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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (10331)	6/26/2003 4:18:03 PM
From: The Ox	Read Replies (2) \| Respond to of 95531

Asia weathers semiconductor slowdown By Tony Sitathan SINGAPORE - When the World Semiconductor Trade Statistics (WSTS) last month revealed that the semiconductor growth forecast for 2003 had slipped to 11.5 percent from its growth of 16.6 percent last year, the silver lining in the gray skies lay in the fact that Asia was one of the main regions propping up growth in the semiconductor industry. A senior marketing officer with Oki Semiconductor Pte Ltd based in Singapore pointed out that Asia still leads in manufacturing economies of scale as well as leading in the consumer-electronics boom. "As more and more electronic designs and tooling and fabrication are done in Asia, there is less reliance on the US and Europe or even Japan to innovate and roll out new chip designs or technology," he said. "Asia is playing a greater role in semiconductor testing and assembly and is slowly edging into the design field as well." Besides costs and greater efficiency of scale, the fabless concept for semiconductor companies is another factor driving growth in Asia. With the ongoing fabless trend of the world's major semiconductor companies, those based in the United States and Europe lacking their own production facilities are looking to outsource their entire manufacturing and logistics to independent foundries in Asia. The Fabless Semiconductor Association forecasts that by 2010, half of all integrated circuits will come from outsourced production companies in Asia. "Its something that cannot be reversed, as we see greater outsourcing in the foundry business. And this trend is likely to continue as long as Asia dominates as a manufacturing center," said Sanjeev Parkert, a semiconductor analyst with Axiom Consulting in Hong Kong. There is also a renewed interest in more global testing and assembly services being set up in Asia. There are several testing and assembly centers in Asia, observes Adrian Ho of Instep Creations, a company based in Taiwan that designs and tests high-density power chips. "More and more companies and their design capabilities are switching over to Asia. The cheaper but highly skilled workforce is a very attractive option," said Ho. And according to a report from Gartner Dataquest, an international research firm that tracks the semiconductor global market, the Asia-Pacific region dominates the worldwide foundry business, accounting for 78.1 percent of the global market last year. This year it is expected to grow by almost 23 percent - a healthy figure since the world figures only started looking up at the middle of this year. "There is some level of semiconductor stabilization in the world market as demand is expected to pick up in the third quarter," said Stephen Potter, a semiconductor active component trader for Bonaparte International based in Singapore. He predicted that the semiconductor market would improve and sales would pick up to the tune of 13 percent as compared with last year. Despite this positive sign, Semiconductor Equipment & Materials International (SEMI), representing the interests of equipment makers supplying the semiconductor industry, has reported a second year of contraction. It estimated that the semiconductor equipment market had shrunk from US$25.5 billion in 2001 to rake in close to $19.7 billion last year. There has been a drop of almost 29.6 percent. It said that more advanced markets such as Japan, Europe and the US shrank by about 40.6 percent on average while countries like China, Singapore, and Malaysia shrank by less than 13 percent. The Asian market is also growing significantly more than the other markets, according to Asia Market Research based in Thailand. It revealed that it was only a matter of time before the center of the information-technology (IT) and computer programming world gravitated toward Asia. India, for instance, has been providing a substantial proportion of the IT workforce in the US for many years, and low salaries and overheads in India itself have led to that country becoming known as "the world's back office". South Korea, which has one of the most broadband-connected populations in Asia, is ranked as one of the five highest users of the Internet in raw numbers. Korean customers, like their counterparts in Japan, are well known for the adoption of new technology and the acceptance of innovations in telecommunications. Also its been said that the number of professional IT developers in the Asia-Pacific region will outnumber their counterparts in other regions. The International Data House (IDC) has predicted that the number of IT developers will increase to 13.3 million by 2006 from 7.8 million in 2001, with growth expected to be much stronger in Asia-Pacific than in North America over the next five years, particularly in the world's two most populous countries, China and India. This would inevitably support the semiconductor industry, which feeds on an IT-savvy workforce. Professional electronic engineers, systems engineers and application design engineers as well as expert real-logic programmers are the backbone of the semiconductor industry. There would not be a Silicon Valley without IT software programmers. And similarly the semiconductor boom is highly dependent on a whole matrix of chip designers to software engineers. One without the other is like having the keys to the Ferrari without the wheels. atimes.com