and price deterioration of DRAM chip.
Looking forward, he forecast that the year 2017 would see the stronger sales growth, compared with 2016. Worldwide semiconductor sales would jump by 6.7%, seeing solid demand growth across a broad spectrum of market segments.
After ending two years of sales drops, sales of DRAM chips especially are forecast to bounce back, driving the upturn. Sales of DRAM chips are forecast to grow by 9.5% from a year ago, working out overcapacity and price drops.
Sales of NAND flash memory chips keep growing by another 7.3%.