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Analyst reveals 30-year seasonal patterns in IC market

Posted: 29 Aug 2012 ?? ?Print Version ?Bookmark and Share

Keywords:IC market? smartphone? tablet? Ultrabook? The McClean Report 2012?

IC Insights has released the August Update to The McClean Report 2012 that analyzed the typical pattern of sequential quarterly IC market growth rates during a calendar year, a phenomenon usually referred to as "seasonality." The report has looked into the past 30 years from 1983 to 2012 and includes IC Insights' forecasts for 3Q12 and 4Q12 results.

When averaging the quarterly IC market growth rate figures in the past 30 years, the Q3 average increase was the highest at almost six percent. In contrast, the average sequential growth rate during the Q1 of the past 30 years was -1.4 percent. When using 10 percent annual growth as the breakpoint for defining "good" and "poor" IC market years, the average quarterly growth rates since 1983 change dramatically. The number of poor growth years (including 2012) is expected to outnumber the good growth years by two, showing a 16-year/14-year split, respectively.

It is interesting to note that in the 14 "good" growth years (i.e., 1983-1984, 1986-1988, 1992-1995, 1999-2000, 2003-2004 and 2010), the Q2 of the year typically registers the highest sequential quarterly growth rate. This is somewhat of a surprise as the Q3 typically comes to mind first when thinking about the strongest seasonal quarter. Q3 and Q4 average sequential growth rates slow from the Q2 peak but are usually still very healthy during good growth years. Even the Q1's sequential average growth rate is positive (3.1 percent) in years with a good growth rate.

In the 16 "poor" IC market growth years (i.e., 1985, 1989-1991, 1996-1998, 2001-2002, 2005-2009 and 2011-2012), the H1 of the year typically takes the brunt of the slowdown. The H2 of the average poor growth year usually rebounds from the first half IC market downturn. For 2012, the Q1 is the only quarter that is expected to display negative sequential growth and the 2H12/1H12 IC market is forecast to register a 10.5 percent increase, about equal to the past 20-year 2H/1H average growth rate.

Figure 1: 1983-2012F Average Sequential Quarterly IC Market Growth Rates.
Source: WSTS, IC Insights.

The 3Q/2Q IC market growth trend line has been on an upward slope since 1983, indicating that the IC market is becoming increasingly dependent upon the seasonal growth in the Q3 of the year. With the slow shift of electronic systems sales from businesses to consumers in the past 30 years, it makes sense that IC market is becoming stronger in the H2 of the year and the Q3 in particular.

It should be noted that the two biggest markets for ICs (i.e., PCs and cellphones) are both highly seasonal and now usually register noticeable H2 of the year strength (an analysis of the cellphone and PC markets is presented in IC Insights' IC Market Drivers Report). Moreover, when one factors in the typically strong consumer IC sales ahead of the holiday shopping season, the total IC market is likely to continue its recent pattern of strengthening Q3 seasonality.

In contrast to the trend of increasing IC sales in the Q3 of the year, Q4 sequential IC sales growth has been on a downward slope since 1983. In fact, the trend line for Q4 sequential growth moved into negative territory beginning in 2007. However, the expectation for the introduction of new electronic system products (e.g., smartphones, tablets and Ultrabooks) beginning in late 3Q12 is forecast to help 4Q12 IC sales increase sequentially by three percent this year.

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