IC market rebounds, but CAGR remains low

The 1980s were characterised by the relatively new but rapidly growing personal computer market and strong demand for computer memory like DRAM, leading to a CAGR of nearly 17%.

In the 1990s, Intel and AMD battled in the MPU space to provide the greatest PC MPU horsepower. Meanwhile, Microsoft introduced new OSs every two to three years and each upgrade required a big boost in DRAM to run the systems efficiently. CAGR averaged 13.6%.

IC market growth through the years

The first decade of the 21st century was not kind on the IC market. Things started great in 2000 with 35% IC market growth, but two global recessions (one in 2001 due to the dot.com bust and the other due to the severe financial meltdown that started in 2008) prevented the market from gaining any traction. Continued flat or falling IC ASPs later in the decade resulted in the IC market showing a paltry 0.5% CAGR from 2000-2009. These setbacks started a trend of significant company consolidation within the IC industry.

Following the recession in 2009, the IC market rebounded with 33% growth in 2010. Fewer suppliers and modest capital spending have had a positive impact on IC ASPs since then. While demand for standard PCs (desktops and notebooks) has cooled, the market for tablet computers and smartphones has remained hot. Sharing data on mobile/wireless devices and growing interest in the IoT will give a boost to IC market. Total IC market growth this decade is forecast to average 4.1% per year.

Over the past 30 years, the IC market has averaged 9% annual growth, but over the past 10 years, it has exceeded that 30 year average growth only one time (in 2010). Annual IC market growth rates are forecast to remain at or below 9% through 2019.