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VLSI raises IC growth forecast to 8.9%

Posted: 07 Mar 2011 ?? ?Print Version ?Bookmark and Share

Keywords:DRAM? LCD panels? CMOS sensors?

The IC market is poised to achieve a 2011 growth rate higher than earlier projected, according to VLSI Research Inc.

The research firm previously predicted that the IC market would amount to $268.7 billion in 2011, posting an 8.1 percent year-on-year growth. It has now revised its forecast, pegging 2011 IC market value at $270.7 billion for an 8.9 percent increase.

Last year, the IC market grew 30.9 percent, according to the firm. Meanwhile, there are mixed signals in the IC market. ''Order activity turned lower for the first time this year,'' according to VLSI in a newsletter.

''It's driven largely by the weakness in the memory market," according to the firm. ''DRAM orders have fallen to low levels and they've yet to bottom. NAND flash is doing well and it's picked up some of the slack, though it has not been enough to offset the weakness in DRAM. The rebound of DRAM prices early in the year brought hopes that this market has turned the corner and that spending would pick up in the second half of the year. However, the recent slide of DRAM spot prices is troublesome, putting a big question mark for future spending plans,'' VLSI explained.

There is more bad news for DRAM. ''DRAM spot prices plunged for the second straight week despite rumors of supply disruptions. These rumors failed to drive prices higher because some DRAM manufacturers were releasing supply in the spot market. As a result, the earlier optimism among traders has turned into caution. NAND flash fared better than DRAM. Still, slow demand is a nagging issue for NAND and it's putting ASPs under pressure despite tight supply in the spot market,'' according to the firm.

NAND and other chips could get a boost, thanks to the recent announcement of Apple Inc.'s iPad 2. ''Regarding the iPad, our contacts see an improved iPad 2 production forecast for both 1Q11 and 2Q11. 1Q11 iPad production is now set at 5.5 million units, up from 5.1 million units previously, with iPad driving about 2 million units of that total (up from about 300,000 units previously),'' said Craig Berger, an analyst with FBR, in a report. ''For 2Q11, our contacts now see 7.2 million units of iPad production, with almost all of that production of iPad 2 devices, meaningfully ahead of the prior iPad 2 production ramp plans.''

But for the most part, there is a lull in the quarter. ''Regarding updated back-end assembly/test checks, we see stability in aggregate versus prior checks, with 1Q11 production set to seasonally fall about 6.5 percent quarter-over-quarter, with slight positive production revisions by Broadcom, AMD, and Xilinx not fully offsetting production declines by Mediatek and Marvell,'' he said.

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