IC Insights: expects the global semiconductor market to grow 22% next year compared with the same period last year.

IC Insights's new McLean report, which provides a preliminary overview and annual forecast of the semiconductor industry from 2022 to 2026, will be released in January.

IC Insights uses this to explain the consistent data forecasting model of the analysis agency, with the first quarter of a year and the fourth quarter of the previous year (1Q/4Q) as the benchmark. This figure is marked as a "direction indicator" because actual 1Q/4Q changes do not directly predict final annual semiconductor market growth in a given year, but more accurately describe the expected direction and year-on-year intensity of annual semiconductor market growth. For example, in 2017, 1Q/4Q grew by 0%, and the semiconductor market grew at an annual rate of 25%, while in 2011, 1Q/4Q grew by 1%, but the semiconductor market grew by only 1% for the whole year. The difference is that the 1Q/4Q change is compared with the previous year's 1Q/4Q change, that is, year-on-year growth is critical.

Excluding the serious recession of the semiconductor industry in 1985 and 2001, IC Insights believes that the quarterly 1Q/4Q market change is also a good indicator of the direction and intensity of semiconductor market changes in the coming year. The reason why this model can well reflect the direction of the annual growth rate of the semiconductor industry lies in the seasonality of the semiconductor market itself. In view of the typical quarterly seasonal pattern of the semiconductor industry, a "foundation" has been basically established in the first quarter, on which the growth of the semiconductor market in the coming quarter will be based.

Overall, when the 1Q/4Q of a given year is better than that of the previous year, the annual growth rate of that year can be expected to be better than that of the previous year. When the current year's 1Q/4Q performance is worse than the previous year, the opposite is usually the case.

From 1984 to 2020, the average seasonal quarter-on-quarter of the 1Q/4Q global semiconductor market fell to 2 per cent. In the first quarter of 2020, the semiconductor market fell 3% from the fourth quarter of 2019, slightly below the historical average. The 1Q21/4Q20 semiconductor market changes by 3% (month-on-month), which is much better than the-3% month-on-month increase in 1Q20/4Q19 IC.

Therefore, IC Insights believes that the annual growth rate of the semiconductor market in 2021 (26%) may be higher than the 13% growth of the IC market in 2020. On the contrary, since the first / fourth quarter of 2021, the semiconductor market is expected to decline by 3%, and semiconductor market direction indicators show that growth in 2022 is much lower than in 2021 (11% in 2022 and 26% in 2021). If the 1Q22/4Q21 semiconductor market grows unexpectedly higher than minus 3 per cent, we may need to raise our current forecast of 11 per cent next year.

It is worth noting that the total growth of the 1Q21/4Q20 semiconductor market was 3%, the first positive growth of the 1Q/4Q IC market since 2011 (figure below). As the chart shows, in the 15 previous quarters of positive growth since 1984, except for three of them (the shaded part of the chart), the semiconductor market achieved strong double-digit growth throughout the year. For 2021, IC Insights currently forecasts a global semiconductor market growth rate of 26%, slightly higher than the global semiconductor market average annual growth rate of 24% since 1984, of which the 1Q/4Q IC market growth is positive.

Although the first quarter of this year is generally considered a "decline" quarter due to seasonal factors, a positive 1Q/4Q market is not uncommon. In the 38 years from 1984 to 2021, the 1Q/4Q market had 16 positive growth (42%). Even if the time span is narrowed to the most recent time range from 2000 to 2021, seven changes in the 1Q/4Q semiconductor market have been positive (that is, the numbers are positive).