In January , Bill McClean, president of IC Insights (Scottsdale, Ariz.), originally projected a gloomy 2 percent drop in the semiconductor industry in 2005 amid a down cycle in the business.
Now, McClean sees a more positive scenario in the market, as he projects that the IC market will hit $186.5 billion in terms of revenues in 2005, up 4 percent over 2004. Unit volumes are projected to remain flat at 105.6 billion in 2005, while average selling prices (ASPs) are expected to climb by 4 percent to $1.77, he said.
The analyst has not changed his forecast for capital spending, which calls for a 5 percent decline to $43.4 billion in 2005.
Clearly, though, there is more optimism in the market. Wireless and NAND flash have shown strong growth in early 2005, thereby providing a boost for the year, he said. "Major IC inventory adjustments (were) completed ahead of schedule," he added.
What's more, the analyst sees stronger-than-expected growth in gross domestic product (GDP) for China, Japan and the United States.
On the other hand, there are some worrisome signs, which could impact overall growth in the IC industry. The silicon foundry and DRAM markets are weak, while high oil prices remain a concern, he added.
A few other analysts have also raised their forecasts. A surge in average selling prices (ASPs) for ICs has prompted one investment banking firm to raise its overall semiconductor growth forecast from minus 0.5 percent to positive 7.1 percent in 2005.
Paul Leming, an analyst with Princeton Tech Research (Princeton Junction, N.J.), in a recent report also lowered his IC forecast for 2006, from positive 9.8 percent growth to plus 6 percent. In 2007, the total IC market is expected to grow 9.3 percent, Leming said. The figures include ICs, memories, discretes, optoelectronics and sensors (see May 24 story).