IC Insights reports that integrated circuit (IC) unit shipments are poised to grow 10 percent in 2007, which would result in a new industry milestone: six consecutive years of annual double-digit increases. On the one hand, strong annual IC unit shipment growth rates are good news for IC suppliers. Factories will be running at near capacity. However, continued pressure on IC average selling prices may cause a prolonged period of "profitless prosperity" for IC suppliers, according to IC Insight's mid-year update.

Strong shipments of DRAM (49%), NAND flash memory (38%), and interface (60%), data conversion (58%), and automotive-related analog ICs (32%) are driving overall industry demand and keeping IC shipments at a high level.

Dating back to 1980, the IC industry has twice seen periods of three consecutive years of double-digit unit growth -- 1982-1984 and 1986-1988. After those three-year spurts, IC unit growth dropped off significantly.

However, since 2002, IC unit shipments have been on a tear, growing by double-digit amounts each year. There seems to be no slowdown in sight. IC Insights believes there is a very good chance that unit demand will continue to increase at least 10% annually over the next 5-10 years as new and evolving applications in communications (cell phones) and consumer electronic systems (DTVs, handheld computing, music, gaming devices, etc.) continue to incorporate large quantities of IC units. Moreover, the continuing development of emerging country markets is also contributing to surging demand for IC units.

Average annual unit growth of 10% seems to be a “lock” for the industry. Using that baseline, future IC market growth will be largely influenced by changes in the average selling price (ASP) of devices. For example, 10% unit growth coupled with either a +5% or -5% change in ASP yields a 10-point range of market growth of between 5% and 15%.

About this study

IC Insights’ 2007 Mid-Year Update to The McClean Report is a 190-page updated market forecast report on the IC industry. It features analysis of all major integrated circuit market segments and global economic trends as well as revised projections on semiconductor capital spending and forecasts on IC product revenues, unit volumes, and ASPs through 2011.

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