>>Do you think global players like DELL and HWP, etc. will reverse trend and bring more manufacturing of chips in-house? I believe HWP addressed this
by investing in Charter Semi in Singapore, but it seems that they are at the mercy of the market in good times when they outsource too much.<<
Dell has essentially no internal chip design expertise. Their forte is logistics. They'd have to be insane to manufacture their own chips.
In general, yes it is possible to become too dependent on an external foundry. But when a fab costs $3 billion and climbing, smaller companies don't have much choice. And larger companies, because their orders are so big, are much less likely to face capacity squeezes. The outsourcing trend is likely to peak at some point, like all trends do, but it seems to have a long way to run yet.
Re: consumer markets, yes they certainly are a source of increasing demand, and yes the forecasts I've seen take this into account. But steadily increasing demand does not mean an end to cyclicality. (See the 1996 memory crunch, when consumption of memory reached all time highs in bit terms, but no one made any money.)
It's also important to remember that consumer markets are extremely price sensitive. Most people simply aren't going to pay $1000 plus for a TV, no matter how many cool features it gives them. So a lot of this demand will *only* occur if silicon prices continue to drop. And silicon pricing dynamics are one of the big reasons why cycles happen.
Katherine |
