Thanks for posting this. I read the same thing in SI (Semiconductor International) and agree with Brad Mattson. It seems we share the same attitude. My most favorite phrases you shared were:
"still doing business as usual. We're still doing technology at any cost,"
"The semiconductor industry will have to shift its focus from chasing the latest "gee-whiz" technology to those technologies that it can afford."
It's nice to see a CEO of the stature of Brad Mattson agree with what I have been saying for close to the past year.<GGG>
Seriously, I hope people are listening and start making fiscally responsible decisions for future manufacturing needs. The tide is starting to shift away from the US based semiconductor industry to the Pacific Rim foundry manufacturing scenario. Instead of the Japanese eating our lunch with cars, steel, etc., this time it will be the Taiwanese and Korean manufacturers. Between Windond, UMC, TSMC and Chartered Semiconductor (sorry if I left any others out), they are on a clear dual mission: put a majority of the US IC manufacturers out of business and dominate the Japanese in the DRAM arena by offering the most cost effective and cheapest IC manufacturing capacity.
Look at the joint ventures, new facilities going up in the US, and the growing number of foundry relationships that are blossoming.
ADPT-Fabless provider of top end I/O boards has foundry relationships with either Charetered or TSMC.
HWP-will be exiting part to all of its IC production in CO by joint venture or foundry relationships overseas.
Hyundai-building a Mega Fab in Beaverton Oregon for DRAM production.
WaferTec-a joint venture with Altera, Analog Devices and a Pacific Rim foundry provider for a Mega IC Fab Campus in Camus Washington.
Countless other US based IC providers either in Joint Ventures or foundry relationships with non US based low cost manufacturing suppliers of ICs. The list goes on and is rather long.
Here is the question. What are they doing better than us? ANSWER: nothing really other than a keener sense of COO, clear focus as to what they want to accomplish and what their goal is. We will see a gradual transition to more cost effective processing by non US based companies, price dumping to gain marketshare, and large expansions before the demand is in place to ensure capacity is available to sell at the appropriate time. The US industry, as a whole, does not have this vision or long range planning, with a few exceptions like MOT and INTC, to name a few. Everything has an extremely short term outlook for immediate gratification(profits) and very little long term perspective, since we are intent on using the most expensive process equipment available and the most intricate processes available. We have lost the competitive edge since we have foresaken the KIS (Keep it Simple) approach while our competitors are adopting KIS and COO. Why is it that the US companies, time and time again, miss the market windows of opportunity for increased IC demand while the Pacific Rim foundries are there just in time? No planning for the future and a policy of playing catch up with the Far East.
Again, there are exceptions like MOT, INTC, IDTI (possibly a fortuitous mistake), AMD (well a case of the MicroP not being there when the fab was completed) and a few others. MU has announced that a year from now they will start up the LEHI plant that has been in mothballs. This is concurrent with the joint venture rumors that a 256M DRAM will go into production sometime next year in Japan. Looks like MU may be late to the party AGAIN. But who knows, they are the last hope of DRAM manufacturing for the US (IMO).
As far as all of our portfolios are concerned, it doesn't matter where the equipment is going to as long as the equipment is being ordered and sold. The European and Pacific Rim expansions look as if they will drive the COO model a great deal beyond what the US based companies will. That is one reason why I am extremely selective on the IC companies I talk about or invest in. My attitude will change as I see the US companies WAKE UP and realize they are causing the demise of their manufacturing facilities and playing into the hands of the TSMCs, Windbond, etal.
First it was DRAMs, then SRAMS and EPROMS. The ASIC market is being tested and may be the next thing we lose (if we haven't already) How many more technologies need to go overseas before management stops looking at and making short sighted decisions that enrich their precious short term stock options and incentives immediately. They need to start doing what is truly right for the companies they work for and not for their wallets.
Increasing shareholder value for 3-5 years then phasing out production or going out of business is not what is needed by the shareholders. They want long term continuity of the business enterprise. Anything else is a form of corporate incompetence. And how is this rewarded? We cut these people loose with DIAMOND parachutes (Golden no longer adequately decribes the exit packages) like $1 million a year for 5 years or $25 million separation packages which they pocket as they go to new positions or retire. This is almost as pathetic as getting $15 million per bite mark on someone's ears.
Mike-I do not know what came over me. I just went into a trance and this is what happened. A nerve was triggered and the venom came out.
I stand behind what I said though. Look at the valuations in our sector (NVLS, AMAT, LRCX, SVGI, ASMLF). They are getting as ridiculous as the valuations for CoCa Cola, MacDonalds and other overpriced DOW stocks. The market is responding to these "name brand" equipment stocks believing that the next wave is coming in the US. I hope they are correct but I have my eye outside the US and see danger.
Andrew |
