EL SEGUNDO, USA: To support media coverage of the Semiconductor Industry Association’s (SIA’s) release of its August chip sales statistics, the market research firm iSuppli Corp., El Segundo, Calif. is issuing the following fast facts:
* The SIA reports global semiconductor sales grew in August compared to a month earlier. Sales also rose in July compared to June. This reveals a pattern of solid sequential growth for the first two months of the third quarter.
* iSuppli estimates worldwide chip sales for the entire third quarter expanded by 10.6 percent compared to the second quarter.
* Solid market conditions in August and throughout the third quarter were partly spurred by efforts among semiconductor suppliers to build inventory levels back to equilibrium. In the second quarter, global Days of Inventory (DOI) at semiconductor suppliers fell short of optimal levels by 6.1 percent. As a result of the inventory rebuild, global chip revenue in the third quarter is estimated to have risen by 3 percent more than actual demand would dictate, creating an artificial bump in sales for the industry.
* However, the semiconductor market remained weak on the year-over-year growth measure. Third-quarter revenue is estimated to have declined by 16 percent compared to the same period in 2008.
* iSuppli now predicts global chip sales will decline by 16.5 percent in 2009, compared to the previous publicly announced forecast of a 23 percent drop. In a forecast delivered to clients in early August, iSuppli had improved its 2009 growth forecast to a 17.6 percent decline.
* Revenue from sales of semiconductors to the consumer electronics industry is estimated to have surged by 28 percent in the third quarter compared to the second. This was the biggest increase of the largest-sized application markets for chips.
* Chip sales to the smaller automotive sector grew by an even more impressive 30.2 percent, boosted by the Cash for Clunkers program in the United States and stimulus efforts in China.
Showing posts with label global semiconductor market. Show all posts
Showing posts with label global semiconductor market. Show all posts
Friday, 2 October 2009
Friday, 11 September 2009
Databeans revises 2009 global semiconductor revenue forecast to $217.3 billion
USA: Looking back, at December and January, the sound of silence was deafening. Orders were pulled and the semiconductor manufacturing machine came to an abrupt halt. In February through June of this year, the progression of improvement began, coaxed by stimulus packages and carefully considered and minimal consumer spending.
Now, eight months into the year, the “sound of momentum” can clearly be heard. Some scoffed at a “V” shaped recovery back then, but it appears that this is the case. Further, we are not expecting a double-dip scenario in the chip industry.
With an unseasonal July, which was down just slightly from June (July has been down 17 percent sequentially on average for over ten years now), the chip industry has made significant progress up the other side of the V, and it is not just microprocessors, and it is not just in the Americas, although both have contributed to the rebound.
Source: Databeans
While it is true that the Americas region is expected to be the first to post higher revenue in the third quarter this year than for the same period a year ago, this region is not driving the recovery. With the exception of a few chip categories, like microprocessors (albeit this one is a great contributor to worldwide revenue), the Americas has the minority share of revenue, so the return to growth is more of a direct result of climbing out of a “smaller ditch.”
What is more notable is the progress made starting in the Asia Pacific region and now in Japan, which has been quiet until now, conservatively waiting to place orders again.
We believe that while the PC market is poised for recovery, increasing microprocessor ASPs are contributing to the stronger numbers in the third quarter. Mobile phone shipments are anticipated to increase with new models set to launch during the second half of the year, but the consumer audio and video sector seems to be more at play here near term, much like wireless was in the second quarter. This ties into improved conditions in Japan, which has posted positive monthly sequential growth for semiconductors since February and is the only region to do so.
Databeans has revised its forecast for 2009 worldwide semiconductor revenue up from $206.5 billion to $217.3 billion, which results in a 13 percent decline - a 4 percent increase over the previous estimate.
Now, eight months into the year, the “sound of momentum” can clearly be heard. Some scoffed at a “V” shaped recovery back then, but it appears that this is the case. Further, we are not expecting a double-dip scenario in the chip industry.
With an unseasonal July, which was down just slightly from June (July has been down 17 percent sequentially on average for over ten years now), the chip industry has made significant progress up the other side of the V, and it is not just microprocessors, and it is not just in the Americas, although both have contributed to the rebound.
Source: DatabeansWhile it is true that the Americas region is expected to be the first to post higher revenue in the third quarter this year than for the same period a year ago, this region is not driving the recovery. With the exception of a few chip categories, like microprocessors (albeit this one is a great contributor to worldwide revenue), the Americas has the minority share of revenue, so the return to growth is more of a direct result of climbing out of a “smaller ditch.”
What is more notable is the progress made starting in the Asia Pacific region and now in Japan, which has been quiet until now, conservatively waiting to place orders again.
We believe that while the PC market is poised for recovery, increasing microprocessor ASPs are contributing to the stronger numbers in the third quarter. Mobile phone shipments are anticipated to increase with new models set to launch during the second half of the year, but the consumer audio and video sector seems to be more at play here near term, much like wireless was in the second quarter. This ties into improved conditions in Japan, which has posted positive monthly sequential growth for semiconductors since February and is the only region to do so.
Databeans has revised its forecast for 2009 worldwide semiconductor revenue up from $206.5 billion to $217.3 billion, which results in a 13 percent decline - a 4 percent increase over the previous estimate.
Friday, 1 May 2009
March chip sales rebound slightly from February
SAN JOSE, USA: Worldwide sales of semiconductors were $14.7 billion in March, a gain of 3.3 percent from the prior month when sales were $14.2 billion, the Semiconductor Industry Association (SIA) reported.
Sales for the first quarter of 2009 amounted to $44 billion, a 29.9 percent decline from the first quarter of 2008 when sales were $62.8 billion. Sales declined by 15.7 percent from the fourth quarter of 2008 when sales were $52.2 billion.
Sales in all geographic regions except Japan showed month-to-month gains. Sales in Japan were sharply lower, reflecting a drop in the country’s economic output. All geographic regions reported lower first-quarter sales compared to the same period of 2008.
"The modest sequential rebound in worldwide sales in March suggests that demand has stabilized somewhat, albeit at substantially lower levels than last year," said SIA President George Scalise. "While all major product sectors showed month-on-month growth, there continues to be limited visibility in end markets. There are some bright spots such as 'smartphones' and 'netbook' PCs, but there are no clear signs of early firming of demand in other major end markets such as automotive, corporate information technology, and consumer electronics."
"The global chip industry continues to reflect the influence of the worldwide economic slowdown," Scalise continued. "We expect economic stimulus measures in the US, combined with other countries will begin to impact sales as we enter 2010," Scalise concluded.
Source: Semiconductor Industry Association
Sales for the first quarter of 2009 amounted to $44 billion, a 29.9 percent decline from the first quarter of 2008 when sales were $62.8 billion. Sales declined by 15.7 percent from the fourth quarter of 2008 when sales were $52.2 billion.
Sales in all geographic regions except Japan showed month-to-month gains. Sales in Japan were sharply lower, reflecting a drop in the country’s economic output. All geographic regions reported lower first-quarter sales compared to the same period of 2008.
"The modest sequential rebound in worldwide sales in March suggests that demand has stabilized somewhat, albeit at substantially lower levels than last year," said SIA President George Scalise. "While all major product sectors showed month-on-month growth, there continues to be limited visibility in end markets. There are some bright spots such as 'smartphones' and 'netbook' PCs, but there are no clear signs of early firming of demand in other major end markets such as automotive, corporate information technology, and consumer electronics."
"The global chip industry continues to reflect the influence of the worldwide economic slowdown," Scalise continued. "We expect economic stimulus measures in the US, combined with other countries will begin to impact sales as we enter 2010," Scalise concluded.
Source: Semiconductor Industry Association
Monday, 20 April 2009
Semiconductor industry revenue to jump 17 percent in 2010!
In order to put some perspective into the current economic climate, it should be noted that this year, Databeans is expecting the chip market to amount to just over $200 billion, which was the size of the market nine years ago. After several years of strong growth, 2008 saw the entire market slip 3 percent from the year before, from $255.7 billion to $248.6 billion in revenue.
The industry agrees that 2009 will be undoubtedly worse due to numerous factors. The inventory issue, particularly in the memory markets, has contributed to falling ASPs and reduced profits. However, Databeans believes that it is the meager replacement rates for typically strong application categories such as mobile handsets, notebook PCs, and consumer electronics, spurred by panic in the credit sector which has hindered consumer spending, and thus reduced demand for ICs.
While this industry recession shows some similarities to the one that occurred in 2001, when semiconductor sales plummeted by 32.5 percent and took nearly three years to return to 2000 levels, Databeans believes this crisis will be far shorter lived.
The primary difference is that the unprecedented growth that occurred between 1999 and 2000 caused such overcompensation in production that the following recovery followed a “bathtub effect” or a rather long and flat stabilization to return to previous profits.
Alternatively, the current crisis caused primarily by temporary macroeconomic issues will recuperate at a much faster rate. After falling 17 percent in 2009, Databeans predicts a “V-Shaped” or “Boomerang” recovery for the semiconductor industry, with a total year-over-year increase of 17 percent from 2009 to 2010.
It is predicted that by 2011, total IC sales will regain momentum and surpass the peak seen during 2007, with $269.1 billion in revenue. We believe that the market reacted swiftly to the financial meltdown and that with little inventory in the channel now, production will begin to flow again and not remain stagnant as it did in 2002.
This improved situation isn’t likely to happen all at once, but certain indicators show that recovery may be sooner than expected. The handset industry, a traditional bellwether for overall semiconductor health, is estimated to have lost nearly 20 percent of its sales in the first quarter, but was still considerably better than the 35 percent decline in Q4 2008.
Nokia, the world’s leading handset supplier with 38 percent of the total market share, is still selling well, particularly in the ever growing Smartphone category, which is expected to perform fairly well throughout 2009. At the same time, the company’s key chipset supplier, Texas Instruments, announced better than expected sales for the last two months. Investors have responded - over the past month, Nokia shares have risen by 45 percent.
China is expected to factor into IC market revival tremendously. Already China's industrial output growth jumped 8.3 percent in March, up from the 3.8 percent rise of the first two months, as domestic demand continued to improve. With low penetration rates for consumer electronics, mobile handsets, and laptop computers, combined with strong cash savings, increasing Chinese consuming habits will likely be a key factor in worldwide recovery.
China’s technology companies have also done surprisingly well during the first quarter, even amidst the global recession. For example, the country’s leading wireless provider China Mobile’s 2008 profit managed to jump nearly 30 percent, as revenue grew 16 percent to $60 billion. The company added more than 7.3 million subscribers per month last year, reaching 457 million customers and enjoys a 70 percent share of China's wireless market. This has been a major factor for Nokia’s continue success in the region, as it is China Mobile’s principal partner in the country’s 3G network infrastructure.
Ultimately, a combination of factors will lead to a gradual recovery in both pricing for ICs and consumer spending habits. This year will still be a difficult journey for many OEMs and semiconductor suppliers, with consolidation, reduction, or restructuring on the horizon. Ultimately, Databeans views the situation as troubled, but still showing signs of improvement.
