IC Insights expects the IC market to mirror the narrow range of worldwide GDP growth with forecasted growth rates from 2% to 7% through 2021.

Since 2010, worldwide economic growth has been the primary influencer of IC industry growth, according to IC Insights. And in this “global economy-driven” IC industry, factors such as interest rates, oil prices and fiscal stimulus are the key players 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.

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.

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).

By: DocMemory
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