Things Look Good, So Far, Says IC Insights
Online Staff -- Electronic News, 9/23/2003
Market research company IC Insights said Monday that it appears as if global macroeconomic factors will support its forecast for semiconductor market growth of 10 percent to 15 percent this year.
But the company cautioned in its September update to its annual McClean Report that there could be some softening as the market heads into 2004, similar to what happened last year.
While the European economy has stagnated in the first half of this year, other parts of the world are enjoying improving economies, most surprisingly Japan, as its economy has grown faster than expected. Originally forecast for less than one percent growth in gross domestic product (GDP) this year, based on first half results, IC Insights anticipates Japanese GDP growth of 2 percent.
"It appears that increased capital spending by Japanese corporations is responsible for a significant portion of this recent GDP growth spurt," IC Insights states in its report. "However, for 2004, the Japanese economy is expected to slip back into its 12-year old coma and grow only 1.2 percent."
The U.S. economy also appears to be improving in the second half of this year, with some economists forecasting a 5.5 percent GDP increase in the current quarter, according to IC Insights. The market research copmany anticipates this growth to carry over in 2004, as the country posts 4.4 percent GDP growth next year.
Meanwhile, Asia continues to recover from the impact of Severe Acute Respiratory Syndrome (SARS) earlier in the year. "It appears that many of the first-half 2003 orders for electronic equipment that were impacted by the SARS epidemic were only postponed or delayed, not cancelled," IC Insights says in its September update. Many of those orders are being filled during the current quarter, the market research firm noted.
As a result, IC Insights raised its China GDP forecast for both 2003 and 2004, predicting 7.7 percent and 8 percent growth, respectively.
Price Remains an Issue
But the rebound in the chip market, at least in terms of volume, if not revenues, has not been a growing tide lifting the entire market; rather it has been driven by a few select products, according to IC Insights. Analog ICs, MCUs and MOS special purpose logic device categories did not exhibit double-digit year-over-year or sequential quarterly growth in July.
On the other hand, MOS MPU, DSP, PLD and flash memory markets each registered greater than 30 percent year-over-year increases in July. The flash market alone was 50 percent larger than the July 2002 market, with unit volumes up 45 percent, IC Insights observed. The company forecasts that strong second-half cell phone unit demand and strong holiday sales of digital cameras will continue to drive the flash memory market in the second-half of the year.
While ASPs have yet to recover for many IC markets, even those that are seeing unit growth, IC Insights notes that over the last two years, IC ASPs have rebounded in the second half of the year, only to decline at the beginning of the next in the post-holiday market doldrums.
"In IC Insights’ opinion, a strong 2004 IC market -- greater than 20 percent growth -- will require a break in this pattern and relatively steady first half 2004 IC ASPs," the company stated.
IC unit volume shipments have displayed significant growth since early last year. Although the June and July three-month average IC unit shipment figures were flat, the 7.27-billion shipment average is still 38 percent above the low point set in January of 2002, IC Insights notes. "Assuming a continuation of increased sales of electronic systems, e.g., cell phones and PCs, IC Insights believes that the three-month average IC unit shipment figures will show at least moderate increases over the next four months (August through November)," the company stated.
Chipmakers Still Stingy When it Comes to Capex
Chipmakers in general continued to invest in capacity, albeit perhaps slowly given capacity utilization figures, in the second half of this year. The total increase in semiconductor capex year over year is now 11 percent, up from the 9 percent in IC Insights' mid-year update to its McClean Report.
That two percent jump came primarily from three companies: Samsung, Nanya, and NEC, according to IC Insights. Samsung announced an increase of $430 million in its 2003 semiconductor capital spending budget while Nanya and NEC announced increases of $150 and $145 million, respectively.
But it is common knowledge that chipmakers in general have been loathe to add capacity like they have in the past, opting instead for incremental increases in fab capacity, rather than adding whole new fab lines and fabs. In light of that pervasive caution, IC Insights is sticking to its forecast of 10 percent growth in capital spending this year, believing that not all budgeted capex will actually get spent this year.
A number of large chipmakers, among them Taiwanese foundries United Microelectronics Corp. and Taiwan Semiconductor Manufacturing Co., as well as Infineon, Advanced Micro Devices and Texas Instruments have so far spent less than 50 percent of their total 2003 budgeted capital expenditures. |