The industry agrees that 2009 will be undoubtedly worse due to numerous factors. The inventory issue, particularly in the memory markets, has contributed to falling ASPs and reduced profits. However, Databeans believes that it is the meager replacement rates for typically strong application categories such as mobile handsets, notebook PCs, and consumer electronics, spurred by panic in the credit sector which has hindered consumer spending, and thus reduced demand for ICs.
While this industry recession shows some similarities to the one that occurred in 2001, when semiconductor sales plummeted by 32.5 percent and took nearly three years to return to 2000 levels, Databeans believes this crisis will be far shorter lived.
The primary difference is that the unprecedented growth that occurred between 1999 and 2000 caused such overcompensation in production that the following recovery followed a “bathtub effect” or a rather long and flat stabilization to return to previous profits.
Alternatively, the current crisis caused primarily by temporary macroeconomic issues will recuperate at a much faster rate. After falling 17 percent in 2009, Databeans predicts a “V-Shaped” or “Boomerang” recovery for the semiconductor industry, with a total year-over-year increase of 17 percent from 2009 to 2010. It is predicted that by 2011, total IC sales will regain momentum and surpass the peak seen during 2007, with $269.1 billion in revenue. We believe that the market reacted swiftly to the financial meltdown and that with little inventory in the channel now, production will begin to flow again and not remain stagnant as it did in 2002.
This improved situation isn’t likely to happen all at once, but certain indicators show that recovery may be sooner than expected. The handset industry, a traditional bellwether for overall semiconductor health, is estimated to have lost nearly 20 percent of its sales in the first quarter, but was still considerably better than the 35 percent decline in Q4 2008.
Nokia, the world’s leading handset supplier with 38 percent of the total market share, is still selling well, particularly in the ever growing Smartphone category, which is expected to perform fairly well throughout 2009. At the same time, the company’s key chipset supplier, Texas Instruments, announced better than expected sales for the last two months. Investors have responded - over the past month, Nokia shares have risen by 45 percent.
China is expected to factor into IC market revival tremendously. Already China's industrial output growth jumped 8.3 percent in March, up from the 3.8 percent rise of the first two months, as domestic demand continued to improve. With low penetration rates for consumer electronics, mobile handsets, and laptop computers, combined with strong cash savings, increasing Chinese consuming habits will likely be a key factor in worldwide recovery.
China’s technology companies have also done surprisingly well during the first quarter, even amidst the global recession. For example, the country’s leading wireless provider China Mobile’s 2008 profit managed to jump nearly 30 percent, as revenue grew 16 percent to $60 billion. The company added more than 7.3 million subscribers per month last year, reaching 457 million customers and enjoys a 70 percent share of China's wireless market. This has been a major factor for Nokia’s continue success in the region, as it is China Mobile’s principal partner in the country’s 3G network infrastructure.
Ultimately, a combination of factors will lead to a gradual recovery in both pricing for ICs and consumer spending habits. This year will still be a difficult journey for many OEMs and semiconductor suppliers, with consolidation, reduction, or restructuring on the horizon. Ultimately, Databeans views the situation as troubled, but still showing signs of improvement.
Feb. 09 global semicon sales forecast results: Ala Cowan LRA model
This is an addition to the continuing coverage on the global semiconductor industry forecasts in form of a monthly update to the Cowan LRA Model's global semiconductor sales forecast numbers.
Mike Cowan, an independent semiconductor analyst and developer of the Cowan LRA model, has provided the latest numbers the model has "spit out" based upon the recently published (by WSTS) Feb 2009. actual sales number.
Key points:
1. FEB09 actual sales number ($13.456B) came in in excellent agreement with last month's sales forecast estimate (of $13.446B) which represents a plus 0.077 percent delta comparing the Feb09's actual sales result to the model's previous forecast estimate (see below).
This percent delta represents the Cowan LRA model's momentum indicator and is defined as the percent difference between the actual sales for a given month -- in this case February's just released actual global sales of $13.456 billion and the forecasted sales estimate for February, that is, $13.446 billion which was calculated and published last month.
The momentum indicator can be either positive or negative and is a measure of the percent deviation of the actual monthly sales number from its previous month's prediction which is derived from the model's linear regression analysis of the past 25 years of historical monthly global "sales experience."
2. The latest Cowan LRA Model's full year 2009 global sales forecast estimate is $182.084 billion. It is up very slightly compared to last month's 2009 sales forecast estimate of $181.896 billion.
In terms of 2008 to 2009 expected sales growth the year-over-year sales growth estimate is projected to be -26.8 percent, which is identical to the previous month's sales growth forecast number as detailed in the table below (note that quarterly sales forecasts are also presented covering each of the next five quarters along with a sales forecast for next month, namely March 2009).
Source: Mike Cowan
NOTE - ALL ITALICIZED NUMBERS ARE FORECASTS.
Sources: WSTS (Actuals) and COWAN LRA MODEL (Forecasts)
NOTE - Jan09 Actual Sales REVISED (SLIGHTLY) UPWARDS TO $13.167B.
Mike Cowan, an independent semiconductor analyst and developer of the Cowan LRA model, has provided the latest numbers the model has "spit out" based upon the recently published (by WSTS) Feb 2009. actual sales number.
Key points:
1. FEB09 actual sales number ($13.456B) came in in excellent agreement with last month's sales forecast estimate (of $13.446B) which represents a plus 0.077 percent delta comparing the Feb09's actual sales result to the model's previous forecast estimate (see below).
This percent delta represents the Cowan LRA model's momentum indicator and is defined as the percent difference between the actual sales for a given month -- in this case February's just released actual global sales of $13.456 billion and the forecasted sales estimate for February, that is, $13.446 billion which was calculated and published last month.
The momentum indicator can be either positive or negative and is a measure of the percent deviation of the actual monthly sales number from its previous month's prediction which is derived from the model's linear regression analysis of the past 25 years of historical monthly global "sales experience."
2. The latest Cowan LRA Model's full year 2009 global sales forecast estimate is $182.084 billion. It is up very slightly compared to last month's 2009 sales forecast estimate of $181.896 billion.
In terms of 2008 to 2009 expected sales growth the year-over-year sales growth estimate is projected to be -26.8 percent, which is identical to the previous month's sales growth forecast number as detailed in the table below (note that quarterly sales forecasts are also presented covering each of the next five quarters along with a sales forecast for next month, namely March 2009).
Source: Mike CowanNOTE - ALL ITALICIZED NUMBERS ARE FORECASTS.
Sources: WSTS (Actuals) and COWAN LRA MODEL (Forecasts)
NOTE - Jan09 Actual Sales REVISED (SLIGHTLY) UPWARDS TO $13.167B.
Thursday, 4 December 2008
Global semicon could decline by over 5pc in 2009!
The year 2008 will soon be relegated to history, albeit with the dubious distinction of handing out an extremely unforgettable year for the memory chip makers!This trend was starkly evident, as a major downturn in this segment caused revenue to fall for nearly all suppliers and contributed to negative results for the overall semiconductor industry, according to recently released preliminary market-share figures from iSuppli Corp. (The memory market is being dealt with in the next blog!)
The key question remains as to whether the semicon industry has really lost the money-making ability? According to Dale Ford, senior vice president, market intelligence services, for iSuppli, the semiconductor industry goes through cycles of revenue growth and profitability. He says, "It would not be correct to extrapolate the current challenges of the semiconductor industry and say that the industry has “lost its money-making ability.”
iSuppli expects that the the industry will experience some level of restructuring during this downturn that will help it emerge to renewed revenue growth and profitability.
Revenue to drop 2 percent
Given the current scenario, it is taken for granted now that the global semicon revenue will likely decline in 2008. Ford says: "iSuppli predicts that the semiconductor industry will decline by 2 percent in 2008. However, it is possible for the decline to worsen as more companies revise down their fourth quarter guidance."
The primary reasons for the decline are the over supply of memory ICs and resulting steep price declines and the global financial/economic crisis that has impacted consumer spending and the production of electronic equipment.
Fabless flies high
Coming down to the top 20 semiconductor suppliers (see table above), it would be interesting to see how the fabless companies have fared overall. Ford says that Qualcomm, Broadcom and nVidia are predicted to be the only fabless companies in the top 20 semiconductor suppliers in 2008.
"Qualcomm and Broadcom are expected to see their revenues grow by 19.6 percent and 26.4 percent, respectively. Only nVidia is expected to see a decline in revenues with a projected contraction of 0.5 percent," he adds.
There are some non-memory players in the top 20, who have registered declines. While it is not possible to comment on every single company, Ford mentions that the declining revenues are due to a variety of factors, including divestiture of business units, declining markets, and lost market share.
Fab spend and outlook 2009
Critically, there is a need to also see how the fab spends are looking like in 2009.
According to SEMI's recent World Fab Forecast, spending on fab construction projects in 2008 is likely to decline by 41 percent year-over-year (YoY), as projects are pushed out or put on hold. In 2009, the Americas and Japan are expected to be the only regions with positive growth rates for construction spending.
Ford adds, "Currently, we see fab spending declining significantly in 2009."
Overall, what's the outlook going to be like for the global semiconductor industry in 2009! Ford concludes: "We have not released a formal forecast to the press at this time. However, I will say that we expect the semiconductor market to decline by more than 5 percent in 2009."
Friday, 7 November 2008
Semicon job cuts galore, but at what cost?
The world is plagued with so many job cuts all over again, thanks to the global financial crisis! Those laid off must be getting fed up! Those who are so far lucky to survive, will be spending anxious days. Everytime we have a recession, the first thing companies do is cut jobs on the pretext of cost cutting! The semiconductor industry is also going through such an exercise at the moment!
There have been reports in the media that EDA major, Cadence, will be cutting 625 jobs! Cadence plans to achieve an annual operating expense savings of at least $150 million through a combination of workforce and other expense reductions!
AMD also announced that it will cut 500 jobs worldwide! If that's not enough, ST-NXP Wireless, to rationalize its product portfolio and development efforts, announced a plan to reduce its global workforce by about 500, including subcontractors, from the current total of over 7500 people.
Oh my!! I wonder who all are getting laid off! I hope only very few good chip designers as possible are laid off. Otherwise, how are these companies going to maintain their momentum in the global semiconductor industry if they lay off several designers?
One question! Why do companies need to hire so many people, only to dump them at the first sign of recession? And, at what cost? Is it going to make the companies nimbler, really improve profitability, improve their market standing, etc.? I wonder!
And what of the global semiconductor industry itself? What about the so-called consolidations? Besides cost cutting, what are the industry pundits really doing to try and revive semiconductors?
We do hear a lot about poor memory market, lower capex on fabs, but well, didn't they all see it coming?
iSuppli reported recently that mainly due to oversupply, a number of semiconductor companies have been struggling with their average selling prices (ASPs) so low that they were not profitable even before the current economic turmoil!
Further, companies may even face problems in getting credit or worse, finding investors for a next upgrade or expansion. And how do companies basically deal with problems? By cutting costs, such as laying off personnel or merging with other company which creates redundancy, leading to the same result.
Every single person laid off is a consumer, besides being the company's valuable asset, right? If he or she wasn't valuable enough, then why was the hiring done in the first place? Also, if he or she gets laid off, won't that effect the economy? If yes, won't that translate into the global economy taking a longer time to recover? Job cuts are fine, but at what cost? Is the industry thinking about all of these?
