VLSI Research lowers IC and tool forecasts for 2002
Semiconductor Business News
(07/21/02 11:24 a.m. EST)
SAN JOSE -- Casting a dark shadow on this week's Semicon West trade show in San Francisco, VLSI Research Inc. here issued a double-whammy for the industry: it has lowered its forecast for both the semiconductor and chip-equipment markets.
One of the more upbeat forecasters in the IC industry, VLSI Research also believes that a second-half recovery “is looking worse all the time for chip makers.” Compounding the problem is what the firm calls the “American Financial Crisis,” which is hurting consumer confidence in the marketplace.
Some were even more blunt about the current state of the industry. “We have a worldwide problem,” said Arthur Zafiropoulo, chairman and CEO of Ultratech Stepper Inc. in San Jose. “Consumer confidence is weak, but we will see a gradual recovery. However, we won't see a sharp recovery until the end of next year,” he said during a press event at Semicon West in San Jose last week.
Meanwhile, the current dynamics has prompted VLSI Research to alter its forecasts. The research firm originally projected that the semiconductor industry would grow 20.6% in 2002 over 2001 (see Jan. 7 story ). Now, the San Jose-based research firm has cut its forecast, saying the market will still grow by 12.6% in 2002 over 2001.
In total, the IC market is expected to grow from $118.5 billion in 2001, to $133.4 billion in 2002, according to VLSI Research. In 2001, the worldwide IC market fell 33% over 2000, the company said.
VLSI Research is not as optimistic about the capital equipment markets, however. Originally, VLSI Research said the worldwide IC-equipment market would hit $34.56 billion in 2002, down 12% over 2001. In June, the firm raised its forecast, saying it will reach $36.89 this year, down about 6% over 2001 (see June 6 story ).
Now, VLSI Research has gone back to its original forecast, saying the market will drop by 12.2% to $34.5 billion in 2002. In 2001, the worldwide semiconductor equipment market hit $39.3 billion, down a staggering 34.7% from 2000, they said.
“Chip prices are beating Moore's Law, [but] they are not beating it hard enough,” according to VLSI Research. “Thus, the possibility of a price-led upturn in the second half is looking worse all the time for chip makers.”
VLSI Research did not lower its fab-capacity utilization forecast for 2002, but noted that funds for capital expenditures are getting released in a slow trickle, analyst G. Dan Hutcheson of the research firm. “This can't be good for equipment in the second half, hence the lowered forecast,” Hutcheson said.
He also noted that profitability remains a problem for chip makers. In addition, the “American Financial Crisis” is also hampering the ability of chip makers to spend.
"I am really swimming upstream when it comes to my optimism, but all the pressure points forcing an upturn are there. It's just a matter of time before they break and a huge upturn ensues,” Hutcheson said.
Other research firms agree. In 2002, worldwide wafer fab equipment spending will be $18.9 billion, a 20% decline from 2001 revenue of $23.7 billion, according to Dataquest Inc. But San Jose-based Dataquest is also looking for the market to rebound in 2003(see July 11 story ).
At the Semicon West show in San Jose last week, a trade group projected similar numbers. In 2003 a near-30% annual increase in total semiconductor equipment sales will follow-on from 19% year-on-year drop in 2002 sales according to the mid-year consensus forecast from Semiconductor Equipment and Materials International (SEMI) (see Jan. 3, 2001 story ).
“We think the semiconductor industry is positioned for a recovery,” said Stanley Myers, president and chief executive officer of SEMI, at a press event during Semicon West last week, which featured the IC-test and assembly portion of the business. This week, Semicon West heads to San Francisco for the “front-end” part of the business.
Others were also somewhat optimistic at the press event. “We believe the [recovery] has already started,” said Alexander Oscilowski, president of Kulicke & Soffa Industries Inc. of Willow Grove, Penn. “But we don't believe there will be a need for capacity buys until 2003,” he said. |
