Slightly positive 1Q11/4Q10 IC market growth a good sign!

SCOTTSDALE, USA: With sequential 1Q/4Q worldwide IC market growth averaging -1.2 percent over the 1984-2011 timeframe, it is commonly assumed that the first quarter worldwide IC market is almost always down from the fourth quarter of the previous year.

However, as shown in Fig. 1, when including 2011, 1Q/4Q quarterly changes were positive in 15 of the past 28 years (i.e., more than half the time). Moreover, in 13 of the previous 14 years in which 1Q/4Q worldwide IC market growth occurred, the full-year annual gain of the IC market was at least 11 percent!

Fig. 1Source: IC Insights, USA.

Currently, there are a number of good signs regarding the economy that should help the IC market continue to grow at a good pace throughout 2011. The Conference Board's US index of leading economic indicators increased by 0.4 percent in March of 2011, the ninth straight monthly increase. Moreover, the Morgan Stanley global PMI (Purchasing Managers Index) was 55.8 in March, a healthy figure that indicates significant strength in the manufacturing segment of the worldwide economy.

With many IC companies guiding 3-5 percent sequential growth in 2Q11, it appears the IC market is beginning to build momentum as it enters the seasonally strong second half of the year. Currently IC Insights forecasts that the worldwide IC market will increase at least 10% in 2011 (a forecast it has maintained since November of 2010).

In fact, if rising oil prices do not cause a significant slowdown in the worldwide economy, IC Insights believes that a worldwide IC market increase of 15 percent or greater is a distinct possibility for this year.