The recovery in the chip industry will happen quicker than the recovery in the general economy, it was stated at Future Horizons' International Forecast Seminar 2009 (IFS2009 in London this morning).
"We see a period when chip growth is accelerating quite strongly while the general economy continues to be weak", said Malcolm Penn, CEO of Future Horizons. The reason, he said, is the IC industry's capacity for innovation which is always stimulated by recessions.
The IMF expects the world GDP to be down 1.4% this year but to grow 2.5% next year. But although the world suffered a 'Year of Hell' from Q208 to Q209, Penn pointed out that this was: "The Q408-Q109 downturn was mass panic over-reaction. The downturn turned out to be very sharp down and very sharp up. This trough lasted one month. We've never had an April with such growth."
To put it in perspective, Penn said: "GDP in 2009 is still bigger than it was in 2007 in absolute size, we're not back to living in caves."
The chip industry massively over-reacted with huge de-stocking in Q4, said Penn, but now optimism is growing.
"The data is recovering faster than was thought possible even three months ago", said Penn, "people feel they can build businesses rather than concentrating on survival."
A big challenge will hit the capital equipment people because recent capex spending levels have been so low.
"We haven't spent so little on capex since the early 1990s when the industry was a quarter the size it is now", said Penn, "I don't know how the capital equipment people will react when one day they get a phone-call saying: 'Instead of cutting our capex by another 50% this quarter, we've increased it by 300%' - and it will all happen in one quarter."
Penn concluded: "Fab capacity is going to get tight; there's no way it can't get tight."
The Future Horizons forecast for the chip market this year is that it will fall 13.7%. From then on, however, it will really start to motor: 2010 will grow 19%; 2011 will grow 28% and 2012 will grow 18%.