Semiconductor industry boom in full force
8/24/2000 By Bill McClean, IC Insights, Scottsdale, AZ
When Applied Materials recently reported that its first half 2000 sales jumped over 80% compared to the same period of 1999, it was another confirmation of the ongoing semiconductor industry capital spending boom. Rarely has a week in 2000 gone by when there was not a significant upward adjustment to one or more companies' capital spending budgets. Overall, nine semiconductor companies spent more than $1.0 billion on capital expenditures in 1999. For 2000, 18 companies are planning to invest more than $1.0 billion.
Figure 1 shows the forecasted top ten worldwide semiconductor capital spenders for 2000. The top 10 ranking includes a good regional mix with three U.S., two Japanese, two European, two Taiwanese, and one Korean company making the list. As shown, the top 10 companies are being very aggressive with an 83% spending surge budgeted for 2000. The top 10 companies represent 53% of the total semiconductor industry capital spending budget for 2000, up from 49% in 1999.
After two years of spending declines, 1999 worldwide outlays rebounded and increased a moderate 16%. For 2000, we expect worldwide spending to increase a staggering 65% from 1999 levels and reach an all-time record $53.5 billion. If this comes to fruition, it will be only the third time since 1978 that the annual increase in capital spending was more than 60% (the other two years being 1984 at 88% and 1995 at 76%).
The 2000 capital spending figures listed by company are budgeted expenditures and may not be fully realized in calendar year 2000 (the remainder most likely being "spent" in 2001). IC Insights believes, as do numerous semiconductor equipment company CEOs, that semiconductor production equipment capacity constraints at Applied Materials, Lam, Nikon, and other companies will restrain actual 2000 semiconductor capital expenditures to a figure less than current company spending surveys indicate. Our total capital expenditure forecast for 2000 is slightly lower than the sum of budgeted capital expenditures of the individual semiconductor companies.
Figure 2 compares the composition of capital spending by company origin for 2000 and 1996. Spending by North American IC companies continues to represent the highest percentage of total worldwide spending, followed by the Japanese. The planned increase in spending by the Taiwanese IC companies in 2000 would bring their share of worldwide spending to 19%, just two points short of the Japanese IC companies' share.
The 2000 IC market drivers
The integrated circuit market is separated into several major product categories. These include digital bipolar, analog, MOS logic, MOS memory, microperipherals, microcontrollers, and microprocessors. Each of these categories can be further divided into distinct product categories. For example, the analog IC market consists of standard analog and application-specific analog ICs.
Figure 3 shows IC Insights’ projection of the fastest-growing products for 2000 in terms of dollars and units. In 2000, we expect flash memory ICs to show the best market growth in terms of dollars (+109%). Several other IC products including 32-bit MCUs, PLDs, display drivers, and voltage regulators/reference devices should achieve market growth in the mid-70 to mid-80% range. In total, twelve different IC product categories are forecast to grow in excess of 50% in 2000.
Typically, the combination of an increase in unit shipment volume and an increase in the average selling price contributes to overall market growth. In 2000, however, IC market growth appears to be driven primarily by an increase in unit shipments. We expect the greatest increases in unit shipment volume to occur in the 32-bit and 16-bit MCU categories, DSPs, display drivers, and with interface analog ICs. Overall, we expect the total IC market to increase 36% in 2000, and total unit shipments to grow 27%.
Strong growth of cellular handsets and the overall burgeoning communications infrastructure are clearly two factors contributing to the increase in IC sales, specifically flash memory and analog ICs. However, increased sales of computers, personal digital electronics devices (Palm Pilot, pagers, MP3 players, etc.) and digital cameras have triggered a surge in demand across nearly all IC product lines.
This article is excerpted from IC Insights’ recently released Mid-Year Update to The McClean Report – 2000 Edition; An In-Depth Analysis and Forecast of the Integrated Circuit Industry. Further information on all of IC Insights reports can be found in the Semiconductor Online Marketplace.
semiconductoronline.com{14015970-77AF-11D4-8C59-009027DE0829}&Bucket=HomeFeaturedArticles |
