Several forecasters line up and provide the outlook for semis and equipment in 2019.
2019 is expected to be a challenging, if not confusing, year for the semiconductor and fab equipment industries.
For example, Apple recently issued a warning about lackluster smartphone demand, which impacted several IC vendors and foundries. Then, the memory market is plummeting. In addition, the 10nm/7nm transition has proven to be difficult for many. And let’s not forget the geopolitical situation. So, to get a handle on what’s ahead, I’ve assembled chip and equipment forecasts from various research firms. Here’s what they are saying:
Gartner
2018 chip growth— 13.4%
2019 chip forecast— 2.6%
“The quarter-on-quarter growth is exhibiting a downward trend. We do expect some softness in the beginning of the year and some normal seasonal growth returning by the end of year in the overall market,” said Bob Johnson, an analyst with Gartner. “But the real picture is when you start breaking the market down in some of its parts. The first thing is the non-memory forecast. That’s kind of even growth and then an acceleration going forward. Going forward, we think (DRAM) prices are going to start dropping a little bit. We are already seeing that this year. This will bring revenue down. The bit growth is staying about the same. Then, NAND pricing went into an expected free fall. As a result, 2019 may go negative in terms of (NAND) growth.”
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IC Insights
2018 chip growth— 17%
2019 chip forecast— 2%
“For 2019, we have the memory market at -6% and the rest of the IC market at +7%,” said Bill McClean, president of IC Insights. “The big uncertainties for 2019 include the ongoing trade war between the U.S. and China and Brexit. Both of these situations are expected to be more clear by the end of the first quarter. Brexit is due to happen on March 29 (with or without trade deals established). The U.S. and China should have a trade deal in place before the beginning of March in order to avoid the U.S. tariffs on $200 billion of Chinese exports going to the U.S. going from 10% to 25%. If the U.S. and China trade war extends into the second half of this year, we will likely be reducing our market forecast, possibly substantially.”
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International Business Strategies (IBS)
2018 chip growth— 14.99%
2019 chip forecast— 0.23%
“For 2019, the non-memory IC market forecast is down by 1.32%. For 2019, the IC market (including memory) forecast is up by 0.23%,” said Handel Jones, chief executive of IBS. “Here’s the general outlook for ICs in 2019: DRAM forecast is up by 2.23%. NAND forecast is up by 3.02%. Power semiconductors forecast is up by 10%+. Image sensors forecast is up by 10%+.”
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SEMI
2018 fab equipment spending – 9.6%
2019 fab equipment spending forecast – minus 7.8%
“Plunging memory prices, trade tensions, and a sudden shift in companies’ strategies in response to trade rifts are driving rapid drops in capital expenditures, especially among leading-edge memory manufacturers, some fabs in China, and some projects for leading-edge nodes such as 7nm. Industry sectors that expected record-breaking growth in 2019, such as memory and China, are now spurring the decline,” said Christian Dieseldorff, an analyst at SEMI.
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Semico Research
2018 chip growth— 16%
2019 chip forecast— minus 0.7% (This does not include discretes)
“Worldwide GDP growth is expected to slow due to slower economic growth in key regions such as China as well as trade concerns,” said Jim Feldhan, president of Semico. “Traditional end markets such as smartphones and computing are expected to struggle. Memory revenues are expected to decline in 2019 due to falling ASPs. Both NAND and DRAM revenues are expected to decline by over 2%. On the other hand, logic IC revenues are expected to increase over 2.5%.”
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VLSI Research
2018 chip growth— 15.5%
2019 chip forecast—minus 2.7%
2018 semi equipment growth – 13.9%
2019 semi equipment forecast – minus 9.5%
“Much of the downturn will by driven by the memory market, where we expect DRAM to fall about 16% and NAND to be off about 11%,” said Andrea Lati, an analyst with VLSI Research. “The non-memory portion, such as analog, logic and others, will slow down in 2019. However, it should be in positive territory for the year. Capital expenditures were up 8% last year. This year, we expect CapEx to drop about 9%. That’s really due to the pullback we are seeing in the memory market.
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Clear as mud…
The forecasters have to start giving more detail around the end markets that aren’t memory and logic. Gartner (Bob) did a pretty good job but it could have been better. I know memory and logic drives the vast majority of the business, but that still leaves Billions of dollars of opportunities that are not in those sectors.
The semi industry has expanded so far into other parts of the economy, that we don’t talk about how significant and important the other segments are for the economy.