+4% this year and +12% next year, forecasts Penn

“If GDP catches cold the chip industry catches pneumonia,” said Malcolm Penn (pictured) CEO of Future Horizons, at the company’s IFS2020 Forecast Seminar yesterday, “it didn’t happen this time – the industry’s momentum just kept powering on.”

Whereas the IMF expects a 4.9% drop in world GDP this year, Penn is expecting 4% growth for the chip industry. “It can’t be less than 3%,” he added.

Penn expects a 2020 market worth $428.65 billion with a downside risk of $424 billion and upside chance of $432 billion. 

Unit growth has stayed on its 8% traditional growth rate and the thing worrying Penn is over-capacity with capex running at 15% of sales compared to its usual 12%.

It’s not the TSMCs and Sansungs driving the capex spend it’s China which is accounting for a quarter of the world’s capex spend this year, said Penn.

And the spend is not on bricks and mortar but on manufacturing equipment – “real kit to make real wafers”, said Penn.

In the last ten years, China has increased its capex spend 4.3x, said Penn, while the USA’s spend has halved, Japan’s has fallen 24% and Europe’s has fallen so far that it’s ‘barely registering”.

Not only is Europe barely registering on chip manufacturing, its chip usage is down to 9% of the world market and heading to 8%.

‘If Q4 holds steady, 2021 will be strong,” says Penn who forecasts growth of 12% for a total 2021 semiconductor market of $480 billion.