In its upcoming Mid-Year Update to The McClean Report 2017 (to be released at the end of July), IC Insights forecasts that the 2017 global electronic systems market will grow by only 2% to $1,493 billion while the worldwide semiconductor market is expected to surge by 15% this year to $419.1 billion. Moreover, IC Insights forecasts that the total semiconductor market will exceed $500.0 billion four years from now in 2021.  If the 2017 forecasts come to fruition, the average semiconductor content in an electronic system will reach 28.1%, an all-time record (Figure 1).

Figure 1

Historically, the driving force behind the higher average annual growth rate of the semiconductor industry as compared to the electronic systems market is the increasing value or content of semiconductors used in electronic systems.  With global unit shipments of cellphones (0%), automobiles (2%), and PCs (-2%) forecast to be weak in 2017, the disparity between the slow growth in the electronic systems market and high growth of the semiconductor market is directly due to the increasing content of semiconductors in electronic systems.

While the trend of increasing semiconductor content has been evident for the past 30 years, the big jump in the average semiconductor content in electronic systems in 2017 is expected to be primarily due to the huge surge in DRAM and NAND flash ASPs and below average electronic system sales growth this year. After dipping slightly to 28.6% in 2020, the semiconductor content figure is expected to climb to 28.9% in 2021, an average yearly gain over the 2016-2021 timeperiod of about 0.8 percentage points.

Of course, the trend of increasingly higher semiconductor value in electronic systems has a limit. Extrapolating an annual increase in the percent semiconductor figure indefinitely would, at some point in the future, result in the semiconductor content of an electronic system reaching 100%.  Whatever the ultimate ceiling is, once it is reached, the average annual growth for the semiconductor industry will closely track that of the electronic systems market (i.e., about 4% per year).  In IC Insights’ opinion, the “ceiling” is at least 30% but will not be reached within the forecast period.

The 250+ page Mid-Year Update to the 2017 edition of The McClean Report further describes IC Insights’ IC market forecast data for 2017-2021.