IC Insights has lowered its 2015 IC market forecast from 1% growth to negative 1%, citing a slowing China economy, strong US dollar, and falling DRAM ASPs.

The rare occurrence of significant strengthening of the US dollar versus most of the major currencies this year is expected to deflate the 2015 worldwide IC market growth rate by at least three full percentage points, IC Insights said. This "deflation" presents itself in the form of lower IC average selling prices (ASPs), which are forecast to register a steep 5% decline this year when reported in US dollars.

The beginning of 2015 started out very strong with the January 2015/2014 IC market showing year-over-year growth of more than 10%, IC Insights observed. In total, the first-quarter 2015 IC market ended up 6.5% higher than the first-quarter 2014 worldwide IC market.

The second quarter of 2015 began by registering similar monthly year-over-year IC market growth that was displayed in the first quarter, with the combined 2015 April and May IC markets up 5.6% compared to the combined April and May IC markets in 2014, IC Insights indicated.

However, things began to change in June as the IC market ended up 3.1% lower than the June 2014 IC market, IC Insights noted. Unfortunately, the 2015 July and August worldwide IC markets followed the disappointing year-over-year trend that began in June.

It should be noted that the average second half versus first half of the year growth rate in the IC market since 1990 is 9.2%. However, IC Insights is forecasting that the second-half 2015 IC market will be down 1.0% as compared to first-half 2015. If this occurs, it would be only the fifth time since 1990 that the second half of the year IC market was worse than the first half (the other years being 1996, 2001, 2008, and 2011). This weak second half market has resulted in IC Insights lowering its full-year 2015 IC market forecast from 1% to negative 1%.

Looking ahead to 2016, three reasons lead IC Insights to believe that the worldwide IC market will register mid-single digit growth next year. The current excess IC inventory is forecast to be under control by early 2016, while the worldwide GDP growth in 2016 is expected to show some improvement as compared to 2015. Meanwhile, the US dollar is unlikely to show nearly as much strength against the major foreign currencies in 2016 as it did this year.

By: DocMemory
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