>>So what is your conclusion? My hypothesis was that given the low margins and the
recent bleeding of DRAM (and other semies), they would be reluctant to spend the
money on new process or even expand the existing capacity, unless they sense
serious pick up in net revenue and net profits ahead. Do you agree with this? And
do you see such a revival ahead?<<
In the past, the DRAM companies have demonstrated a willingness to build capacity in the face of almost certain oversupply. They've been willing to go ahead and destroy margins for the whole industry and face purely price-driven competition. I don't see any signs that this attitude has changed, but the bankers do seem much less willing to finance it. Banking reform in Japan and Korea is very important.
Overall, my outlook is basically the same that I've presented before:
news.semiconductoronline.com
That is, sluggish chip growth this year, with good times (and major fab construction) returning next year. Faster than expected improvement in Asian economies could accelerate this. So could predatory pricing and construction on the part of the DRAM suppliers, but that would tend to make the upcycle shorter and the downturn deeper (same reasons as the 1997-98 downturn). The good news is that the Asian economies *do* seem to be recovering, and the US economy doesn't seem to be slowing significantly because of recessions elsewhere.
Regarding PDAs and other portable/home automation, think about chipmakers who *don't* rely on memory or microprocessors. DSPs, custom logic, transmitters, etc., are all big beneficiaries, as are low power circuits. Lucent, TI, and Rockwell spring to mind in the US. STMicroelectronics, Philips, and Siemens, all European, have been very successful in these markets, too. I include Internet-related growth in this category too, by the way, since I think there's still a *huge* amount of Internet infrastructure left to be built globally.
Katherine |
