Global chip market set for strong rebound, but with downside risks
Qualitatively Penn is in line with the forecast from World Semiconductor Trade Statistics (WSTS) organization but, as is often the case, Penn is on the bullish side of forecasting
Penn is predicting the chip market will grow by between 3 and 5 percent in 2020 and then accelerate by between 6 and 12 percent in 2021. WSTS predicted 3.3 and 6.2 percent respectively (see Chip market will grow in 2020, accelerate in 2021, says bullish WSTS).
At the mid-point Future Horizons is predicting the global chip market will be worth $429 billion in 2019 and a further 12 percent growth would take it to $480 billion in 2021.
Penn inserted a number of caveats. His forecast is based on a steady economic recovery in 4Q20; no global lockdown as a result of second wave of the pandemic, no stock market collapse. Other risk factors are an escalation of the US-China trade war. “If Q4 holds steady 2020 will be strong,” Penn told an online version of his bi-annual industry forecast seminar.
However he also pointed out that based on impacts in 2019 and 2020 a trade war escalation could knock $30 billion off the 2021 total and second global lockdown a further $24 billion. That would turn 12 percent growth into a 12 percent decline.
Elsewhere in the discussion Penn sang the praises of Apple, who he said were poised to dominate remote healthcare through their far-sighted roll out of the iWatch, foundry TSMC which has moved a generation of two ahead of Intel in chip manufacturing and Nvidia.
Of Nvidia’s aspiration to buy ARM, Penn said: “You couldn’t find a better buyer. A top semiconductor company; exemplary for doing the job right. Their CEO is well-considered and a deep thinker.” Penn added: “As long as there is no data leakage [between ARM and Nvidia] I don’t see a problem. It’s got a good chance of success.”
Penn’s final thought was on the significance of TSMC in the global chip market and their perilous position in Taiwan, which is at the same time both an independent country and the 24th province of the People’s Republic of China. “How long can TSMC straddle both camps?” Penn asked before adding: “If TSMC shut today the world economy would collapse tomorrow. It would make Covid-19 look like a minor inconvenience.”
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