Applied: Semiconductor market to revive after three to six months
Katherine Chiu, Hsinchu; Jane Wang, DigiTimes.com [Thursday 29 August 2002]
At the 2002 technology seminar held by Applied Materials Taiwan on August 28, Applied executive vice president David NK Wang stated that the recent weakening of the semiconductor market is mainly due to a decline in the consumer confidence index. He added that, as other indicators such as the retail price index, durable goods orders and semiconductor unit shipments have risen, he believes the semiconductor market will revive after three to six months.
As consumers now account for half of electronics products users, and life cycles of consumer electronics products have shortened to only six months, even a slight dip in consumer confidence can make waves in the semiconductor industry, Wang indicated. According to statistics from the US, the consumer confidence index this year has plunged from 97.4 in July to 93.5 in August, the lowest since November 2001. Apparently, consumer confidence is still conservative, mainly due to the feeble job and stock markets, he said.
On a more optimistic note, however, Wang pointed out that inventory of electronics products in the second quarter has greatly decreased from previous quarters. Moreover, the retail price index has steadily increased since February, and US industry production rose in value from June to July. Also, July durable goods orders reached US$18 million, up 8.7% from June, the highest growth since October 2001, and orders for computers and electronics products have grown 3.9%, indicating that the US market is not quite as miserable as imagined.
Looking at global GDP, 2001 and 2002 have been the two worst years for the market over the past few years, but 2003 should be better. Global monthly IC shipments reached 30 billion units in June this year, achieving 90% of the levels during the market peak in October 2000.
Wang agrees with TSMC chairman Morris Chang’s earlier forecast of a three to six-month “pause” in market recovery, citing that Applied’s orders are indeed down from the first half. He notes, however, that new digital camera models, personal digital assistants (PDAs), and color display/ camera functions on mobile phones are set to push for a recovery in 2003. He predicts the semiconductor production value in 2003 to approach US$160 billion, up slightly from US$150 billion this year, and that it would reach US$300 billion in 2008.
As foundries cut capital expenditures, Wang expects 12-inch production to hit the mainstream even later than the expected date of 2004. He forecasts that 12-inch fabs will account for 7.4% of global semiconductor capacity in 2003, for which 64.7% will be based in the Asia-Pacific region and Taiwan alone will account for at least 40%.
Wang added that the Asia-Pacific region has accounted for over 30% of global semiconductor capital expenditures since 1999, with the ratio poised to exceed 60% this year, stimulated by Taiwan’s foundries.
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