March 2, 2001–Scottsdale, Arizona–IC Insights, a market research firm based in Scottsdale, AZ, believes that sequential quarterly growth will return to the IC industry beginning in 3Q01. Examining the last 5 IC industry downturns that have occurred over the past 20 years, IC Insights reports that there is both good and bad news regarding the current situation.
During each of the past 5 downturns, the initial quarterly decline in the IC market was always followed by 2 additional quarters of flat to negative sequential IC market results. However, IC Insights reports, the good news is that in every one of the past 5 downturns, the third quarter after the initial decline has always displayed positive sequential growth. This quarterly pattern held true even through the disastrous IC inventory burn year of 1985 and the global recession of 1998.
The current downturn portion of Cycle 6–the 6th IC industry cycle since 1970–began in 4Q00 with a 3% sequential quarterly decline in the IC market. Following historical trends, this negative quarter should be followed by quarterly IC market contractions in 1Q01 and 2Q01. However, sequential quarterly growth should return to the IC industry beginning in 3Q01. The timing of this renewed growth is expected to coincide with the elimination of the vast majority of the excess IC inventory that was accumulated by electronic system producers throughout 2000.
Interestingly, IC Insights points out that quarterly IC unit volume growth patterns are similar to those of IC dollar volumes. In all of the past 5 cyclical downturns since 1980, IC unit volume shipments recovered within 3 quarters after the first quarterly sequential decline was registered. Similar to the IC market, IC unit volume shipments first displayed a quarterly decline in 4Q00. Therefore, IC Insights expects quarterly IC unit volume growth to re-emerge in the IC industry beginning in 3Q01.