Semicon Singapore Reflects Chip Industry Optimism
by Tony Santiago
EE Times
05/06/2004, 10:34 AM ET
SINGAPORE -- Growing semiconductor demand estimated to be worth some $210 billion this year lent an air of optimism to this year's Semiconductor Equipment and Materials International (SEMI) exhibition here this week.
The annual event was called off last year due to the slumping global chip market. Now, semiconductor unit shipments have reached record totals of over 100 billion units at the end of 2003. Overall semiconductor manufacturing utilization increased by 12 percent, and capacity increased by almost 6.5 percent, prompting semiconductor equipment makers and materials manufacturers to scramble to meet the surge in demand.
According to Stanley Myers, president and CEO of SEMI (San Jose, Calif.), the semiconductor market will see double- digit growth while the equipment market is expected to grow 39 percent. The materials market is forecast to expand by 11 percent in 2004.
"This year is no doubt a year of growth as strong fundamentals are in place. However its hard to predict strong growth for next year as we may see possible contraction in growth for semiconductors by late 2005," he added.
Riding the demand wave can be challenging task not just for foundries but for semiconductor equipment makers as well. "In 2002 to 2003, there was significant under-utilization. Now it's a reverse situation where there is almost a 95-percent fab utilization capacity," said Len Jelinik, principal analyst with market researchers iSuppli Corp. "There is currently more demand than supply and the book-to-bill ratio, which is a good indicator of semiconductor orders, lies in excess of one," or a backlog of bookings. Already there are spot parts shortages and a gradual increase in IC average selling prices. Increased chip demand for the consumer, wireless and PC markets has become widespread. Along with soaring U.S and Chinese imports, emerging markets like India recorded $12.3 billion in electronics consumption last year. The increase in domestic spending in Japan is also contributing to worldwide demand.
Singapore's chip demand was worth an estimated to be $3.3 billion in 2003, and may exceed $3.8 billion in 2004 and $4.7 billion by 2007.
China is set to play a greater role in the global semiconductor market, according to Jelinik,. Last year it contributed close to 4 percent of the world's semiconductor output and by 2007 is expected to contribute closer to 9 percent. China's overall capacity is set to increase as foundry service providers expand their operations to meet forecasted global and domestic demand, especially for 200-mm wafer technology.
"China will continue to be a major supplier of mature technologies. For instance Semiconductor Manufacturing International Corporation intends to build commodity DRAM and 90-nm CMOS logic chips while Grace Semiconductor is ramping up production in its 200-mm wafer fab," he added.
Jelinik does not see consolidation in the front-end manufacturing of wafers, unlike the test and assembly industry that has seen a spate of recent mergers and consolidations. "I see greater strategic partnerships and alliances between front-end manufacturers similar to Chartered's alliance with IBM."
Overcapacity could return by the second half of 2005. "We anticipate some corrections in inventory levels and the industry would be showing only 1.7 percent growth by 2006," Jelinik added.
siliconstrategies.com |
