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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (34096)	2/8/2000 2:31:00 PM
From: Proud_Infidel	Read Replies (2) \| Respond to of 70976

Semiconductor capacity appears to be under control, says SIA By Bill McIlvaine Semiconductor Business News (02/08/00, 01:04:58 PM EDT) NEW YORK -- Don't expect the semiconductor industry to run out of capacity in the near future. Despite previous patterns that predict capacity shortages during boom cycles, the last round of fab overbuilding has taken care of that problem, according to the Semiconductor Industry Association and several member companies. As the semiconductor industry enters one of its hottest periods ever -- with chip sales expected to pass $150 billion in 2000 -- some analysts and observers have raised the specter of capacity shortages. However, it appears there is enough to meet everyone's needs for the foreseeable future. "I don't see a capacity issue at all in the near future," stated George Scalise, president of the Semiconductor Industry Association, at a press briefing Monday in New York. The last severe capacity crunch came in 1994 and 1995, when the semiconductor industry went through its last boom and reached revenue high-water marks that are just now being topped (see Feb. 7 story ). In previous upward cycles, the chip industry encountered capacity shortages and added new capacity quickly, only to suffer the consequences of overcapacity when the downturn hit with particular force in 1997 and 1998. "There are enough empty fabs out there," remarked Scalise. Intel Corp.. for instance, last week snapped up a vacant shell from Rockwell International Corp. in Colorado Springs, Colo. (see Feb. 2 story ). Additionally, both Micron Technology Inc. and Texas Instruments Inc. have fabs currently sitting empty in the United States. Hyundai Electronics has two in the U.K. -- in Scotland and Wales -- while Infineon Technologies still has the shuttered North Tyneside fab that came with its spin-off from parent Siemens AG. Also, U.S. chip makers are growing more comfortable with a mix of their own fab manufacturing and outsourcing. Zilog Inc., for instance, has been upgrading its Nampa, Idaho, fab but has a "foundry fallback" as well, said Jeff Weir, director of public communications at the Campbell, Calif., processor maker. "We couldn't afford a new fab and there's no need for one," he added. LSI Logic Corp. of Milpitas, Calif., which has two fabs in the United States, also has a foundry agreement with Silterra Ltd., a Malaysian foundry. "We have the capacity for 0.25-micron processing and below, and the resources to respond to a spike [in orders]," said Kevin Brett, director of corporate public relations. "I don't see us getting to 20% [of foundry outsourcing]." Still, the movement to foundry outsourcing, is continuing, though to what percentage of the industry's manufacturing is still unclear. National Semiconductor Corp. has plans to move up to 30% of its production to foundries while doing "some contract manufacturing" at its South Portland, Maine, fab, said LuAnn Jenkins, program manager for corporate public relations at National. Because the semiconductor industry believes it has the capacity even for the boom period currently under way, and because it remembers what happened the last time it anticipated a capacity crunch, chip comopanies are cautious about overbuilding again. "We just came through one of the biggest downturns ever," said LSI Logic's Brett. "It's a realization that somewhere there's going to a slowdown and it will be led by overcapacity."