Now we have even come to the point where "conspiracy" theories are popping up.
<<Revised SIA forecast is likely to hurt semiconductor equipment sales, says analyst.
The Semiconductor Reporter
June 11, 2004, 10:10 a.m. EDT
NEW TRIPOLI, Pa. -- The SIA forecast announced Wednesday that revised semiconductor growth from 19% and 6% growth in '04 and '05, respectively, to 29% and 4% (see June 9 story), should negatively impact semiconductor production equipment sales for 2004, analyst Robert Castellano said today.
Castellano has taken a postion on the development of the fab equipment market that stands in stark contrast with those of several other analysts, who see the market growing in the neighborhood of 50% this year. Castellano suggests that chip manufacturers have capacity they are not telling Sicas about in order to claim maxed-out capacity utilization to justify price hikes.
Forecasts issued by the The Information Network in November 2003 called for the front-end equipment market to grow 21.0% in 2004 and 11.4% in 2005 before dropping 7.9% in 2006, based in part on the SIA forecasts of 19% and 6% semiconductor revenue growth for 2004 and 2005, and on estimates of IC fab capacity. "We are monitoring developments to see whether our numbers need to be adjusted," said Castellano, president of the market research firm. "But we anticipate that orders will decelerate quickly through the end of the year."
"Negative sentiment from analysts and forecasts of a relatively flat 2005 from the SIA are pointing to eventual pushouts and cancellations of equipment," said Castellano. "Semiconductor manufacturers are already overly cautious from the last severe downturn, and fear, uncertainty, and doubt about growth in late 2004 and beyond will affect their decisions to go ahead and purchase more tools they may not need by the time they are delivered."
The industry is nine months into the current equipment upswing, while semiconductor sales have been in an "up cycle" since January 2002 -- a period of 28 months. Historically, semiconductor and equipment inflections have occurred within 3 months of each other, according to Castellano's new report.
Castellano believes that the industry went through a paradigm shift during the past recession, moving to more aggressive die shrinks and to 300-mm processing to increase production. In order to avoid another massive inventory buildup like the massive bubble that took the industry by surprise in 2000, semiconductor manufacturers won't be investing frivolously in equipment but will instead be closely monitoring real demand.
If demand drops, real or perceived, the equipment market boom will be over before it really got going, according to Castellano.
"We question the capacity statistics from Sicas, which say that total IC capacity increased from 1.367 million 8-inch equivalent wafer starts per week in the third quarter of 2003 to 1.372 million in the fourt quarter and then to 1.373 million in 1Q04 -- negligible growth," Castellano said. "In fact, total MOS [capacity] actually decreased from 1.267 million wspw in 4Q03 to 1.265 million in 1Q04.
"Yet front-end semiconductor equipment [sales] increased 26.7% in 4Q03 and 48.8% in 1Q04," he explained. "As capacity utilization -- which is all the buzz -- is the ratio of wafer starts (and we know they've been increasing for 28 months) to capacity, and capacity is showing no growth, it results in increasing capacity utilization. But why didn't capacity grow when revenues (billings) increased dramatically for the past two quarters? Is capacity utilization really increasing to stratospheric levels as IC manufacturers would lead us to believe at a time they are raising prices? One can only wonder!">> |