We all talk about how companies should try and must try to bring the cheer back in Christmas spending! As a friend remarked yesterday in jest -- "Which Christmas? This year, or next?"
Will job cuts bring the cheer back, especially in the Christmas spends? If no, then how is it helping the semicon and electronics (and all other) industries? Can you tell me?
There have been reports in the media that EDA major, Cadence, will be cutting 625 jobs! Cadence plans to achieve an annual operating expense savings of at least $150 million through a combination of workforce and other expense reductions!
AMD also announced that it will cut 500 jobs worldwide! If that's not enough, ST-NXP Wireless, to rationalize its product portfolio and development efforts, announced a plan to reduce its global workforce by about 500, including subcontractors, from the current total of over 7500 people.
Oh my!! I wonder who all are getting laid off! I hope only very few good chip designers as possible are laid off. Otherwise, how are these companies going to maintain their momentum in the global semiconductor industry if they lay off several designers?
One question! Why do companies need to hire so many people, only to dump them at the first sign of recession? And, at what cost? Is it going to make the companies nimbler, really improve profitability, improve their market standing, etc.? I wonder!
And what of the global semiconductor industry itself? What about the so-called consolidations? Besides cost cutting, what are the industry pundits really doing to try and revive semiconductors?
We do hear a lot about poor memory market, lower capex on fabs, but well, didn't they all see it coming?
iSuppli reported recently that mainly due to oversupply, a number of semiconductor companies have been struggling with their average selling prices (ASPs) so low that they were not profitable even before the current economic turmoil!
Further, companies may even face problems in getting credit or worse, finding investors for a next upgrade or expansion. And how do companies basically deal with problems? By cutting costs, such as laying off personnel or merging with other company which creates redundancy, leading to the same result.
Every single person laid off is a consumer, besides being the company's valuable asset, right? If he or she wasn't valuable enough, then why was the hiring done in the first place? Also, if he or she gets laid off, won't that effect the economy? If yes, won't that translate into the global economy taking a longer time to recover? Job cuts are fine, but at what cost? Is the industry thinking about all of these?
We all talk about how companies should try and must try to bring the cheer back in Christmas spending! As a friend remarked yesterday in jest -- "Which Christmas? This year, or next?"
Will job cuts bring the cheer back, especially in the Christmas spends? If no, then how is it helping the semicon and electronics (and all other) industries? Can you tell me?
Tuesday, 2 September 2008
Semicon to grow 4-8pc in 2008; ASPs trending up
It has really been a tumultuous year for semiconductors, which has held up very well, despite the memory market turmoils, so far.
Just a day ago, Future Horizons reported on the June sales for semiconductors. According to Malcolm Penn, chairman and CEO, June's WSTS results brought both good and bad news! The good news being that the recovery momentum strengthened, with Q2 sales up 3 percent on Q1.
He says, "This was significantly better than even we dared to predict in last month's Report, despite the fact we raised eyebrows and disbelief by suggesting a 2.3 percent quarter on quarter growth."
The bad news was the Jan-May YTD WSTS numbers for standard logic (and thus, the total ICs and total SC) were revised downwards by a sizeable US$1.4 billion, a restatement that will knock 2 percentage points off the 2008 year on year growth number!
What were the reasons for the recovery momentum to have strengthened, with Q2 sales up 3 percent on Q1? Penn adds: "The first half year sales were much stronger than everyone (except us) believed. It has depresses, only by memories."
Also, the Jan-May YTD WSTS numbers for standard logic (and total ICs and total SC) were revised downward by a sizeable US$1.4 billion. Why did this happen? It is interesting to note that one company mis-reported its sales for Jan-May and corrected this reporting error in June.
Penn adds: "This often happens, but not before at this magnitude. Individual company details are secret, so we do not know who the culprit was or how the 'error' happened."
Forecast revised to 4-8 percent
Future Horizons further says in its report that the downward revision in standard logic numbers would knock 2 percentage points off the 2008 year on year growth number. On quizzing, Penn agrees: "Yes, our 'revised' forecast range is 4-8 percent. We are currently still erring on the high side of this range. More important though is the market momentum."
Memory has been a constant problem this year. iSuppli has mentioned in an earlier report that NAND recovery will be likely in H2-2009.
DRAMeXchange, in another report today, indicates a new record low for DDR 1Gb. Even Penn agrees that recovery is definitely not in sight. When do we actually get to see some recovery? He adds: "There is still over capacity, however, Q3 is typically the strongest demand quarter."
Still on memory, does Future Horizons forsee Hynix bouncing back? Penn says: "They did; in 2000-02, they were on the verge of bankruptcy. Now, they are fitter and financially strong."
ASPs were trending up earlier, and the status quo is maintained. "ASPs are still trending up, slowly, but surely. We will be commenting more on this in September's report," he adds.
Fab spends trending down
Just a few days ago, a SEMI analyst highlighted the chief reasons for decline in fab spends. Christian Gregor Dieseldorff, Senior Manager of Fab Information and Analysis at SEMI, said: "Given the weaker economic conditions globally, coupled with higher energy and commodity prices and the financial crisis, the overall outlook for semiconductor growth in 2008 is for low-single digit growth in both revenues and units. As such, device makers have responded by cutting back their capital spending and pushing out fab projects or putting them on hold."
On the status with fab spends, Penn agrees, "Those are still trending down, and will continue to do so for at least the next three quarters."
Solar not much help
There have been lot of investments happening in solar/PV. One may imagine that all of this would be helping the global semiconductor industry. So, is the spend in solar/PV really helping the industry? Penn disagrees, saying this only helps the equipment guys.
One last query, and this is regarding the smaller IDMs, 'fab-lite' IDMs, and fabless semiconductor companies. Are they growing at below average? Penn concludes: "They are mostly not. The fabless firms outgrew the market 2x in the first half of 2008."
Perhaps, here also lies a message for India!! One hopes that India does not get too carried away by all those investments in solar/PV, and focuses more on the semicon side. Semicon in India, does need concrete planning, after all!
Just a day ago, Future Horizons reported on the June sales for semiconductors. According to Malcolm Penn, chairman and CEO, June's WSTS results brought both good and bad news! The good news being that the recovery momentum strengthened, with Q2 sales up 3 percent on Q1.He says, "This was significantly better than even we dared to predict in last month's Report, despite the fact we raised eyebrows and disbelief by suggesting a 2.3 percent quarter on quarter growth."
The bad news was the Jan-May YTD WSTS numbers for standard logic (and thus, the total ICs and total SC) were revised downwards by a sizeable US$1.4 billion, a restatement that will knock 2 percentage points off the 2008 year on year growth number!
What were the reasons for the recovery momentum to have strengthened, with Q2 sales up 3 percent on Q1? Penn adds: "The first half year sales were much stronger than everyone (except us) believed. It has depresses, only by memories."
Also, the Jan-May YTD WSTS numbers for standard logic (and total ICs and total SC) were revised downward by a sizeable US$1.4 billion. Why did this happen? It is interesting to note that one company mis-reported its sales for Jan-May and corrected this reporting error in June.
Penn adds: "This often happens, but not before at this magnitude. Individual company details are secret, so we do not know who the culprit was or how the 'error' happened."
Forecast revised to 4-8 percent
Future Horizons further says in its report that the downward revision in standard logic numbers would knock 2 percentage points off the 2008 year on year growth number. On quizzing, Penn agrees: "Yes, our 'revised' forecast range is 4-8 percent. We are currently still erring on the high side of this range. More important though is the market momentum."
Memory has been a constant problem this year. iSuppli has mentioned in an earlier report that NAND recovery will be likely in H2-2009.
DRAMeXchange, in another report today, indicates a new record low for DDR 1Gb. Even Penn agrees that recovery is definitely not in sight. When do we actually get to see some recovery? He adds: "There is still over capacity, however, Q3 is typically the strongest demand quarter."
Still on memory, does Future Horizons forsee Hynix bouncing back? Penn says: "They did; in 2000-02, they were on the verge of bankruptcy. Now, they are fitter and financially strong."
ASPs were trending up earlier, and the status quo is maintained. "ASPs are still trending up, slowly, but surely. We will be commenting more on this in September's report," he adds.
Fab spends trending down
Just a few days ago, a SEMI analyst highlighted the chief reasons for decline in fab spends. Christian Gregor Dieseldorff, Senior Manager of Fab Information and Analysis at SEMI, said: "Given the weaker economic conditions globally, coupled with higher energy and commodity prices and the financial crisis, the overall outlook for semiconductor growth in 2008 is for low-single digit growth in both revenues and units. As such, device makers have responded by cutting back their capital spending and pushing out fab projects or putting them on hold."
On the status with fab spends, Penn agrees, "Those are still trending down, and will continue to do so for at least the next three quarters."
Solar not much help
There have been lot of investments happening in solar/PV. One may imagine that all of this would be helping the global semiconductor industry. So, is the spend in solar/PV really helping the industry? Penn disagrees, saying this only helps the equipment guys.
One last query, and this is regarding the smaller IDMs, 'fab-lite' IDMs, and fabless semiconductor companies. Are they growing at below average? Penn concludes: "They are mostly not. The fabless firms outgrew the market 2x in the first half of 2008."
Perhaps, here also lies a message for India!! One hopes that India does not get too carried away by all those investments in solar/PV, and focuses more on the semicon side. Semicon in India, does need concrete planning, after all!
Thursday, 24 July 2008
Semicon to grow 10pc during 2008: Future Horizons
Hold on to your horses, folks. The year 2008 may not be so bad after all for the global semiconductor industry, according to Malcolm Penn, CEO, Future Horizons.
While presenting the mid-term semiconductor industry outlook in London this week, he said that the overall semiconductor outlook for 2008 was somewhere between 7-10 perfect. This includes 5-8 percent unit growth plus 2 percent ASP growth.
In his presentation, he ruled out any changes in forecast, saying that the industry could grow at about 10 percent this year, though 12 percent growth was still possible.
Will unit sales will hold up then? This is one of the great unknown answers! Unit visibility is bad, very bad, he adds. The inventory excesses/adjustments can always catch you out, but the underlying 10 percent pa annual unit growth will continue.
When put together with increasing ASPs, will it start to deliver strong overall chip market growth? Penn assumes that this may happen either second half of this year at best, or second half of next year at worst.
How has the memory market been doing among all of this? Well, it has really been lousy, and it is this that is holding back the overall market numbers!
There have been concerns over the lack of investment in the overall semiconductor manufacturing capacity. This trend will likely continue. Penn says: "Yes, this was the whole theme for the capacity section. It's been going on for a year and will continue that way for most of this year. That earliest correction will come in Q4-08, i.e., capacity in Q4-09."
In the midst of all of this, it seems that the Asian giants such as China and India, as well as the other emerging markets have been compensating adequately for the recessionary tendencies elsewhere.
Finally, are the Intels, Samsungs and the foundries of this world spending the required billions of dollars to bring on production at the leading-edge? Penn says: "Intel yes, but Samsung is slowing, but the foundries, no! The reason? To put up their prices; the industry is fed up with four successive years of decreasing revenues per wafer start, despite all of the billions spent on new investment."
