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Semi Content in Electronic Systems Forecast to Drop to 26.4% in 2019

Daniel Nenni

Admin
Staff member
Falling IC ASPs to cause semiconductor content to plunge this year after setting a record high of 31.1% last year.

In its upcoming Mid-Year Update to The McClean Report 2019 (to be released at the end of July), IC Insights forecasts that the 2019 global electronic systems market will grow 4% to $1,680 billion. In contrast, the worldwide semiconductor market is expected to drop by 12% this year to $443.8 billion after exceeding the $500.0 billion level for the first time last year. If the 2019 forecasts come to fruition, the average semiconductor content in an electronic system will drop to 26.4% after setting the all-time record of 31.1% last year (Figure 1).


Figure 1
Historically, the driving force behind the higher average annual growth rate of the semiconductor industry as compared to the electronic systems market is the increasing value or content of semiconductors used in electronic systems. With global unit shipments of cellphones, automobiles, and PCs showing maturity and slowing over the past 10 years, the disparity between the 3% 2008-2018 CAGR registered in the electronic systems market and the 7% 2008-2018 CAGR displayed by the semiconductor market is directly due to the increased content/value of semiconductors in electronic systems.

While the trend of increasing semiconductor content has been evident for the past 30 years, the big jump in the average semiconductor content in electronic systems in 2017 and 2018 was primarily due to the huge surge in DRAM and NAND flash ASPs and average electronic system sales growth last year. The memory IC ASP jump experienced over the past two years (56% in 2017 and 29% in 2018) is expected to reverse itself this year (-33%) and bring the semiconductor content percentage down with it. However, beginning in 2020, the semiconductor content percentage figure is expected to once again resume its climb and eventually reach a new high of 31.8% in 2023.

The trend of increasingly higher semiconductor value in electronic systems has a limit. Extrapolating an annual increase in the percent semiconductor figure indefinitely would, at some point in the future, result in the semiconductor content of an electronic system reaching 100%. Whatever the ultimate ceiling is, once it is reached, the average annual growth for the semiconductor industry will closely track that of the electronic systems market (i.e., about 4%-5% per year).

The 200+ page Mid-Year Update to the 2019 edition of The McClean Report further describes IC Insights’ IC market forecast data for 2019-2023.
Report Details: The 2019 McClean Report

Additional details on semiconductor and IC market trends will be provided in the Mid-Year Update to The McClean Report—A Complete Analysis and Forecast of the Integrated Circuit Industry. A subscription to The McClean Report includes free monthly updates from March through November (including a 200+ page Mid-Year Update), and free access to subscriber-only webinars throughout the year. An individual-user license to the 2019 edition of The McClean Report is priced at $4,990 and includes an Internet access password. A multi-user worldwide corporate license is available for $7,990.

To review additional information about IC Insights’ new and existing market research reports and services please visit our website: www.icinsights.com.


PDF Version of This Bulletin
A PDF version of this Research Bulletin can be downloaded from our website at http://www.icinsights.com/news/bulletins/
 

Arthur Hanson

Active member
The biggest growth opportunity for the semi sector is to apply its ability to mass produce and lower costs while increasing functionality to the MEMS sector which Morris Chang stated is one of the greatest opportunities for mankind and industry. We are seeing just the tip of the spear and combining MEMS as the interface with AI/ML is going present a whole new area of discovering and creating new markets. Automation of Everything is going to create as many or more social challenges as well as technical ones. Medical and education are about to be turned on their head as is probably our whole social structure. The impact of the world of micro technologies of all types is just beginning to be felt and few fully realize the dramatic opportunities and dangers it presents. I hope we have the wisdom to use the march and penetration of technology to our benefit instead of destruction. Many will defend the current system for they don't understand and can't comprehend their place in the future. Defending the past, if allowed, will be the keys to our destruction. To guarantee a future we want to live in, we will need to use all our tools and everyone's intellect to their fullest. The very best structures develop the skills and mindset to use both their human and technical resources to their fullest potential. Maximizing both is the ultimate good. The more vision we can have, the better.
 
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