LONDON—Malcolm Penn, the founder and CEO of Future Horizons Ltd. and usually one of the most bullish of chip market forecasters, thinks 2017 could be a third year of decline for the global semiconductor industry.
Penn told attendees at his autumn industry forecast seminar that 2016 was already headed towards a 1 percent decline and said political and economic uncertainty — born of incompetence — continues to dull business confidence and recovery.
Forecast of quarterly global chip sales for 2016 in dollar billions. Source: Future Horizons.
For the fifth year in a row the semiconductor market had refused to recover, Penn said. Apart from a dramatic year-on-year recovery in 2010 after the market crashed in 2009 after the collapse of Lehman Brothers late in 2008, the chip market has been essentially flat. From 2011 to 2016 it is averaging just 1.7 percent annual growth, Penn pointed out. The industry is now in the hands of relatively few high volume chipmakers who decline to invest in manufacturing capacity speculatively, Penn said.
The integrated circuit is now ubiquitous in society and so the chip market is strongly coupled to the general economy, which has been drifting for a number of years, said Penn. This poor market growth was also a driver of consolidation in the market place, he said.
Optimistic forecast of quarterly global chip sales for 2016 and 2017 in dollar billions. Source: Future Horizons.
Penn then forecast a spread for 2017 of between 2.8 percent growth on the bullish side to a 5 percent decline on the bearish side. Penn said that without a compelling application for chips to replace the lacklustre PC, tablet and smartphone market it was likely to be “business as usual” in 2017 which meant another bad year. For the bullish forecast to come true would require the global economy to “kick in.”
Pessimistic forecast of quarterly global chip sales for 2016 and 2017 in dollar billions. Source: Future Horizons.
With turmoil over Brexit in Europe, over war in the Middle-East and over the Presidential election in the United States this looked unlikely Penn said. He also said that constant optimism for next year, whichever year, followed by regular downgrades is proving monotonous and unhelpful.
Article originally posted on EE Times Europe.