So what's Future Horizon's overall outlook for 2008? One, no change to IFS2008-09 analysis. If anything, the fundamentals are stronger! Also, the global economic outlook has strengthened. However, fab capacity expansion rate has slowed. The inventory is as controlled as it gets. PC and mobile phone markets remain robust.
However, there is weakening consumer demand in the US and the UK/Eurozone. The memory markets are continuing to be plagued with price wars. As a result, the YoY maths has been slightly impacted (down). The balance still leans to the upside, depending on the ASPs.
Danger signs to watch?
Multiple, he says! Capacity: It’s hard to see how this can spoil 2008-09, provided unit growth holds up (need to watch capex). Next, demand -- the current IC unit demand is sustainable provided the economy holds up (need to watch inventory). On the economy itself, the current outlook continues good, but risks still on the downside (if it does tank, run for the life boats).
And finally, ASPs, which are always the industry’s first line of defence (ASPs can still derail Q3/Q4, but they are improving, memories aside).
Chip industry in perspective
Technology marches on, new markets open, old ones expand, enhancing our lives. The fall out at the macro level affects the entire world economy. Next, the electronic market was traditionally Japan, North America and Western Europe. It now encompasses the whole Asian Rim, China, Eastern Europe and India. There has been a middle class market growth from 500 million to 3 billion people.
Large chip markets have become larger, niches have become commodities, and new niches have arisen. Far from maturing, the industry is still in its volatile high growth phase, says Penn, with at least a further 20 years of strong growth in prospect.
Third digital wave leaders will be different from today. The shakeout has started. The underlying growth drivers for chips continues good. The market’s not maturing nor slowing, and neither have the industry dynamics / psyche (globally competitive / intensely competitive).
As Penn says, he who dares may not necessarily win, but the feint-hearted will definitely lose! Aptly sums up the state of the global semiconductor industry.
While presenting the mid-term semiconductor industry outlook in London this week, he said that the overall semiconductor outlook for 2008 was somewhere between 7-10 perfect. This includes 5-8 percent unit growth plus 2 percent ASP growth.
In his presentation, he ruled out any changes in forecast, saying that the industry could grow at about 10 percent this year, though 12 percent growth was still possible.Will unit sales will hold up then? This is one of the great unknown answers! Unit visibility is bad, very bad, he adds. The inventory excesses/adjustments can always catch you out, but the underlying 10 percent pa annual unit growth will continue.
When put together with increasing ASPs, will it start to deliver strong overall chip market growth? Penn assumes that this may happen either second half of this year at best, or second half of next year at worst.
How has the memory market been doing among all of this? Well, it has really been lousy, and it is this that is holding back the overall market numbers!
There have been concerns over the lack of investment in the overall semiconductor manufacturing capacity. This trend will likely continue. Penn says: "Yes, this was the whole theme for the capacity section. It's been going on for a year and will continue that way for most of this year. That earliest correction will come in Q4-08, i.e., capacity in Q4-09."
In the midst of all of this, it seems that the Asian giants such as China and India, as well as the other emerging markets have been compensating adequately for the recessionary tendencies elsewhere.
Finally, are the Intels, Samsungs and the foundries of this world spending the required billions of dollars to bring on production at the leading-edge? Penn says: "Intel yes, but Samsung is slowing, but the foundries, no! The reason? To put up their prices; the industry is fed up with four successive years of decreasing revenues per wafer start, despite all of the billions spent on new investment."
So what's Future Horizon's overall outlook for 2008? One, no change to IFS2008-09 analysis. If anything, the fundamentals are stronger! Also, the global economic outlook has strengthened. However, fab capacity expansion rate has slowed. The inventory is as controlled as it gets. PC and mobile phone markets remain robust.
However, there is weakening consumer demand in the US and the UK/Eurozone. The memory markets are continuing to be plagued with price wars. As a result, the YoY maths has been slightly impacted (down). The balance still leans to the upside, depending on the ASPs.
Danger signs to watch?
Multiple, he says! Capacity: It’s hard to see how this can spoil 2008-09, provided unit growth holds up (need to watch capex). Next, demand -- the current IC unit demand is sustainable provided the economy holds up (need to watch inventory). On the economy itself, the current outlook continues good, but risks still on the downside (if it does tank, run for the life boats).
And finally, ASPs, which are always the industry’s first line of defence (ASPs can still derail Q3/Q4, but they are improving, memories aside).
Chip industry in perspective
Technology marches on, new markets open, old ones expand, enhancing our lives. The fall out at the macro level affects the entire world economy. Next, the electronic market was traditionally Japan, North America and Western Europe. It now encompasses the whole Asian Rim, China, Eastern Europe and India. There has been a middle class market growth from 500 million to 3 billion people.
Large chip markets have become larger, niches have become commodities, and new niches have arisen. Far from maturing, the industry is still in its volatile high growth phase, says Penn, with at least a further 20 years of strong growth in prospect.
Third digital wave leaders will be different from today. The shakeout has started. The underlying growth drivers for chips continues good. The market’s not maturing nor slowing, and neither have the industry dynamics / psyche (globally competitive / intensely competitive).
As Penn says, he who dares may not necessarily win, but the feint-hearted will definitely lose! Aptly sums up the state of the global semiconductor industry.
Sunday, 6 July 2008
Can Apple lead rebound in NAND fortunes?
There is an interesting piece of news on Digitimes, Taiwan, which says that Samsung has recently told its downstream customers that it will start reducing supply of NAND flash chips from July as Apple, Samsung's key customer, has placed a large batch of orders.
Will this move do anything to the NAND flash market? In the earlier blog, I had highlighted what Future Horizon's Malcolm Penn had mentioned -- that the impact of the Apple iPhone has been minimal so far on the chip market. "It's just one item in a very large and complex mix of products. The overall iPhone volume is miniscule," he says. I would probably go with that statement.
Even Semico, in its recent report, has said that the NAND market has not experienced the 'Apple effect' as has been seen in previous years, so far in 2008, despite the upcoming 3G iPhone (with up to 16GB of storage) and the SSD option for the MacBook Air.
With a majority of the analyst community yet to give the green signal about an industry revival of sorts, everything depends largely on how the new iPhone will do! However, even if it does do well, it just may not be enough!
The consumer confidence is still quite low, and rising oil prices are not really helping. Will these factors have any effect on the consumer electronics segment in the long run? Too early to say though, and do bear in mind that one product or one brand can find it a tough ask to turn around, rather, lead the memory market, and the consumer electronics industry to huge growths.
All of us in the semiconductor/chip industry keep hoping that a strong rebound does happen, and that the industry remains on course of a strong growth in 2008. However, it is not right to pin faith on one product or one brand to lead a revival.
We are probably either to hung up about numbers or about technologies. Especially, whenever a new product or technology comes around, we start banking on that product or technology to revive the industry's fortunes. Great technologies do not essentially lead to market revivals. We have seen that happen umpteen number of times.
Perhaps, it'd be wiser to let the industry have a 'free fall' or 'free growth', if you may, for some time, and let corrections happen over time, rather than bank on something or the other to carry the industry's fortunes forward.
Will this move do anything to the NAND flash market? In the earlier blog, I had highlighted what Future Horizon's Malcolm Penn had mentioned -- that the impact of the Apple iPhone has been minimal so far on the chip market. "It's just one item in a very large and complex mix of products. The overall iPhone volume is miniscule," he says. I would probably go with that statement.
Even Semico, in its recent report, has said that the NAND market has not experienced the 'Apple effect' as has been seen in previous years, so far in 2008, despite the upcoming 3G iPhone (with up to 16GB of storage) and the SSD option for the MacBook Air.
With a majority of the analyst community yet to give the green signal about an industry revival of sorts, everything depends largely on how the new iPhone will do! However, even if it does do well, it just may not be enough!
The consumer confidence is still quite low, and rising oil prices are not really helping. Will these factors have any effect on the consumer electronics segment in the long run? Too early to say though, and do bear in mind that one product or one brand can find it a tough ask to turn around, rather, lead the memory market, and the consumer electronics industry to huge growths.
All of us in the semiconductor/chip industry keep hoping that a strong rebound does happen, and that the industry remains on course of a strong growth in 2008. However, it is not right to pin faith on one product or one brand to lead a revival.
We are probably either to hung up about numbers or about technologies. Especially, whenever a new product or technology comes around, we start banking on that product or technology to revive the industry's fortunes. Great technologies do not essentially lead to market revivals. We have seen that happen umpteen number of times.
Perhaps, it'd be wiser to let the industry have a 'free fall' or 'free growth', if you may, for some time, and let corrections happen over time, rather than bank on something or the other to carry the industry's fortunes forward.
Tuesday, 1 July 2008
Semicon is no longer business as usual!
The Global Semiconductor Monthly Report June 2008 from Future Horizons, states: Let the market beware; it is no longer business as usual!
I would completely agree! For instance, the industry has since long moved to fabless, and now, fabless firms are ranking among the very best. Or, even from 130nm to 22nm process nodes, or from 180mm fabs to 450mm fabs!! Fair enough?
Coming back to the industry trends, Malcom Penn, CEO, Future Horizons, says that compared with March, the IC units were up and ASPs were down in April, even after adjusting for March being a five-week month. The net result was a 7.7 percent revenue decline! Does this spell more bad news for the beleaguered chip market?
Certainly, this seems to be the industry consensus view. Always the contrarian, Future Horizons' views are different. Here's how! April's results came in exactly as expected. Also, the unit rise and fall was simply the result of the engrained 'making the quarterly number' mentality!
Digging beneath the layers reveals a set of market fundamentals that are in remarkably strong form. The penny may not yet have dropped to the table, but, even for the chip industry ever full of surprises, let the market beware; it is no longer business as usual.
Penn says: To paraphrase the late Sir Winston Churchill's comments on Russia, "The chip industry too is a riddle wrapped up in an enigma". It marches to its own complex interwoven pattern of rules, each relatively simple when viewed in isolation, but contriving to interact in a volatile and unique way. Right now, the industry is at its most confused [state] for a decade, battered by a barrage of uncertainties and contradictions. Shell-shocked and confused, confidence is off the agenda … just when what is needed most is cool heads and determination."
Be it falling cap ex, tight capacity, focus on profits, continuing strong market demand, second half seasonal effects, according to him, the forecast tea leaves all seem to be pointing in the same positive direction. Has the worm finally turned then for the industry? He thinks so! Future Horizons also thinks that the "penny has yet to drop and that the impact on the market will be seismic and dramatic".
Earlier, the Semiconductor Industry Association (SIA) reported that worldwide sales of semiconductors of $21.8 billion in May were 7.5 percent higher than the $20.3 billion reported for May 2007, reflecting continued strong sales of consumer electronic products. May sales were 2.8 percent higher than the $21.2 billion reported for April 2008.
Do bear in mind that May is historically a strong month for semiconductor sales, as per SIA.
NAND strong minus Apple effect
DRAMeXchange has indicated in its monthly review on the DRAM segment that the NAND Flash prices are likely to gradually stabilize after mid-July pushing by lower price, new demand from 3G iPhone, smart phones and low-cost PCs.
Elsewhere, as reported by Semiconductor International, according to Semico, NAND unit shipments are likely to cross over 3.5 billion units in 2008 as against 2.5 billion units in 2007, leading to a year-over-year growth of 35 percent.
