Brian and all, "Chipmakers Coming Out Of Dry Spell, Survey Says"
Date: 4/29/98
Author: Michele Hostetler
Fabless semiconductor firms will gobble up 45%
more silicon wafers this year than last, says a
survey released Tuesday.
And chipmakers that don't own their own
manufacturing plants, called fabs, will use another
30% more wafers next year, says the survey by the
Fabless Semiconductor Association.
The association says wafer demand rose 21% last
year compared with '96, while the '96 demand rose
43% from '95. Chips are cut from silicon wafers,
which now come mostly in a six-inch-diameter size.
Fabless chipmakers generally have grown faster
than their foundry-owning brethren because they've
focused on highflying niches, analysts say.
Still, fabless firms are only cautiously optimistic
about the near future. While the rise in wafer
demand bodes well for unit sales, chipmakers aren't
fully recovered from the steep price cuts of '96, led
by memory chips.
This year could determine whether the
memory-chip slowdown will spread to other
segments, says David Angel, chairman of the
Dallas-based trade association.
To keep competitive, fabless chip firms are moving
to thinner transistors and are fitting more functions
onto a single chip. They also are watching Asia's
economic troubles.
''The industry has been in a soft . . . recession for
two years,'' said Angel, who's also chief executive
of San Jose, Calif.-based voice-chip maker
Information Storage Devices Inc.
''People are having a terrible time making forecasts,''
Angel said. ''Customers are changing their demands
daily. We've never seen anything like this in the
history of the industry.''
The first half of this year will be weak, Angel says.
But he expects a second-half rebound, making way
for a stronger '99.
But if Asia, especially Japan, can't fix its economic
woes, then PC sales could slow, Angel says. Some
of the strong fabless chip niches are in graphics and
multimedia chips for PCs.
''You just cannot sell computers in Japan,'' he said.
''There isn't a market for them. Japan is going to
have to figure out how to create a whole new
wealth of consumer products.''
Asian companies are slowing their memory-chip
manufacturing. The industry must keep a close
watch on this trend because memory tends to be
either very much in oversupply or undersupply,
Angel says.
Despite its hurdles, fabless chip companies are
getting more respect, says Jodi Shelton, the FSA's
executive director.
''A few years ago, the very first thing (Wall Street
analysts) would ask is when are you going to have
your own fab, not if,'' Shelton said.
This is the first year that fabless chip companies
have access to the most advanced chip- making
equipment, Shelton says. In the past, they've lagged
two to three generations behind companies that
owned their own fabs.
Fabless chip firms are developing chips with
transistor widths as small as 0.25 micron, which is
state of the art. A human hair is 100 microns wide.
The thinner widths lead to squeezing more
information onto chips. The approach is dubbed
''system on a chip.''
'' 'System on a chip' is a marketing phrase,'' Angel
said. ''I don't necessarily see that creating new
markets.''
Cellular telephone customers don't care if their
phones have one chip or four, as long as the phone
works, he says.
However, the system- on-a-chip approach does help
chip companies meet the 30% annual cost reduction
that their customers demand. That leads to more
business for fabless semiconductor firms, Angel
says.
(C) Copyright 1998 Investors Business Daily, Inc. |
