IC industry headed towards 'worry free' mode in '04
By Mark LaPedus
Silicon Strategies
01/12/2004, 2:30 PM ET
PEBBLE BEACH--The IC and chip-equipment industries are moving into a "worry free" mode after a long and painful slump, although there are still some uncertainties beyond 2004, according to executives and analysts at the Industry Strategy Symposium (ISS) here today (January 12, 2004).
Industry forecasters at the ISS event all agree that the IC and chip-equipment markets will show solid growth in 2004 over 2003. But one market watcher--Gartner/Dataquest Inc.--sees a two-phase semiconductor growth cycle on the horizon, with a supply-driven downturn starting in late 2005 to early 2006.
Still, the current IC recovery "is not a flash in the pan," declared Klaus-Dieter Rinnen, an analyst with Gartner/Dataquest, in an interview during ISS. "It's a worry-free 2004," referring to the overall booming market conditions for ICs in 2004.
Indeed, the signs are positive for the semiconductor and chip-equipment industries--if not the economy as a whole heading into 2004. "The bottom line is that I'm pretty optimistic," said A. Michael Spence, professor emeritus of management in the graduate school of business at Stanford University in Palo Alto, Calif. "We are in a period of rapid growth in the global economy," he said during a keynote address at ISS.
"What a difference a year makes," added Stanley Myers, president and chief executive of the Semiconductor Equipment and Materials International (SEMI) trade group. Both the semiconductor and chip-equipment industries "are in the early stages of a strong recovery," Myers said during ISS. SEMI is the sponsor of ISS, which runs here from Jan. 11-14.
And history is repeating itself, in which the IC industry is bouncing back and returning to the same boom levels as 2000. "An IC industry recovery has begun and is forecast to increase in intensity," according to Bill McClean, president of IC Insights Inc. "The 2004 IC market is expected to exceed the 2000 level."
In fact, the semiconductor industry is expected to jump 27 percent this year, from $166.4 billion in 2003, to $210.5 billion in 2004, according to IC Insights. In this forecast, there is a 65 percent chance the IC market will grow 20-to-30 percent in 2004 over 2003, according to IC Insights. There is a 20 percent chance the IC market will grow more than 30 percent in 2004 and a 15 percent possibly that it will grow by less than 20 percent, according to the firm.
The semiconductor equipment market is expected to grow 48 percent this year, from $21.7 billion in 2003, to $32.2 billion in 2004, according to the market research firm. The semiconductor materials market is expected to jump 22 percent this year, from $24.5 billion in 2003, to $29.9 billion in 2004, according to IC Insights.
Meanwhile, Gartner reiterated its forecasts for the IC and chip equipment industries, which are expected to grow 20.1 and 35.9 percent in 2004 over 2003, respectively.
Gartner also sees two expansion cycles. In the first phase, which is expected to last from 2003 to mid- to late-2004, the industry will see tight capacity, lean inventories and solid demand, according to Rinnen. "Device vendors will expand in a controlled fashion," he said. "Equipment order ramp leads to 37 percent growth in 2004."
In late 2004 through 2005, the market will experience another phase. "Continued end-user demand, improved demand visibility, and spot shortages will return to a more historical spending pattern," according to Gartner.
But beyond 2004, there is indeed some uncertainty. The IC industry is expected to grow 17.7 percent in 2005, but fall by 4.2 percent in 2006, according to Gartner. By 2007, the market is projected to rebound and grow by 7.6 percent, according to the firm.
Meanwhile, the fastest growing applications in the semiconductor industry are consumer displays, followed by digital TV, storage networking infrastructure, printers, solid-state storage, among other products, according to Gartner.
Cell-phone production is projected to grow 11.3 percent this year, from 460.2 million units in 2003, to 512.3 million in 2004. By 2005, cell-phone production will grow 1.2 percent to 518.2 million units, according to the firm.
PC shipments are projected to grow 12.8 percent this year, from 164.2 million units in 2003, to 185.2 million in 2004. By 2005, PC shipments are projected to grow 9.5 percent to 202.8 million units, according to the firm.
At ISS, meanwhile, VLSI Research Inc. is expected to reiterate its forecasts for IC and chip-equipment markets, which were released in December. As previously reported, the chip and fab-tool markets are projected to grow 32.8 and 40.1 percent, respectively, in 2004 over 2003, according to the Santa Clara-based research firm (see December 18, 2003 story). |