However, reflecting the memory segment's ASP (average selling price) crunch, NAND revenues will grow 13 percent in 2008, down compared to 25 percent in 2007." Semico has said that the NAND industry will record a growth year in 2008, without experiencing what it has called the 'Apple effect'.
Heartening solar initiatives
The one heartening thing to note has been the various solar related initiatives that have taken place over the past month (actually, for over the year!). In fact, iSuppli has probably been spot on while analyzing that investments in solar and semiconductors could be on par by 2010!
SVTC Technologies, an independent semiconductor process-development foundry, announced that its SVTC Solar business unit has launched the Silicon Valley Photovoltaic Development Center in San Jose. Canadian Solar and LDK Solar signing a new agreement for an additional 800MW of solar wafers, besides LDK updating on its polysilicon plant in China.
National Semiconductors also entered the PV market with its SolarMagic technology that maximizes solar energy production. Evergreen Solar, a maker of solar power panels with its proprietary, low-cost String Ribbon wafer technology, signed two new long-term sales contracts. Tokyo Ohka Kogyo Co. Ltd and IBM are also collaborating to establish new, low-cost methods for developing the next generation of solar energy products.
Not be left behind, Intel too is spinning off key assets of a start-up business effort inside Intel's New Business Initiatives group to form an independent firm called SpectraWatt.
In India, solar has been making rapid strides, especially at the Fab City in Hyderabad. There is a possibility of something similar happening in Karnataka state as well.
Indeed, semiconductors are no longer business as usual! Right?
I would completely agree! For instance, the industry has since long moved to fabless, and now, fabless firms are ranking among the very best. Or, even from 130nm to 22nm process nodes, or from 180mm fabs to 450mm fabs!! Fair enough?
Coming back to the industry trends, Malcom Penn, CEO, Future Horizons, says that compared with March, the IC units were up and ASPs were down in April, even after adjusting for March being a five-week month. The net result was a 7.7 percent revenue decline! Does this spell more bad news for the beleaguered chip market?
Certainly, this seems to be the industry consensus view. Always the contrarian, Future Horizons' views are different. Here's how! April's results came in exactly as expected. Also, the unit rise and fall was simply the result of the engrained 'making the quarterly number' mentality!
Digging beneath the layers reveals a set of market fundamentals that are in remarkably strong form. The penny may not yet have dropped to the table, but, even for the chip industry ever full of surprises, let the market beware; it is no longer business as usual.
Penn says: To paraphrase the late Sir Winston Churchill's comments on Russia, "The chip industry too is a riddle wrapped up in an enigma". It marches to its own complex interwoven pattern of rules, each relatively simple when viewed in isolation, but contriving to interact in a volatile and unique way. Right now, the industry is at its most confused [state] for a decade, battered by a barrage of uncertainties and contradictions. Shell-shocked and confused, confidence is off the agenda … just when what is needed most is cool heads and determination."
Be it falling cap ex, tight capacity, focus on profits, continuing strong market demand, second half seasonal effects, according to him, the forecast tea leaves all seem to be pointing in the same positive direction. Has the worm finally turned then for the industry? He thinks so! Future Horizons also thinks that the "penny has yet to drop and that the impact on the market will be seismic and dramatic".
Earlier, the Semiconductor Industry Association (SIA) reported that worldwide sales of semiconductors of $21.8 billion in May were 7.5 percent higher than the $20.3 billion reported for May 2007, reflecting continued strong sales of consumer electronic products. May sales were 2.8 percent higher than the $21.2 billion reported for April 2008.
Do bear in mind that May is historically a strong month for semiconductor sales, as per SIA.
NAND strong minus Apple effect
DRAMeXchange has indicated in its monthly review on the DRAM segment that the NAND Flash prices are likely to gradually stabilize after mid-July pushing by lower price, new demand from 3G iPhone, smart phones and low-cost PCs.
Elsewhere, as reported by Semiconductor International, according to Semico, NAND unit shipments are likely to cross over 3.5 billion units in 2008 as against 2.5 billion units in 2007, leading to a year-over-year growth of 35 percent.
However, reflecting the memory segment's ASP (average selling price) crunch, NAND revenues will grow 13 percent in 2008, down compared to 25 percent in 2007." Semico has said that the NAND industry will record a growth year in 2008, without experiencing what it has called the 'Apple effect'.
Heartening solar initiatives
The one heartening thing to note has been the various solar related initiatives that have taken place over the past month (actually, for over the year!). In fact, iSuppli has probably been spot on while analyzing that investments in solar and semiconductors could be on par by 2010!
SVTC Technologies, an independent semiconductor process-development foundry, announced that its SVTC Solar business unit has launched the Silicon Valley Photovoltaic Development Center in San Jose. Canadian Solar and LDK Solar signing a new agreement for an additional 800MW of solar wafers, besides LDK updating on its polysilicon plant in China.
National Semiconductors also entered the PV market with its SolarMagic technology that maximizes solar energy production. Evergreen Solar, a maker of solar power panels with its proprietary, low-cost String Ribbon wafer technology, signed two new long-term sales contracts. Tokyo Ohka Kogyo Co. Ltd and IBM are also collaborating to establish new, low-cost methods for developing the next generation of solar energy products.
Not be left behind, Intel too is spinning off key assets of a start-up business effort inside Intel's New Business Initiatives group to form an independent firm called SpectraWatt.
In India, solar has been making rapid strides, especially at the Fab City in Hyderabad. There is a possibility of something similar happening in Karnataka state as well.
Indeed, semiconductors are no longer business as usual! Right?
Friday, 20 June 2008
Semicon half year over, what next now?
Wow! A majority of my predictions made on this blog for the global semiconductor industry have so far turned out correct -- in December 2007 and again in May 2008.
Recently, I'd done a check on where are we today, in May, and earlier, via a Webcast from Semiconductor International, I had mentioned about the semiconductors market situation. Around that time, I had attempted my hand at predicting the top 10 global semiconductor trends for 2008.
There have been several folks, who've contacted me via this blog. Each one of them has his and her opinion about the semiconductor industry, and now want me to take this up a little bit more ahead. Let's see what more I can do!
While all of these makes me feel proud of having been spot on with my assessment of the global (and Indian) semiconductor industry, it should also serve as a warning for the global (and Indian) semiconductor industry -- that it really needs to pull up its socks! It is not going to be an easy ride ahead!
For starters, you simply cannot wish away the rising oil prices. The oil prices impact will be immense, and DRAM and flash are still wobbling. Besides, the ASPs are a wobbly lot and will continue to remain so. Interestingly, several forecasts from various quarters have been revised or re-assessed. Didn't you all see it coming?
I'd also like to touch upon the Indian semiconductor industry. In all likelihood, the wafer fab story has all but disappeared. Very few comments are now being made about the wafer fabs, although, how this topic was played up, rather, hyped up about a year ago is quite well documented. In fact, I'd also written about whether the timing was right for having fabs in India!
No, it is not a failure on part of the Indian industry or the India Semiconductor Association. Perhaps, we started on the fab path a bit too late! Let's all accept that!! Having said that, if a wafer fab or two do start functioning in India later in 2009 or beyond, that would be simply great!
Yes, several solar fabs are coming up and investments in solar/PV are rising, as also in India, but that was along expected lines.
I'd mentioned earlier that investments in photovoltaics (PV) had eased the pressure on capital equipment makers and spend somewhat. In fact, 2007 is now well remembered as the year when the PV industry emerged as a key opportunity for the subsystems suppliers and provided a timely boost in sales for those actively addressing this market. Perhaps, here lies an opportunity for India! I'm repeating this to the extent of sounding boring.
Further, even though it has been quite a while since the Indian semicon policy was announced, some feel that India should continue to focus on design services and embedded -- its well known strengths, rather than go after something as mature as wafer fabs. Also, why do we have to 'force ourselves to think' that we are good at product development? We are not! Yes, it can change, but that would need great effort on part of all industry stakeholders.
So, what next? For now, I will not try and predict again what's the way ahead for the semiconductor industry, as I've recently done a self check on where the global semiconductor industry stands today. That assessment will be left for another day!
Recently, I'd done a check on where are we today, in May, and earlier, via a Webcast from Semiconductor International, I had mentioned about the semiconductors market situation. Around that time, I had attempted my hand at predicting the top 10 global semiconductor trends for 2008.
There have been several folks, who've contacted me via this blog. Each one of them has his and her opinion about the semiconductor industry, and now want me to take this up a little bit more ahead. Let's see what more I can do!
While all of these makes me feel proud of having been spot on with my assessment of the global (and Indian) semiconductor industry, it should also serve as a warning for the global (and Indian) semiconductor industry -- that it really needs to pull up its socks! It is not going to be an easy ride ahead!
For starters, you simply cannot wish away the rising oil prices. The oil prices impact will be immense, and DRAM and flash are still wobbling. Besides, the ASPs are a wobbly lot and will continue to remain so. Interestingly, several forecasts from various quarters have been revised or re-assessed. Didn't you all see it coming?
I'd also like to touch upon the Indian semiconductor industry. In all likelihood, the wafer fab story has all but disappeared. Very few comments are now being made about the wafer fabs, although, how this topic was played up, rather, hyped up about a year ago is quite well documented. In fact, I'd also written about whether the timing was right for having fabs in India!
No, it is not a failure on part of the Indian industry or the India Semiconductor Association. Perhaps, we started on the fab path a bit too late! Let's all accept that!! Having said that, if a wafer fab or two do start functioning in India later in 2009 or beyond, that would be simply great!
Yes, several solar fabs are coming up and investments in solar/PV are rising, as also in India, but that was along expected lines.
I'd mentioned earlier that investments in photovoltaics (PV) had eased the pressure on capital equipment makers and spend somewhat. In fact, 2007 is now well remembered as the year when the PV industry emerged as a key opportunity for the subsystems suppliers and provided a timely boost in sales for those actively addressing this market. Perhaps, here lies an opportunity for India! I'm repeating this to the extent of sounding boring.
Further, even though it has been quite a while since the Indian semicon policy was announced, some feel that India should continue to focus on design services and embedded -- its well known strengths, rather than go after something as mature as wafer fabs. Also, why do we have to 'force ourselves to think' that we are good at product development? We are not! Yes, it can change, but that would need great effort on part of all industry stakeholders.
So, what next? For now, I will not try and predict again what's the way ahead for the semiconductor industry, as I've recently done a self check on where the global semiconductor industry stands today. That assessment will be left for another day!
Friday, 13 June 2008
Global semi to grow 4.9 percent: Cowan
This is a new addition to the continuing coverage on the global semiconductor industry forecasts in form of a monthly update to the Cowan LRA Model's global semiconductor sales forecast numbers.According to Mike Cowan, an independent semiconductor analyst and developer of the Cowan LRA model, the "momentum indicator" dropped to 1.8 percent from March's number of 6.1 percent; but still remains in positive territory.
Consequently, the updated forecast numbers increased very slightly from March's results with the 2008's sales forecast estimate increasing to $268.249 billion (from last month's estimate of $267.318; up a modest 0.35 percent) thereby yielding a year-on-year (YoY) sales growth forecast estimate of 4.9 percent (up from last month's sales growth forecast expectation of 4.6 percent).
