The $2.2trn spent by the world on economic stimulus in 2009/10/11saved the world from a 3.2% economic contraction last year, according to Bill McClean, president of IC Insights, speaking at the European Nanoelectronics Forum 2011 in Dublin earlier today.
As it was, the world economy contracted 1.9% last year, which was bad enough. The stimulus money delivered 4.3%world economic growth this year. Without the stimulus money, world GDP would have grown 2.1% this year.
The bulk of the $2.2trn stimulus – 55% of it, worth $1.2trn, was spent last year; in 2009 the amount spent was $770bn or 35% of the total; this year only $220bn – 10% of the total was spent on stimulus which is resulting in a more subdued forecast for world GDP next year of 3.3%. Without the stimulus money the growth next year would have been 2.9%.
The semiconductor industry could grow by over 10% next year, but only if worldwide GDP grows over 3.8%, said McClean. A 3.4%-3.7% increase in GDP would deliver 6-10% growth in the semiconductor industry; 2.9% to 3.3% GDP growth would result in semiconductor industry growth of 1-5%; a world GDP growth of 2.5% to 2.8% will cause a 0.5% to 0% growth in the chip market.
Overhanging the chip market are some major miscalculations by major buyers of ICs:
Acer planned to sell 5.7m tablets this year, said McClean, and now expects to only sell 2.5m to 3m, leaving it with inventory bought to support a build of 5.7m units.
RIM bought inventory to support a build of 2.4m tablets in Q3 2011 and only sold 800,000 to 900,000 - again leaving a pile of unsold chips.
LG expected to sell 150m cellphones and 30m smartphones this year but is only going to sell 114m cellphones and 24m smartphones – leaving another mountain of unused ICs.
And then there was the debacle of HP’s TouchPad. The company had clearly bought enough chips to support a market run longer than six weeks.
All these piles of inventory overhang the market.