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Technology Stocks : MEMC INT'L. (WFR -NYSE) The Sleeping Giant? -- Ignore unavailable to you. Want to Upgrade?

To: ---------- who wrote (2913)	1/14/1998 6:19:00 AM
From: Mark Oliver	Read Replies (3) \| Respond to of 4697

Here's an article from EE News which I suppose you will all get to eventually, but I thought the section at the end about predicted growth in materials and especially wafers was interesting. For the full article, see sumnet.com Money In Wafers ------------------------------------------------------------------------ Mr. Rose's forecast calls for sales of silicon wafers (the largest segment of materials) to climb to $6.85 billion, a 10.5 percent increase. Mr. Rose pointed out that silicon wafers are now the largest single segment of electronic materials. On a unit basis, he said, square inches of silicon will increase from 3 billion last year to 4 billion by 2000, nearly one square-mile of silicon. The forecast calls for square inches of silicon to increase nearly 10 percent in 1998. Mr. Rose pointed out that six of the top 10 semiconductor materials companies in 1997 were wafer suppliers. "That's where the big dollars are -- supplying wafers." Sales of epitaxial wafers increased again last year, Mr. Rose said. His forecast calls for them to continue to do so, rising to more than 25 percent of the overall $7 billion 1998 wafer market. "As the entire world begins to move toward using epitaxial wafers in place of prime wafers for advanced products, demand will soar, reaching one-third of the total silicon wafer market in 2000," Mr. Rose said. "Some concerns have been expressed over the ability of wafer suppliers to satisfy this surging demand, but sufficient excess capacity will be in place to satisfy the most bullish demand forecasts." Japan is the world's largest consumer of silicon, consuming more than $1.1 billion square inches in 1997, according to Mr. Rose. The forecast calls for this trend to continue, predicting Japan will consume more than $1.5 billion in 2000, nearly 50 percent more than its closest competitor, North America. According to the forecast, photomasks, the second-biggest segment of the fab materials market, will also grow in sales this year, up 17.6% to $2.23 billion. The forecast calls for this area to continue growing up to $3.1 billion in 2000. Eventually, the industry will need to replace the current lithography technology with a new generation in order to continue shrinking the size of integrated circuits (ICs), which may alter the type of photomasks used. Mr. Rose hails 1998 as the beginning of a "materials revolution," a time when changes in wafer-making processes are forcing the industry to develop new materials to take the place of older conventional materials (see chart). "The transition to smaller and smaller feature sizes is putting a strain on conventional materials," he said. "New materials are needed right now, but R&D budgets are not supporting this. As a result, we probably have poor materials control. Never in the past 20 years have we faced such a daunting task of introducing new materials." The challenge, he said, will be materials suppliers coming up with new materials and processes with limited R&D budgets. "The reality is, companies can only afford to spend 5 percent of sales on R&D because the margins are so small," he said. "This will probably result in a lot of frustration for chipmakers and suppliers. Cost objectives, particularly with 300mm, are going to be difficult, leading to a disparity between what customers will pay and what vendors need to charge." While confusion reigns supreme about what kind of year 1998 will be in the semiconductor business, there is at least one forecast guaranteed to be on the money: there will be no shortage of theories. Regards, Mark