This newly updated sales growth forecast estimate of 4.9 percent as per the Cowan LRA model compares quite favorably with both Gartner's most recent forecast update of 4.6 percent and the WSTS's Spring 2008 forecast update of 4.7 percent.
Cowan adds: "It should be highlighted that these Cowan LRA Model's forecast numbers are a "snapshot in time" (for a given month) and will "change" as each new month's results are made available and digested by the dynamic Cowan LRA Model as the year evolves."
Cowan LRA model
A new semiconductor sales forecasting model has been developed to facilitate the determination of future global sales of the semiconductor industry. The Cowan LRA (Linear Regression Analysis) Model, which forecasts global semiconductor sales, is a mathematically based model that features statistical analysis of the past 24 years of historical, monthly global semiconductor sales numbers that are collected and published by the World Semiconductor Trade Statistics (WSTS) organization.
Mike Cowan is a 45-year semiconductor industry veteran. He has a 36-year history at IBM's Microelectronics Division in East Fishkill, N.Y., where he was involved in many facets of semiconductor development and manufacturing engineering, including both technical and management responsibilities.
Over his last 10 years at IBM, as a senior technical staff member, he has been involved in strategy development and competitive analysis focused on the semiconductor industry, and has developed a number of top-down and bottom-up models to predict the dynamics of the semiconductor industry.
After retiring from IBM in 2002 he became an independent semiconductor industry analyst providing his monthly forecasts to The Semiconductor Reporter Web site from 2002-2006, and presently to Future Horizons.
May I also take this opportunity to welcome Mike Cowan on my blog.
Saturday, 31 May 2008
Top semicon articles of 2008
A very kind reader left a comment yesterday that he (or she?) spent three hours on my blog! I am simply overwhelmed and humbled!!
It has really been a pleasure writing and maintaining a semicon blog! Plenty such are around carrying very valuable information, and I salute those bloggers.
It is really tough to contend with all the other technology-related information, but then, semicon has its own charm, and its own set of dedicated readers -- who DO go on to become extremely loyal.
I am even more touched by another request by a friend to list all the top articles I've written this year. Wow!!
It is very difficult for me to say, which ones are the best! However, I am listing the articles here. They all link back to CIOL. Of course, I've blogged here first, so, those who are familiar with my blog pieces, will identify them immediately.
Here goes then -- starting from the latest back down to very late last year -- in terms of relevance. Enjoy!
Semi trends 2008: Fab spend lower, ASPs stabilizing
The call on global fab spend was for a 10 percent reduction, and this is now getting to be closer to 20 percent.
UK, India aim for semicon collaboration
ISA-UKTI study examines collaboration scope between India and UK in design, applications and devices.
Dubai an emerging silicon frontier
The government of Dubai has set up the Dubai Silicon Oasis Authority (DSOA) as the engine for propelling Dubai into the knowledge economy.
Be parallel, or perish!
Parallelism offers new doors, and creativity is required to open these new doors, says Intel.
Altera first @ 40nm FPGAs
The company has announced two product lines -- the Stratix IV FPGAs and the HardCopy IV ASICs.
Semicon likely to grow 12pc in 2008
If there will be an economic recession, the chip industry (but not all firms) is in the best shape possible to weather the ensuing storm.
India's growing might in global semicon
India is fast becoming the world's destination, and increasingly the source too, for semiconductors.
Fascinating developments in 22nm!
These augur well for the global semiconductor industry, even though the field could get much narrower.
Indian design services to touch $10.96bn by 2010
Total design services market in India is said to have grown at 21 percent year on year.
NXP India achieves RF CMOS in single chip
The entire analog and RF work done has been in Bangalore by NXP's single-chip design team.
LabVIEW 8.5 delivers power of multicore processors
With LabVIEW, designers and engineers can assign different tasks on different cores -- which are independent.
Multi-nationalization of product development process
Indian designers lead in transaction level design, and can play big role in EDA.
Can we expect exciting times in 2008? Some trends
Blurring lines between PMPs and PNDs, semicon rush or hush; Netscape's end -- all are in store!
Semicon outlook 2008: Global market likely to grow 6-11 percent in 2008
Some predictions are for 2008 to be flat year or a year of negative growth; EDA to grow 7.8pc!
That's about it! If there's anything I've missed out, kindly let me know. Thanks for all your continuing support, dear readers. It is very humbling and touching.
It has really been a pleasure writing and maintaining a semicon blog! Plenty such are around carrying very valuable information, and I salute those bloggers.
It is really tough to contend with all the other technology-related information, but then, semicon has its own charm, and its own set of dedicated readers -- who DO go on to become extremely loyal.
I am even more touched by another request by a friend to list all the top articles I've written this year. Wow!!
It is very difficult for me to say, which ones are the best! However, I am listing the articles here. They all link back to CIOL. Of course, I've blogged here first, so, those who are familiar with my blog pieces, will identify them immediately.
Here goes then -- starting from the latest back down to very late last year -- in terms of relevance. Enjoy!
Semi trends 2008: Fab spend lower, ASPs stabilizing
The call on global fab spend was for a 10 percent reduction, and this is now getting to be closer to 20 percent.
UK, India aim for semicon collaboration
ISA-UKTI study examines collaboration scope between India and UK in design, applications and devices.
Dubai an emerging silicon frontier
The government of Dubai has set up the Dubai Silicon Oasis Authority (DSOA) as the engine for propelling Dubai into the knowledge economy.
Be parallel, or perish!
Parallelism offers new doors, and creativity is required to open these new doors, says Intel.
Altera first @ 40nm FPGAs
The company has announced two product lines -- the Stratix IV FPGAs and the HardCopy IV ASICs.
Semicon likely to grow 12pc in 2008
If there will be an economic recession, the chip industry (but not all firms) is in the best shape possible to weather the ensuing storm.
India's growing might in global semicon
India is fast becoming the world's destination, and increasingly the source too, for semiconductors.
Fascinating developments in 22nm!
These augur well for the global semiconductor industry, even though the field could get much narrower.
Indian design services to touch $10.96bn by 2010
Total design services market in India is said to have grown at 21 percent year on year.
NXP India achieves RF CMOS in single chip
The entire analog and RF work done has been in Bangalore by NXP's single-chip design team.
LabVIEW 8.5 delivers power of multicore processors
With LabVIEW, designers and engineers can assign different tasks on different cores -- which are independent.
Multi-nationalization of product development process
Indian designers lead in transaction level design, and can play big role in EDA.
Can we expect exciting times in 2008? Some trends
Blurring lines between PMPs and PNDs, semicon rush or hush; Netscape's end -- all are in store!
Semicon outlook 2008: Global market likely to grow 6-11 percent in 2008
Some predictions are for 2008 to be flat year or a year of negative growth; EDA to grow 7.8pc!
That's about it! If there's anything I've missed out, kindly let me know. Thanks for all your continuing support, dear readers. It is very humbling and touching.
Friday, 30 May 2008
ASPs stabilizing, fab spend lower than expected
Future Horizons recently released the May WSTS results on the global semiconductor industry, which indicate that the chip market is slowly starting to buzz again. With the 'hum back among the chips', it was important for me to quiz Malcolm Penn, chairman and CEO, Future Horizons, in the UK, to find out why this was happening!
Now then, why is the chip market exactly humming? What has actually happened? Well, nothing specific! It is merely an overall step-by-step general improvement in everything, helped along by the normal seasonal improvement in business in the second half of the year!
So many forecasters and firms have their own forecasts. What happens now if some of these forecasts are cut or revised? Will that affect the market overall market? The answer is simple -- a forecast is simply just that -- a forecast -- not fact!
Penn says, "The market will judge whether the other forecasters' analyses of the market were right, as it wll indeed judge whether we are right too!"
Earlier, I had written about Future Horizons forecasting 12 percent growth in 2008 for the global semiconductor industry. Keep an eye on that one!
Further, have the ASPs stabilized, as those are indeed a dodgy lot? Penn feels, "We believe yes, although, there will still be the normal month-on-month variations and wobbles."
Now, where does all of this leave the DRAM and NAND markets? According to the forecast, prices have already stopped falling as fast as they were this time last year.
However, they do fall and will fall; this is what they do! The question is: by how much? In other words, is the current fall above or below the long-term trend line? This will be analyzed in the long run as well.
Finally, what's happening with the semicon equipment capex? Again, it is continuing to fall! "Right now we are in the middle of an underinvestment period, which means a capacity shortfall in 12 month's time," notes Penn.
No 'fab' times for fab spends
Is the fab spend going to see any change then? Well, unfortunately, no luck there! At least, not yet. Penn adds that fab spend is lower than expected at the beginning of the year.
He says: "The call then was for a 10 percent reduction, and this is now getting to be closer to 20 percent. In fact, Mike Splinter of Applied Materials is quoted as saying that he thinks that fab spend will end up 30 percent down."
It is good to see that the global semiconductor industry is starting to hum a little bit more than what it was doing last month. Sincerely hope that the rest of the year pans out well!
Now then, why is the chip market exactly humming? What has actually happened? Well, nothing specific! It is merely an overall step-by-step general improvement in everything, helped along by the normal seasonal improvement in business in the second half of the year!
So many forecasters and firms have their own forecasts. What happens now if some of these forecasts are cut or revised? Will that affect the market overall market? The answer is simple -- a forecast is simply just that -- a forecast -- not fact!
Penn says, "The market will judge whether the other forecasters' analyses of the market were right, as it wll indeed judge whether we are right too!"
Earlier, I had written about Future Horizons forecasting 12 percent growth in 2008 for the global semiconductor industry. Keep an eye on that one!
Further, have the ASPs stabilized, as those are indeed a dodgy lot? Penn feels, "We believe yes, although, there will still be the normal month-on-month variations and wobbles."
Now, where does all of this leave the DRAM and NAND markets? According to the forecast, prices have already stopped falling as fast as they were this time last year.
However, they do fall and will fall; this is what they do! The question is: by how much? In other words, is the current fall above or below the long-term trend line? This will be analyzed in the long run as well.
Finally, what's happening with the semicon equipment capex? Again, it is continuing to fall! "Right now we are in the middle of an underinvestment period, which means a capacity shortfall in 12 month's time," notes Penn.
No 'fab' times for fab spends
Is the fab spend going to see any change then? Well, unfortunately, no luck there! At least, not yet. Penn adds that fab spend is lower than expected at the beginning of the year.
He says: "The call then was for a 10 percent reduction, and this is now getting to be closer to 20 percent. In fact, Mike Splinter of Applied Materials is quoted as saying that he thinks that fab spend will end up 30 percent down."
It is good to see that the global semiconductor industry is starting to hum a little bit more than what it was doing last month. Sincerely hope that the rest of the year pans out well!
Chip market is beginning to hum again!
Future Horizons has released the May WSTS results today on the global semiconductor industry, which indicate that the chip market is slowly starting to buzz again.
Malcolm Penn, chairman and CEO, Future Horizons, points out that as shown in May's WSTS results, March's sale figures romped home with a vengeance – reversing February's lacklustre performance – with IC sales up 10.8 percent on February and 8.2 percent on the same time last year.
More importantly, the ASPs were up 13.3 percent on February and 2.1 percent on March 2007.
