SCOTSDALE, AZ — Despite seeing a 35 percent growth this year, the integrated circuit industry could be on the verge of another slowdown says Arizona market research company IC Insights.

According to the McClean Report 2001, the IC industry is seeing the beginning of the sixth cyclical slowdown since 1970, largely triggered by global economic recession, IC industry overcapacity and IC inventory corrections. However, the slowdown should be short-lived.

According to the report, worldwide GDP is forecast to drop to 3.5 percent or less in 2001, down from 4.8 percent in 2000. That reduction in growth is expected to have a negative impact on electronic system sales next year.

In 2000, MOS IC wafer capacity increased to 24 percent, eclipsing the 21 percent boom experienced in 1995. Much of the current increase can be linked to a 79 percent increase in capital spending in 2000. IC Insights predicts capital spending will increase by no more than 10 percent in 2001.

The research company also reports that many electronic system producers accumulated excess inventory in 2000, which historically has led to IC pricing weakness.

Finally, despite modest growth in 2001 and 2002, IC Insights expects the market to increase 20 percent in 2003.

The full report is scheduled to be released in January.

–Jeff VanPelt