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

To: Kirk © who wrote (47512)	6/1/2001 12:34:02 PM
From: Proud_Infidel	Respond to of 70976

Despite second-half recovery, foundry shipments will drop 4% in 2001, says new forecast Downturn becomes worst ever in short history of silicon foundry business, according to market researcher By Mark LaPedus Semiconductor Business News (06/01/01 08:32 a.m. EST) PHOENIX -- The slumping silicon foundry business is expected to rebound in the second half of this year, but the troubled chip segment is still heading into negative-growth territory for 2001, according to new forecast being prepared by Semico Research Corp. here. In fact, Semico is cutting its forecast for worldwide foundry services for the second time in recent months, due to an oversupply of wafer fabrication capacity--which is causing some large chip makers to pull products back into their own fabs--and lackluster demand for ICs. Last October, the Phoenix research firm predicated that the silicon foundry business would grow 17% in 2001. At the time it looked like foundry demand would grow from 12.8 million eight-inch equivalent wafers in 2000 to 15.1 million this year. After the start of a terrible first quarter, Semico lowered its 2001 growth forecast to 12%, but now the market researcher projects that the foundry sector will end up falling by 4% this year. Demand for processed wafers from third-party manufacturers will decline from 12.8 million eight-inch equivalent substrates in 2000, to 12.3 million wafers, according to the revised Semico outlook. The 2001 downturn is now believed to be the worst slump ever in the short history of the silicon foundry business. Until now, the sector suffered one of its biggest slumps in 1997-1998, when the business fell somewhere between 0.5-to-1%, according to Semico. But on the bright side of the current downturn, processed-wafer prices have not taken a beating, as many in the industry originally feared, said analyst Joanne Itow, who tracks the chip foundries. "Wafer prices have not changed that much this year, as compared to what happened in 1997 and 1998," Itow said, referring to the last foundry slump, when leading manufacturers engaged in a price war to maintain their market shares and keep their plants full. Another positive aspect to the current outlook is that foundry suppliers may see a recovery in the second half of 2001, with the likelihood of a boom period starting in 2002, according to Semico. Next year, in fact, Itow projects the silicon foundry business will surge by 30%, in terms of unit volumes. "Right now, I am looking at negative numbers for 2001," she said. "But I still believe the market will hit bottom in the third quarter of this year. Things will look better in the fourth quarter. And 2002 is going to be a good year," Itow added. The foundry rebound will be driven by both the communications and PC systems sectors. "We're still bullish about the communications market," the Semico foundry analyst said. But still, the sudden and surprisingly sharp downturn in the communications market has taken a major toll on the foundry industry in terms of sales and fab-utilization rates, especially for Singapore's Chartered Semiconductor Manufacturing Pte. Ltd. Last week, Chartered reduced its quarterly forecast and noted that its wafer-fab utilization rate will fall to the low 30-percent range (see May 21 story ). "Chartered has been heavily weighted in the communications industry," Itow noted. "In comparison, TSMC and UMC have a broader base of customers," she added, referring to the two Taiwan foundry giants--Taiwan Semiconductor Manufacturing Co. Ltd. and United Microelectronics Corp. However, TSMC and UMC have also suffered in the six-month-old downturn. In April, TSMC--the world's largest silicon foundry supplier--reported that its fab utilization rate had fallen close to 50%, and it warned that the level could drop slightly lower in the next few months. That represents a sequential drop from 70% in the March quarter and 100% in the fourth quarter of last year. (see April 18 story ). It's about the same story at UMC. And in April, the world's second largest pure-play chip foundry announced a 25.9% sequential drop in revenues during the first quarter of 2001, and it projected net sales would fall another 30% in the current quarter from Q1 as it struggles with weak market conditions. (see April 30 story ).