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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: A. Edwards who wrote (9048)	2/26/2004 8:30:34 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 25522

IC industry sees shortages in '04, followed by downturn in '05 By Mark LaPedus Silicon Strategies 02/26/2004, 3:20 PM ET PHOENIX--Worldwide wafer demand is expected to grow by 9.2 percent from 2003 to 2008--a level that raises concerns about capacity shortages in the short term and a downturn in the long term, according to a new report from Semico Research Corp. today (February 26, 2004). At the same time, the IC industry is seeing select fab-capacity shortages today, especially for leading-edge processes. But a capacity glut is expected to fuel another downturn in 2005, according to the Phoenix-based research firm. In the new report, entitled "Wafer Demand 2004-2008: Wafers Growing But Will Profits?", Semico attempts to tackle a major concern as the semiconductor industry begins another foray into a new growth cycle. Semico stated that wafer demand reached 78.2 million wafers in 2003, up 12.6 percent from 2002. The growth was driven by semiconductor unit demand and other factors, said Semico analyst Joanne Itow. "Capacity is always the topic of main concern during a recovery," Itow said. "Will there be enough? Will it be at the right technology? How do we plan for it?" Semico continues to believe that the transition to 130-nm and smaller process technologies will accelerate as the recovery takes hold and new products are introduced. In 2003, 16 percent of all wafers were processed using 130-nm and smaller process technology, according to Semico. In 2004, 31 percent of the total IC wafers manufactured will utilize 130-nm process technology or smaller. That equates to almost 23 million wafers out of a total of 74 million used in the production of all ICs, not including discretes or bipolar. There are other key capacity issues. The combination of reduced capital expenditures, continued introduction of new technologies, and the closing of older fabs is already resulting in spot shortages. With the decline in capital expenditures over the past two years, fewer fabs are currently available for production at new technologies and the advanced technology capacity is being quickly consumed by the increase in demand which Semico forecasted would begin in the second half of 2003. Despite current tightening of supply, Itow contends that the supply and demand balance will shift again quickly. "Companies with 300-mm fab shells began putting the wheels in motion to facilitize these fabs late in 2003," Itow said. "We also expect there will be a corresponding increase in upgrades of existing lines and more announcements for 300-mm facilities." Semico is predicting that almost two dozen 300-mm fabs will come online in 2005. This additional capacity combined with numerous 200-mm fabs in China, along with a slight economic downturn will drive an industry slowdown in 2005.