Paul, Intel investors, Intel isn't the only one that can't make quite enough chips. Brian K posted this on the AMAT thread (because he's licking his chops over the need for more and more AMAT type equipment. Hi Brian.;-). I put it on the LSI thread because of a great expression that Wilf Corrigan coined: "Fabless can become chipless." Well, hope it doesn't affect Xilinx, if indeed they are fabless. Altera? Conexant should have fabs from the Rockwell days, but not sure. Maybe look out for your chip holdings, see what their fab situation is.
To: E. Graphs who wrote (21364)
From: Tony Viola
Monday, Feb 7, 2000 1:51 PM ET
Reply # of 21367
E, thread, if you recall what I posted about one thing Wilf Corrigan said at the stockholders' meeting last year
(seems so long ago):
"Fabless can become chipless." Well, there it is in the article below. With regard to fab capability, LSI is in
fat city, of course, with Gresham.
============================================================
Fabless suppliers face delays, price hikes from foundries
By Mark LaPedus and Macabe Keliher
Electronic Buyers' News
(02/07/00, 09:53:10 AM EDT)
TAIPEI, Taiwan-- Chip suppliers that rely on foundry services to meet customer demand are in for a rude
awakening this year: lack of capacity, shipment delays, and price hikes.
What's more, semiconductor companies--fabless suppliers as well as those that have outsourced from their
captive manufacturing bases--may pass rising costs along to their OEM customers, according to some
vendors.
Leading wafer foundries were already scrambling to meet demand in 1999, and are now reporting that they
are booked solid for the first half of this year, with probable wafer shortages lingering until at least 2002. The
shortages are said to be pushing out delivery times by a month or more.
Given the environment, several foundries are considering a new round of price hikes for select chip makers,
particularly smaller companies with little or no market leverage. But larger chip makers are not immune to the
situation and eventually may face price increases of their own.
The outlook for foundry vendors looks bright, although a shortage of wafers is mounting despite the massive
buildup of fab capacity in the industry, according to analyst Joanne Itow, who tracks the foundry segment at
Semico Research Corp. in Scottsdale, Ariz.
"Chip makers are concerned," Itow said. "Foundry capacity is tight right now. In 2001, we expect shortages
of 0.25-micron capacity. 0.18-micron capacity is OK now, but I also expect shortages for this technology in
2001."
Itow also predicts that the average selling price for a wafer based on five-layer, 0.18-micron process
technology will jump from $2,800 per unit now to $3,000 by the third quarter.
Even lagging-edge wafers, which usually experience price declines in normal cycles, are not budging due to
the capacity crunch, she said. ASPs for five-layer, 0.25- to 0.35-micron wafers were supposed to drop in the
first half of 2000, but prices are now projected to stabilize or increase, according to Itow. In fact, she said, a
0.25-micron wafer will now hover at about $2,000 per unit, while a 0.35-micron wafer will sell for $1,200
to $1,460.
"Normally, we see price declines, especially for older technology," Itow said. "But I think we'll see price
increases in the second half of 2000.'
The pressure to raise prices is already being felt around the industry. Taiwan's Realtek Semiconductor Corp.,
a supplier of LAN chips, said discussions with wafer- foundry giant United Microelectronics Corp. regarding
possible price increases could force the company to up tags for its customers.
"UMC's prices are threatening to go up for us, and the effects will be felt," said a spokesman at Realtek in
Hsinchu. "Given the current supply situation, we may have to pass along the price increases to our customers,
allowing our profit margins to remain stable."
UMC's foundry rival-Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC)-is also considering a plan to
raise Realtek's wafer prices in the near future, the spokesman said.
Industry sources said that other fabless-IC design houses, including Via Technologies Inc. and Silicon
Integrated Systems Corp., could see wafer price increases as well. Representatives from the companies were
unavailable for comment before press time.
Though they stopped short of confirming a price hike, leading foundry providers acknowledged that ASPs are
gradually increasing as they move their fabs to leading-edge process technologies.
"The trend is for prices to go up in a tight demand situation, but there's no across-the-board increase," said a
spokesman at Hsinchu-based UMC.
"[Wafer] prices continue to firm up in the marketplace," said Ron Norris, acting president of TSMC's U.S.
subsidiary in San Jose, in a recent conference call to analysts. "As we shift toward higher-end process
technology, I expect that to be a major contributor" to possible increases in wafer prices.
"We have been successful in getting more value for our wafers, [and] that has resulted in higher prices," said
Kevin Meyer, vice president of business development at Singapore's Chartered Semiconductor Manufacturing
Pte. Ltd. "We have successfully transitioned some customers to richer technology mixes. As older contracts
have expired, new contract pricing reflects current market value. New customers have been developed at
current market pricing."
The industry's other major foundry provider, IBM Microelectronics, declined to comment on its pricing
strategy. If rising prices weren't enough, chip makers say they are also coping with shipment delays due to the
industrywide capacity crunch.
It typically takes 30 days for a foundry to manufacture, package, assemble, and test a chip, according to a
spokesman at Taiwan's Advanced Semiconductor Engineering Inc., the world's second-largest IC-assembly
house.
However, cycle times have been pushed out now to nearly 60 days, the ASE spokesman observed. "It's not
our fault," he said. "The problem is the capacity issues within the foundries." |
