Market watcher IBS is raising its growth forecast for the semiconductors market as the year transitions to 2017. International Business Strategies (IBS) sees a 0.2% increase in chip sales this year and 4.6% rise next year.

At an industry event in January, IBS chief executive Handel Jones was the bear, predicting 1.5 percent decline while Bill McClean of IC Insights was the bull, forecasting four percent revenue growth in 2016. Now both are roughly in agreement.

 
Semi-forecast-2016-2017-IBS Figure 1: Chip sales market forecast from this year to 2017. (Source: IBS)  

Last month, McClean updated his projections to 1 percent growth this year and 4 percent in 2017. The two analysts point to similar dynamics of rising memory prices and increasing memory content in smartphones from growing suppliers in China.

In his latest update, Jones said DRAM prices should rise 20% to 30% in the second half of this year, making up for most of the declines that started about a year ago.

NAND flash prices are also increasing “with bit growth of 36.2% in 2016,” driving the overall NAND market up 6.2% this year, IBS said in a statement.

Jones expects only small decreases in DRAM prices through 2017. NAND prices “are expected to remain at the $0.28-$0.35 level in 2017,” he said.

China’s rising smartphone makers are increasing their silicon content to levels competitive with market leaders such as Apple and Samsung, he added. For example, he noted the Xiaomi Mi 5S handset which costs $459 uses a Qualcomm Snapdragon 821 processor and 128gb of storage.

In other markets, IBS predicts data centre growth for semiconductors will be 12 percent to 14 percent in 2016 with similar levels in 2017. The automotive semiconductor market will grow at 13.0 percent in 2016 and 10.5 percent in 2017, Jones said.

“There continues to be significant risks to the semiconductor market in 2018 because of the potential for a decline in global GDP, but 2017 has high probability for growth at the 4.6% level,” he concluded.