While the increase on February 2008 is merely part of the normal month 3 versus month 2 quarterly patterns, the increase over the same period last year is much more statistically -– and structurally -– significant.
"Finally, the chip market is starting to hum. Now is NOT the time to cut back on the 2008 forecast," he adds.
Now then, why is the chip market exactly humming? What's actually happened? Well, nothing specific! It is merely an overall step-by-step general improvement in everything, helped along by the normal seasonal improvement in business in the second half of the year.
So many forecasters and firms have their own forecasts. What happens now if some of these forecasts are cut or revised? Will that affect the market overall market? The answer is simple -- a forecast is simply just that -- a forecast -- not fact! Penn says, "The market will judge whether the other forecasters' analyses of the market were right, as it wll indeed judge whether we are right too!"
Earlier, I had blogged about Future Horizons forecasting 12 percent growth in 2008 for the global semiconductor industry. Keep an eye on that one!
Further, have the ASPs stabilized, as those are indeed a dodgy lot? Penn feels, "We believe yes, although, there will still be the normal month-on-month variations and wobbles."
I shall continue this story in my next blog... so keep reading folks! My very warm regards and thanks to all of you who do stop by to read and comment.
Malcolm Penn, chairman and CEO, Future Horizons, points out that as shown in May's WSTS results, March's sale figures romped home with a vengeance – reversing February's lacklustre performance – with IC sales up 10.8 percent on February and 8.2 percent on the same time last year. More importantly, the ASPs were up 13.3 percent on February and 2.1 percent on March 2007.
While the increase on February 2008 is merely part of the normal month 3 versus month 2 quarterly patterns, the increase over the same period last year is much more statistically -– and structurally -– significant.
"Finally, the chip market is starting to hum. Now is NOT the time to cut back on the 2008 forecast," he adds.
Now then, why is the chip market exactly humming? What's actually happened? Well, nothing specific! It is merely an overall step-by-step general improvement in everything, helped along by the normal seasonal improvement in business in the second half of the year.
So many forecasters and firms have their own forecasts. What happens now if some of these forecasts are cut or revised? Will that affect the market overall market? The answer is simple -- a forecast is simply just that -- a forecast -- not fact! Penn says, "The market will judge whether the other forecasters' analyses of the market were right, as it wll indeed judge whether we are right too!"
Earlier, I had blogged about Future Horizons forecasting 12 percent growth in 2008 for the global semiconductor industry. Keep an eye on that one!
Further, have the ASPs stabilized, as those are indeed a dodgy lot? Penn feels, "We believe yes, although, there will still be the normal month-on-month variations and wobbles."
I shall continue this story in my next blog... so keep reading folks! My very warm regards and thanks to all of you who do stop by to read and comment.
Saturday, 17 May 2008
Top 10 global semicon predictions -- where are we today
It is always interesting to write semicon blogs! Lots of people come up to me with their own comments, insights, requests, etc. One such request came from a friend in Taiwan, who's involved with the semiconductor industry.I was asked forthrightly what I thought of the top 10 global predictions, which I had blogged/written about some time back late last year.
Top 10 semicon predictions
For those who came in late, here are the 10 global predictions on semiconductors made at that time (late December 2007.
1. Semiconductor firms may have to face a recession year in an election year.
2. DRAM market looks weak in 2008.
3. NAND market will remain hot.
4. Power will remain a major issue.
5. EDA has to catch up.
6. Need to solve embedded (software crisis?) dilemma.
7. Consolidation in the fab space.
8. Capital equipment guys will continue to move to other market.
9. Spend on capital equipment to drop.
10. Mini fabs in developing countries.
Well, lot of water has flowed since those predictions were made. Let's see how things stand, as of now. The updated predictions would look something like these:
1. There have been signs of recession, but the industry has faced it well, so far. In fact, Future Horizons feels that if there is going to be a global economic recession, the chip industry (but not all companies) is in the best shape possible to weather the ensuing storm.
2. Memory market is changing slightly as well, though people are very cautious. According to Converge, memory market prices appear to be stabilizing. iSuppli has predicted a poor year for DRAM though!
3. NAND Flash could show some recovery later this year. Yes, Q1-08 QoQ sales seems to have slipped, but the market remains hopeful of a recovery. Even iSuppli warned of NAND Flash slowdown in 2008, while Apple slashed its NAND order forecast significantly for 2008! Keep those fingers crossed!!
4. Power remains a big issue, and will continue to be so. This will remain as we move up newer technology process nodes.
5. EDA is seemingly catching up with 45nm designs. Magma, Synopsys, and the other leading EDA vendors are said to be playing big roles in 45nm designs.
6. Fabless companies are gaining in strength. No doubt about it! The 2007 semicon rankings show that. Also, Qualcomm is now the leader in the top wireless semicon suppliers, displacing Texas Instruments.
7. There have been consilidations (or long term alliances) in: a) fab space b) DRAM space. In the fab space, Intel, Samsung and TSMC have combined to go with 450mm wafer fab line by 2012. And in the DRAM space, there have been new camps, such as Elpida-Qimonda, and Nanya-Micron partnering to take on Samsung. With the global semiconductor market seeing steady decline in growth rate, which would continue, look forward to more consolidations.
8. Investments in photovoltaics (PV) have eased the pressure on capital equipment makers and spend somewhat. In fact, 2007 will be remembered as the year when the PV industry emerged as a key opportunity for subsystems suppliers and provided a timely boost in sales for those companies actively addressing this market. Perhaps, here lies an opportunity for India.
9. Mini fabs -- these are yet to happen; so far talks only. In India, a single silicon wafer fab has yet to start functioning, even though it has been quite a while since the semicon policy was announced. Conversely, some feel that India should focus on design, rather than go after something as mature as having wafer fabs. However, several solar fabs -- from Moser Baer, Videocon, Reliance, etc., are quite likely.
10. Moving to 45nm from 32nm is posing more design challenges than thought. This is largely due to the use of new materials. Well, 45nm will herald a totally different structure -- metal gate/high-k/thin FET/deep trench design, etc. It will herald a new way of system design as well.
Now, I am not a semicon expert by any long distance, and welcome comments, suggestions, improvements from you all.
Wednesday, 14 May 2008
Semicon to grow 12pc in 2008: Future Horizons
If there is going to be a global economic recession, the chip industry (but not all companies) is in the best shape possible to weather the ensuing storm!
According to Malcom Penn, CEO, Future Horizons, we are dealing with a semiconductor industry in 'deep trauma.' He was delivering the company's forecast at the recently held International Electronics Forum (IEF) 2008 in Dubai, predicting a 12 percent growth this year despite signs of a wobbling US economy.
Is there a need to get back to the industry basics? “Semiconductors are a peculiar business; the only sane strategy is to bet the company regularly,” once remarked Dr Gordon Moore.
Penn noted that the current industry status is somewhat confused and uncertain. Short-term issues are dominating the agenda.
Longer-term structural trends are unclear. The traditional IDMs are currently going through a mid-life ‘new business model’ identity crisis, and the start-ups are struggling to even reach critical mass! And all of this has been happening amidst intense economic uncertainty
"Now is the time for strong nerves and determination," Penn said. According to him, the underlying industry fundamentals are sound and there is no end in sight to the 'make-lunch-or-be-lunch' ethos.
The emerging economies like India and China have so far been less affected by the financial market's turbulence. In fact, the emerging and developing economies were shifting the global growth dynamics.
Chip industry in best possible shape
A forecast health warning is: IF the global economy collapses, it will take the chip market with it. However, Future Horizons feels that if there is going to be a global economic recession, the chip industry (but not all companies) is in the best shape possible to weather the ensuing storm.
The ASPs are an enigma wrapped up in riddle. The course of ASPs (like love) never runs smooth. Wobbles happen! ASPs are also the perennial (and least understood) industry wild card. ASPs are generally driven by new IC designs, and that takes time (sometimes three to four years). Post-2001, value recovery lost one generation (130nm impact). The ASP recovery ‘wobbled’ in 2007 (memory and MPU price wars). Barring a recession, Future Horizons forecasts that ASPs will recover in 2008 (it has already started).
12 percent growth likely
Future Horizons' 2008 forecast summary and assumptions (as of May 2008) are -- ‘12 percent’ growth -- '10 percent' units / ‘2 percent’ ASP. There may be no global economic recession, although US/UK/Eurozone might wobble -- which they are! No significant inventory correction will probably take place, but there are always Q4>Q1 adjustments, and there's nothing special about that either.
There could be lower fab capacity expansion due to 2007/2008 capex slowdown, which is inevitable and irreversible. There is also a possibility of a more stable memory price erosion -- which means, back to the learning vs. bleeding curve, and prices have since hardened. If the global economy holds, the 2H-08 growth will likely be strong. This, if the capacity, ASP and units are all pulling together, which is said to be happening.
Therefore, Penn feels it is too early to call for a (major) downward revision. Q1 08 was a lot stronger than conventional wisdom feared.
"That’s the rational analysis, but semiconductors aren’t rational. It could just as easily be another single digit growth year," Penn added.
Danger signs to watch out for
So, what are the danger signs one should watch out for? These would be capacity -- it is hard to see how this can spoil 2008, provided unit growth holds up, but there is a need to watch capex. Another factor is demand -- the current IC unit demand is sustainable provided the economy holds up, so there is a need to watch the inventory.
Next comes the economy! The current outlook continues to be uncertain with risks all on the downside. ASPs are the key to recovery, but always the first line of defence. ASPs could still derail 2008, but the trends are encouraging.
What's driving the market?
In semiconductor 7.0 -- or the 7th decade of the transistor revolution, the same things, as always, are driving the market. These are: technology, legislation -- energy saving/conservation and structural -- the relentless analog to digital conversion. All of these are combining to do what the chip industry does best -- enabling something that was previously impossible. Penn contends, "This industry has nowhere near run out of steam!"
New applications continue to drive the market, with automotive, industrial and medical, mobile phones, and PCs and servers, dominating. The PC market is dominating, but going nowhere fast. Mobile phones have become more interesting, but have conflicting priorities. The challenges are: how to protect the existing cost structure and subscriber base and how to add useful and affordable value-add services! Evidently, "chipset suppliers love the high end, market loves the low end."
There is definitely an increasing automotive semiconductor content. A solid annual growth has been prediced (CAGR 2006-11) for vehicles -- 5.5 percent, systems -- 11.5 percent, and semiconductors -- 13.3 percent. Some other new areas are motor control and energy, as well as lighting and photovoltaic, besides medical electronics. Robotics is yet another interesting area.
Key industry issues
It is clear that more chips per wafer equals less cost per chip and more transistors per die equals more functionality. Several billion transistors gives phenomenal design flexibility as well. Considering total ICs and MOS ICs, in the MOS capacity build out by technology node, there has been no change in volume ramp profile despite the hype.
As for the evolution of the technology node, definitely, 45nm is a revolutionary step from 65nm. In all likelihood, 32nm will be a natural evolutionary. However, Penn cautioned that 22nm would be another ‘difficult’ transition!
There is no doubt that 65nm will be tomorrow’s leading-edge workhorse, having the same basic Si gate/SiO2/MOSFET structure. Nevertheless, 45nm will herald a totally different structure -- metal gate/high-k/thin FET/deep trench design, etc. Also, 45nm will herald a new way of system design.
