Cary,
Some research is saying what you have for awhile.....
Analysis: IC forecasts see slowdown in '05, '06
By Mark LaPedus
Silicon Strategies
06/04/2004, 11:00 PM ET
SAN JOSE, Calif.--Don't look now, but the semiconductor industry is headed towards the dreaded boom-to-bust cycle. Worldwide IC growth and capital spending budgets are projected to de-accelerate in 2005--and beyond--despite a strong and surprising campaign for vendors in 2004.
Last week, two research organizations--Gartner Inc. and the World Semiconductor Trade Statistics (WSTS) group--raised their respective forecasts for the semiconductor industry in 2004. On Tuesday (June 1), the WSTS said global chip sales are likely to grow 28.4 percent to a record $213.6 billion in 2004, according to the WSTS.
However, after high-growth 2004, the following year is expected to show 8.5 percent growth in 2005, followed by a 0.7 percent decline in 2006. After the dip in 2006, the global chip market is predicted to show 9.3 percent growth in 2007 (see June 1 story).
The new data from the WSTS also indicates that Asia-Pacific and Europe will overtake Japan as the world's fastest growing semiconductor markets in 2004 (see June 1 story). Originally, the WSTS projected that the IC industry would grow 19.4 percent in 2004 and 12.6 percent in 2005, it was noted.
Then, on Wednesday (June 2), Gartner presented a different view. The research firm said that the worldwide semiconductor market would grow by more than 25 percent in 2004 and 15 percent in 2005. In February, Gartner projected that the semiconductor market will grow 22.6 percent in 2004 and 13.3 percent in 2005 (see June 2 story).
While the data appears to be conflicting, there is one common theme. The semiconductor market is currently experiencing steady growth, as opposed to a wild and unmanageable upturn, said Michael Kirk, vice president and general manager of KLA-Tencor Inc.'s Surfscan Division, a supplier of silicon wafer metrology tools.
"It's sustained growth," Kirk said. "We're certainly positive about things. It's not nutty like 2000. That might not be so bad."
The capital spending picture is slightly different. "I don't see that we're in the height of the capital spending cycle," said Vijay Rakesh, director and senior research analyst for Next Generation Equity Research in Chicago. "There is more to go this year and next."
Rakesh has raised his capital spending forecast from 40 percent growth in 2004 over 2003, to 60 percent this year. But capital spending is expected to ease, as Rakesh projects 20-to-25 percent growth in 2005 over 2004. "Still, if you take a step back, that pretty positive," he said.
The analyst also expects to see two waves of capital spending in the current cycle. The current wave of spending involves a surprising surge of demand for 200-mm equipment in the market. The next phase is expected to be the long-awaited, 300-mm fab-tool crossover. In fact, there are no less than four or five new 300-mm plants are on the horizon, including those at Micron, Sony, SMIC, and Texas Instruments.
The ratio in terms of 200- and 300-mm fab-tool procurements is running at 50:50. But the 300-mm fab-tool crossover is expected to kick in by year's end. "Right now, it's 50:50," he said. "Going into the December quarter, you will see a 60:40 ratio."
Product mixture varies
On the semiconductor product front, however, there are still some mixed signals. Chip maker Fairchild Semiconductor International this week reiterated its guidance for sales to increase by 5 percent sequentially in Q2. And to keep up with demand, Fairchild said it is also adding capacity in its 8-inch fab in Mountaintop, Penn., as well as its assembly and test facility in Suzhou, China.
"Demand for our products continues to be extremely strong and broad based," said Kirk Pond, Fairchild's president, CEO and chairman, in a statement this week. "We also continue to see volatility in our second quarter backlog which could affect our ability to meet our forecast, however, booking activity has been consistently high all quarter with particular strength in the display, television, white good, power supply, battery charger, and handset end markets."
Another chip maker, Intel Corp., expects revenue for the second quarter to be at the high-end of its previous guidance, following strong demand for flash-memory products and notebook PCs.
Andy Bryant, chief finanical officer of Intel, attributed the stronger-than-expected forecast on demand for company's NOR flash-memory products. "Flash is driving the mid-point [forecast]," he said during a conference call with analysts. The microprocessor business "is where we thought it would be," he said.
Overall, the three-month average of worldwide semiconductor sales rose to $16.94 billion in April, a sequential increase of 4.1 percent from the $16.275 billion reported in March and a 36.7 percent increase from April 2003, the Semiconductor Industry Association (SIA) reported Tuesday (June 1).
"Worldwide semiconductor sales in April reached the highest monthly level since July 2000," said SIA president George Scalise, in a statement. "Continued strong overall economic growth in the United States and China helped propel chip sales upward. The fundamentals are in place for strong growth through the remainder of the year, and it is likely that growth for 2004 will significantly surpass last fall's forecast of 19 percent growth" (see June 1 story).
Wireless hot, analog not
On a rolling three-month, month-to-month basis, semiconductor units jumped 4.5 percent in April over May, but average selling prices (ASPs) fell 0.1 percent in the period, said Michael McConnell, an analyst with Pacific Crest Securities Inc., in a report.
IC units and ASPs are up 24 percent and 11 percent in April, respectively, compared to the like period a year ago, he said. "April monthly sales tracked in line with historical patterns and were highlighted by soaring digital signal processor sales (up 6.8 percent), seasonal results for microprocessors (up 2.2 percent), flash memory (up 3.1 percent), and weakness in high-performance analog (down 1.4)," he said.
On a rolling three-month, month-over-month basis, microprocessor units were up 1 percent in April over March and ASPs jumped 1.8 percent, according to Pacific Crest. Revenues were also up 2.2 percent during April. "April sales benefited from a workdown of execess notebook inventories," according to the analyst.
On a year-over-year basis, microprocessor units jumped 17 percent, but ASPs grew only 5 percent. Revenue grew 25 percent year-over-year.
On a rolling three-month, month-over-month basis, DSP units increased 3 percent in April, with ASPs jumping 4 percent, due to ongoing demand for wireless products, according to Pacific Crest. DSP increased 6.8 percent in that month.
Meanwhile, on a year-over-year basis, DSP units jumped 35 percent but ASPs fell 4 percent. Revenue growth was up 29 percent.
On a rolling three-month, month-over-month basis, flash-memory units increased 1.7 percent in April and an uptick in ASPs by 1.6 percent, according to Pacific Crest. Flash revenues jumped 3.1 percent in April, amid a shortage of products in the market.
Meanwhile, on a year-over-year basis, flash units jumped 53 percent but ASPs rose only 14 percent. Revenue growth was up 74 percent in the sector.
On a rolling three-month, month-over-month basis, high-performance analog units increased 0.8 percent in April but and ASPs grew 0.8 percent, according to Pacific Crest. Revenues rose 2.3 percent in February.
On a year-over-year basis, analog units jumped 31 percent but ASPs fell 4 percent. Revenue growth was up 25 percent in the sector. |
