For chip executives, there's not much to say except--'a recovery is coming'
Semiconductor Business News
(06/07/01 11:11 a.m. EST)
REDWOOD CITY, Calif. -- One thing is clear about a forecast event in the semiconductor industry these days: Don't expect to get any concrete answers from top semiconductor executives about the future growth of the IC business.
At the Semiconductor Industry Association's mid-year forecast event here Wednesday, for example, top chip executives painted a fairly optimistic picture about the future of the IC market in spite of the current downturn.But in interviews with executives before and after the event, the optimism turned into uncertainty--if not a simple "no comment" in many cases.
The SIA forecast itself is a mixed bag. The mid-year forecast calls for chip sales to drop 14% to $175 billion in 2001 compared to $204 billion in 2000. But a second-half recovery in worldwide IC markets this year will pull the chip industry out of its recession and spur growth of 20.5% in 2002 and 25% in 2003, according to a revised forecast released by the SIA (see June 6 story). For a breakout of how product segments will perform in the next four years see today's story.
Chip executives at the SIA forecast luncheon and later a press conference tried hard to be upbeat about the outlook--beyond what many hope is an ending 2001 downturn.
"The current outlook [for the chip industry] is very strong," said Kirk Pond, chairman and chief executive of Fairchild Semiconductor International Inc. of South Portland, Maine. "But 2001 will hold the distinction of being one of the worst downturns in the history of the semiconductor industry," said Pond in a presentation at the SIA lunch.
And believe it or not, it could get worse. Worldwide chip sales could fall "as high as 17%" in 2001 over last year, said George Scalise, president of the SIA, based in San Jose. "That's a real possibility," Scalise said in the SIA press event.
If the chip industry should drop by 17% this year, this would represent the worst downturn in the long, colorful history in the semiconductor business. So far, the worse downturn in the chip industry occurred in 1985, when the business sunk by a staggering 16.5%, according to the SIA.
One chip veteran put this downturn in perspective. "This downturn is terrible," stated Morris Chang, chairman of Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) of Hsinchu. "This downturn is about to become the worst ever," Chang said in an interview with SBN at the SIA event.
Still, top chip executives are bullish about the second half of 2001 and beyond. The market will rebound due in part to resurgence in the PC, communications and other sectors, chip executives insisted at the SIA event.
Or will it? One executive--who could perhaps give the most insight--wasn't talking.
Craig Barrett, president and chief executive of Intel Corp., appeared at the SIA press event, but he refused to answer direct or specific questions about the semiconductor, PC, or other industries.
Barrett did give some general answers about the industry, but he claimed that he could not give specifics because Intel is in the so-called "quiet period."
In fact, Intel today is expected to give its first-ever mid-quarter business forecast--and, it's not going to be a pretty sight. Analysts believe that Intel may reduce its forecast for the current quarter, citing the continued slowdown in the PC and communications markets.
The PC market is a major concern for Intel and others. On Wednesday, for example, International Data Corp. cut its forecast for the worldwide and U.S. shipments, and it is now predicting that unit shipments will fall for the first time ever in the U.S. market (see June 6 story).
Meanwhile, the communications chip market is also weak, especially the wireline segments, said Archie Malone, executive vice president and chief financial officer for STMicroelectronics Inc.
For example, ST recently announced plans to shut down its wafer fab in Canada, which was acquired from troubled communications-equipment maker Nortel. Originally, ST hoped to make chips exclusively for Nortel in that fab.
"Nortel's business is seriously deteroriating," Malone said in an interview with SBN.
For ST, the market also remains cloudy. And not surprisingly, it was difficult to get a forecast for the Geneva-based chip maker. "In Q2, we've stood by our guidance," he said. "For Q3 or Q4, it's very tough to make a predication."
It's also difficult to get an exact prediction for the silicon foundry industry, which is also mired in its worst-ever slump.
"We've hit the bottom in the foundry business," TSMC's Chang said. The TSMC executive re-iterated that the foundry business could pick up in the second half of this year.
In fact, Hsinchu-based TSMC has already seen some positive signs. "For the April and May, we've had a book-to-bill ratio of 1.0," Chang said. "The business will boom again," added the semiconductor veteran. |
