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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (19078)	4/29/1998 4:37:00 PM
From: Gottfried	Respond to of 70976

Brian and all, "Chipmakers Coming Out Of Dry Spell, Survey Says" Date: 4/29/98 Author: Michele Hostetler Fabless semiconductor firms will gobble up 45% more silicon wafers this year than last, says a survey released Tuesday. And chipmakers that don't own their own manufacturing plants, called fabs, will use another 30% more wafers next year, says the survey by the Fabless Semiconductor Association. The association says wafer demand rose 21% last year compared with '96, while the '96 demand rose 43% from '95. Chips are cut from silicon wafers, which now come mostly in a six-inch-diameter size. Fabless chipmakers generally have grown faster than their foundry-owning brethren because they've focused on highflying niches, analysts say. Still, fabless firms are only cautiously optimistic about the near future. While the rise in wafer demand bodes well for unit sales, chipmakers aren't fully recovered from the steep price cuts of '96, led by memory chips. This year could determine whether the memory-chip slowdown will spread to other segments, says David Angel, chairman of the Dallas-based trade association. To keep competitive, fabless chip firms are moving to thinner transistors and are fitting more functions onto a single chip. They also are watching Asia's economic troubles. ''The industry has been in a soft . . . recession for two years,'' said Angel, who's also chief executive of San Jose, Calif.-based voice-chip maker Information Storage Devices Inc. ''People are having a terrible time making forecasts,'' Angel said. ''Customers are changing their demands daily. We've never seen anything like this in the history of the industry.'' The first half of this year will be weak, Angel says. But he expects a second-half rebound, making way for a stronger '99. But if Asia, especially Japan, can't fix its economic woes, then PC sales could slow, Angel says. Some of the strong fabless chip niches are in graphics and multimedia chips for PCs. ''You just cannot sell computers in Japan,'' he said. ''There isn't a market for them. Japan is going to have to figure out how to create a whole new wealth of consumer products.'' Asian companies are slowing their memory-chip manufacturing. The industry must keep a close watch on this trend because memory tends to be either very much in oversupply or undersupply, Angel says. Despite its hurdles, fabless chip companies are getting more respect, says Jodi Shelton, the FSA's executive director. ''A few years ago, the very first thing (Wall Street analysts) would ask is when are you going to have your own fab, not if,'' Shelton said. This is the first year that fabless chip companies have access to the most advanced chip- making equipment, Shelton says. In the past, they've lagged two to three generations behind companies that owned their own fabs. Fabless chip firms are developing chips with transistor widths as small as 0.25 micron, which is state of the art. A human hair is 100 microns wide. The thinner widths lead to squeezing more information onto chips. The approach is dubbed ''system on a chip.'' '' 'System on a chip' is a marketing phrase,'' Angel said. ''I don't necessarily see that creating new markets.'' Cellular telephone customers don't care if their phones have one chip or four, as long as the phone works, he says. However, the system- on-a-chip approach does help chip companies meet the 30% annual cost reduction that their customers demand. That leads to more business for fabless semiconductor firms, Angel says. (C) Copyright 1998 Investors Business Daily, Inc.