Exploring Semiconductor Test Equipment Business Cycles

The semiconductor test equipment market has matured. You would expect an industry that came of age in 1980s would have matured over the last 35 years and in fact it has. The semiconductor test equipment industry has experienced consolidation, a sure sign of maturation. Two factors are important to consider with regard to it becoming a mature industry. First, market share shifts of 10 points or more are extremely difficult and slow to occur. The value of incumbency is very high and to achieve growth faster than competitors means uncovering new market opportunities through innovation of your existing products, applying existing technologies into adjacent or new markets, or through merger or acquisition.

A variety of technology and business trends impact the test equipment business cycles. In the full paper, which we invite you to download [hyperlink], we analyzed the impact of the following drivers n detail:

  • IC unit volume expansion
  • Equipment lead times
  • Seasonality
  • Degree of customization of SOCs
  • Chinese market
  • Replacement of home-grown ATE by commercial solutions
  • OSAT business model

Download the full paper

Forecast based on GDP growth?

Today, everybody in the semiconductor industry is aware of the substantial influence of the consumer. Behavior of end consumers in turn heavily influences the performance of the overall economy, which statistically is measured in the GDP. Recently IC Insights published a bulletin, which describes their findings examining the worldwide GDP growth and its impact on the 2016 IC market growth.

For the period from 2010 to 2015, IC Insights derives a remarkable correlation of 0.92 between the worldwide GDP growth and the IC market growth. Keep in mind that 1.0 would be a perfect correlation. If the correlation was relatively weak or even negative, IC Insights believes that the ongoing consolidation in the maturing IC manufacturer and supplier market together with other changes (e.g. a strong movement to the fab-lite model and a declining capex/sales ratio) would lead to a less volatile market.

With forecasted annual worldwide GDP growth rates that range from 2.7% to 3.1% over the next five years, IC Insights’ IC market growth rate expectations mirror the narrow range of worldwide GDP growth.

Read the full IC Insights bulletin “New 2016 McClean Report examines worldwide GDP growth and its impact on 2016 IC market growth” here: