IC Unit Shipments to See First-Ever Back-to-Back Decline

Article By : Barbara Jorgensen

IC Insights forecasts that worldwide IC unit shipments will register their first-ever back-to-back annual decline in 2020.

Market researcher IC Insights forecasts that worldwide IC unit shipments will register their first-ever back-to-back annual decline in 2020. Prior to 2019, the previous four years that IC unit shipments declined were 1985, 2001, 2009, and 2012.

From 2013 through 2018, IC unit shipments were on a respectable growth path with an 8% increase logged in 2013; a 9% jump registered in 2014; a 5% increase displayed in 2015; a 7% increase shown in 2016; a double-digit growth rate of 15% in 2017; and a 10% increase in 2018.  In contrast to the double-digit increases in 2017 and 2018, 2019 marked only the fifth time in the history of the IC industry that IC unit shipments registered a decline, according to IC Insights.

IC unit volume, IC Insights, growth

Two of the four years in which IC unit volumes declined (1985 and 2001) were preceded by big increases (spurred on by inventory builds) of IC unit shipments—50% in 1984 and 27% in 2000. Although there was only a 2% increase in IC unit shipments in 2008, and there was not an excessive amount of inventory to purge; the depth of the global recession and its negative impact on electronic system sales caused the third annual IC unit decline in history in 2009 (-7%).

IC Insights’ baseline forecast for global IC market growth for 2020 now stands at -4% with total IC unit shipments expected to decline by 3% this year. If this forecast comes to fruition, IC Insights believes it would be the only back-to-back annual IC unit shipment declines in the history of the IC industry.

Gartner finalizes 2019 data
Gartner reported worldwide semiconductor revenue totaled $419.1 billion in 2019, down 12% from 2018.

“Oversupply in the DRAM market helped push the overall memory market down 32.7% 2019. The memory market accounted for 26.1% of semiconductor sales in 2019 and was the worst-performing device segment,” said Andrew Norwood, research vice president at Gartner, in a press release.

“The U.S.-China trade war distorted sales throughout the year and was an additional headwind to revenue growth for the overall global semiconductor market. During 2019, this brewing trade war seemed the most imminent danger to the world economy, but with the current spread of the Covid-19 virus, trade wars seem a minor issue in comparison.”

Intel regained the No. 1 position in the market as the downturn in the memory market negatively impacted many of the top vendors, including Samsung Electronics, the No. 1 vendor by revenue in 2018 and 2017.

Within the memory segment, Gartner reports, NAND flash suffered its worst sales contraction in its history with 2019 revenue declining 26.4% due to elevated levels of inventory at the end of 2018 and sluggish demand in the first half of 2019.

Weak demand from smartphone and hyperscale cloud service providers drove down prices and forced nearly all vendors to pull back on existing fab plans or, in some cases, cut wafer starts to levels below 2018. The NAND market began to stabilize in July 2019 when a power outage in the fabs jointly owned by Kioxia and Western Digital acted as a catalyst to reduce vendor inventories and prompted prices to increase from unsustainable lower levels.

Performance in other device categories was mixed as analog products declined 5.1% in 2019 and the optoelectronics segment grew 6.6% in 2019, Gartner said. Analog components, which normally closely track the overall semiconductor market, experienced a decline due to weak end-equipment markets, especially industrial and legacy automotive. Optoelectronics recorded the best performance of any device category due to the increasing number of cameras in smartphones.

“At this point, the global semiconductor market appears to be headed for another decline in 2020, due to the impact of the coronavirus on semiconductor supply and demand,” said Norwood. “Covid-19 has distorted supply chain and manufacturing operations across the world and will lead to a drastic drop in consumer and enterprise spending across most areas with a few exceptions. We expect the global semiconductor market to decline 0.9% in 2020, which is down from forecasted growth of 12.5% at the end of 2019.”

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