Chip market to fall 10% in 2019, then rebound

March 25, 2019 //By Peter Clarke
Chip market to fall 10% in 2019, then rebound
The semiconductor market will decline in 2019 by 10 percent, according to market researcher Semiconductor Intelligence. This would translate into a 2 percent decline excluding memory.

The company notes that several rival organizations put forecasts in the -5 percent to -1 percent range. Gartner projects a 2.6% gain for semiconductors. IC Insights projects the IC market will decline 9% in 2019, but will be flat excluding memory. WSTS expects 2.6 percent growth for semiconductor excluding memory.

The current outlook for the semiconductor industry for 2019 assumes lower memory prices, slower electronic equipment demand, inventory corrections, and slower growth for the global economy. Despite all the uncertainty, few analysts expect a global recession in 2019.

The expectations for the 2020 semiconductor market are for a moderate rebound. VLSI Research and Gartner forecast growth in 2020 of 7.0 and 8.1 percent, respectively. The preliminary 2020 forecast from Semiconductor Intelligence is for 5 to 10 percent growth.

The global economic outlook points to slower growth in 2019. The International Monetary Fund (IMF) January 2019 forecast is for world GDP growth to slow from 3.7 percent in 2018 to 3.5 percent in 2019. The decline is led by the advanced economies, with the U.S. slowing from 2.9 percent in 2018 to 2.5 percent in 2019 and the Euro area slowing from 1.8 percent to 1.6 percent. China is expected to drag down growth as its GDP growth decelerates from 6.6 percent in 2018 to 6.2 percent in 2019.

On the positive side, India continues to show over 7 percent growth and increasing.

The outlook for 2020 shows a slight improvement, with an increase to 3.6 percent world GDP growth led by emerging and developing countries.

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