Is fabless right?
Is Fablite a valid option? While there is nothing wrong with being fabless, people are just not sure whether the best starting point is being an IDM. Teamwork has to be perfectly orchestrated as competition is tough.
As for the market share dynamics, the top 10 companies (IDMs) have been losing share. Fabless share has been growing, but it is still relatively small.
Coming to the realities of the foundry market, TSMC's lead is now unassailable. Were it an IDM, it would be No. 2, challenging Intel and passing Samsung. Moving more into design looks inevitable.
Finally, execution, and not technology, is everything! Execution has and will continue to make the difference. Applications (software) will play the role of the key differentiator as well, and it has value. Design is the means to an end, and not the end.
From the chip industry's perspective, the electronics market was traditionally Japan, North America and Western Europe. It now encompasses the entire Asian rim, China, Eastern Europe and India. Far from maturing, the chip industry itself is still in its volatile, high-growth phase, with at least a further 20 years of strong growth in prospect. Penn said, "The underlying growth drivers for chips has never been better."
Back to basics
We started with the need to get back to industry basics. We end in the same way! Stick to basics like:
* Don’t invest in low cost areas just because they are cheap -- they have a habit of becoming high cost tomorrow, plus the hidden extras.
* Don’t make outsourcing decisions just because they are easy -- especially if there’s no way back.
* Don’t make strategic cut-backs just to trim the bottom line -- some decisions, e.g., R&D, take a long time to impact, then it’s too late.
* Stop looking for high volume/high value market niches -- they don’t exist, need to learn how to compete
* Do show strong leadership
* Do have a long-term plan and stick with it -- even if it negatively impacts ‘the next quarter’ balance sheet
* Do show a commitment and determination to succeed
* Do stay focused and resistant to external meddling
* Do execute ruthlessly -- this is the key competitive differentiator)
* Do … just do it with passion -- it’s the passion that makes the difference
According to Malcom Penn, CEO, Future Horizons, we are dealing with a semiconductor industry in 'deep trauma.' He was delivering the company's forecast at the recently held International Electronics Forum (IEF) 2008 in Dubai, predicting a 12 percent growth this year despite signs of a wobbling US economy.Is there a need to get back to the industry basics? “Semiconductors are a peculiar business; the only sane strategy is to bet the company regularly,” once remarked Dr Gordon Moore.
Penn noted that the current industry status is somewhat confused and uncertain. Short-term issues are dominating the agenda.
Longer-term structural trends are unclear. The traditional IDMs are currently going through a mid-life ‘new business model’ identity crisis, and the start-ups are struggling to even reach critical mass! And all of this has been happening amidst intense economic uncertainty
"Now is the time for strong nerves and determination," Penn said. According to him, the underlying industry fundamentals are sound and there is no end in sight to the 'make-lunch-or-be-lunch' ethos.
The emerging economies like India and China have so far been less affected by the financial market's turbulence. In fact, the emerging and developing economies were shifting the global growth dynamics.
Chip industry in best possible shape
A forecast health warning is: IF the global economy collapses, it will take the chip market with it. However, Future Horizons feels that if there is going to be a global economic recession, the chip industry (but not all companies) is in the best shape possible to weather the ensuing storm.
The ASPs are an enigma wrapped up in riddle. The course of ASPs (like love) never runs smooth. Wobbles happen! ASPs are also the perennial (and least understood) industry wild card. ASPs are generally driven by new IC designs, and that takes time (sometimes three to four years). Post-2001, value recovery lost one generation (130nm impact). The ASP recovery ‘wobbled’ in 2007 (memory and MPU price wars). Barring a recession, Future Horizons forecasts that ASPs will recover in 2008 (it has already started).
12 percent growth likely
Future Horizons' 2008 forecast summary and assumptions (as of May 2008) are -- ‘12 percent’ growth -- '10 percent' units / ‘2 percent’ ASP. There may be no global economic recession, although US/UK/Eurozone might wobble -- which they are! No significant inventory correction will probably take place, but there are always Q4>Q1 adjustments, and there's nothing special about that either.
There could be lower fab capacity expansion due to 2007/2008 capex slowdown, which is inevitable and irreversible. There is also a possibility of a more stable memory price erosion -- which means, back to the learning vs. bleeding curve, and prices have since hardened. If the global economy holds, the 2H-08 growth will likely be strong. This, if the capacity, ASP and units are all pulling together, which is said to be happening.
Therefore, Penn feels it is too early to call for a (major) downward revision. Q1 08 was a lot stronger than conventional wisdom feared.
"That’s the rational analysis, but semiconductors aren’t rational. It could just as easily be another single digit growth year," Penn added.
Danger signs to watch out for
So, what are the danger signs one should watch out for? These would be capacity -- it is hard to see how this can spoil 2008, provided unit growth holds up, but there is a need to watch capex. Another factor is demand -- the current IC unit demand is sustainable provided the economy holds up, so there is a need to watch the inventory.
Next comes the economy! The current outlook continues to be uncertain with risks all on the downside. ASPs are the key to recovery, but always the first line of defence. ASPs could still derail 2008, but the trends are encouraging.
What's driving the market?
In semiconductor 7.0 -- or the 7th decade of the transistor revolution, the same things, as always, are driving the market. These are: technology, legislation -- energy saving/conservation and structural -- the relentless analog to digital conversion. All of these are combining to do what the chip industry does best -- enabling something that was previously impossible. Penn contends, "This industry has nowhere near run out of steam!"
New applications continue to drive the market, with automotive, industrial and medical, mobile phones, and PCs and servers, dominating. The PC market is dominating, but going nowhere fast. Mobile phones have become more interesting, but have conflicting priorities. The challenges are: how to protect the existing cost structure and subscriber base and how to add useful and affordable value-add services! Evidently, "chipset suppliers love the high end, market loves the low end."
There is definitely an increasing automotive semiconductor content. A solid annual growth has been prediced (CAGR 2006-11) for vehicles -- 5.5 percent, systems -- 11.5 percent, and semiconductors -- 13.3 percent. Some other new areas are motor control and energy, as well as lighting and photovoltaic, besides medical electronics. Robotics is yet another interesting area.
Key industry issues
It is clear that more chips per wafer equals less cost per chip and more transistors per die equals more functionality. Several billion transistors gives phenomenal design flexibility as well. Considering total ICs and MOS ICs, in the MOS capacity build out by technology node, there has been no change in volume ramp profile despite the hype.
As for the evolution of the technology node, definitely, 45nm is a revolutionary step from 65nm. In all likelihood, 32nm will be a natural evolutionary. However, Penn cautioned that 22nm would be another ‘difficult’ transition!
There is no doubt that 65nm will be tomorrow’s leading-edge workhorse, having the same basic Si gate/SiO2/MOSFET structure. Nevertheless, 45nm will herald a totally different structure -- metal gate/high-k/thin FET/deep trench design, etc. Also, 45nm will herald a new way of system design.
Is fabless right?
Is Fablite a valid option? While there is nothing wrong with being fabless, people are just not sure whether the best starting point is being an IDM. Teamwork has to be perfectly orchestrated as competition is tough.
As for the market share dynamics, the top 10 companies (IDMs) have been losing share. Fabless share has been growing, but it is still relatively small.
Coming to the realities of the foundry market, TSMC's lead is now unassailable. Were it an IDM, it would be No. 2, challenging Intel and passing Samsung. Moving more into design looks inevitable.
Finally, execution, and not technology, is everything! Execution has and will continue to make the difference. Applications (software) will play the role of the key differentiator as well, and it has value. Design is the means to an end, and not the end.
From the chip industry's perspective, the electronics market was traditionally Japan, North America and Western Europe. It now encompasses the entire Asian rim, China, Eastern Europe and India. Far from maturing, the chip industry itself is still in its volatile, high-growth phase, with at least a further 20 years of strong growth in prospect. Penn said, "The underlying growth drivers for chips has never been better."
Back to basics
We started with the need to get back to industry basics. We end in the same way! Stick to basics like:
* Don’t invest in low cost areas just because they are cheap -- they have a habit of becoming high cost tomorrow, plus the hidden extras.
* Don’t make outsourcing decisions just because they are easy -- especially if there’s no way back.
* Don’t make strategic cut-backs just to trim the bottom line -- some decisions, e.g., R&D, take a long time to impact, then it’s too late.
* Stop looking for high volume/high value market niches -- they don’t exist, need to learn how to compete
* Do show strong leadership
* Do have a long-term plan and stick with it -- even if it negatively impacts ‘the next quarter’ balance sheet
* Do show a commitment and determination to succeed
* Do stay focused and resistant to external meddling
* Do execute ruthlessly -- this is the key competitive differentiator)
* Do … just do it with passion -- it’s the passion that makes the difference
Thursday, 20 March 2008
Top 25 semicon vendors of 2007
Here are the top 25 global suppliers of semiconductors, according to iSuppli. First up, there are no surprises in the top 5 -- Intel, Samsung, Texas Instruments, Toshiba and STMicroelectronics retain their spots for this year too. The surprises occur in the second rung -- or, in the next five spots.Renasas and Hynix exchanged places, with Hynix moving up from 7th position in 2006 to 6th position in 2007, and Renasas dropping from 6th last year to 7th. This is very interesting, because, despite memory market pains during 2007, South Korea's Hynix Semiconductor and Japan's Toshiba and Elpida Memory achieved memory-chip revenue growth of 15, 14.5 and 8.8 percent respectively in 2007, as per iSuppli.
Infineon, Sony major movers
The next three positions are the major surprises of the year. Well, the 10th position was no surprise to me -- AMD, dropping from 8th in 2006 to 10th in 2007. Sony and Germany's Infineon Technologies have been the biggest gainers of the year!
According to iSuppli, Infineon acquired TI's DSL CPE chip business and its wireless baseband semiconductor unit, boosting its revenue. Qimonda, which spun off Infineon, dropped from 12th in 2006 to 16th this year. This split had seen Infineon go out of the top 10 last year.
As per iSuppli, logic application specific integrated circuits (application specific standard products and ASICs) enjoyed the strongest performance among all semicon segments in 2007. Sony and Toshiba were key drivers of growth in this segment due to their sales of semiconductors for the PS3.
Fabless is surely in
The presence of Qualcomm and nVidia in the top 25 list speaks volumes of the power of fabless companies. Qualcomm moved up from 16th to 13th position this year, while nVidia moved up from 25th to the 20th position this year. There is every chance that we will see a fabless company in the top 10 next year! There is an even better chance that more fabless companies will make it to the top 25 companies next year and in future.
All other key players dropped in their rankings. NXP dropped from 9th to 11th; NEC dropped from 11th to 12th; Freescale from 10th to 14th; Micron from 13th to 15th; Elpida moved up from 19th to 17th; while Matsushita and Broadcom dropped a place each.
An iSuppli release says: "Overall, the top 25 semiconductor suppliers significantly outperformed the combined performance of companies ranked lower than them in 2007. The Top-25 as a group achieved revenue growth of 4.5 percent in 2007 while the combined growth of all other semiconductor suppliers was only 0.8 percent."
On a personal note, I would love to see names like SemIndia and HSMC making it to the list. If not now, then at least sometime in the near future. However, it seems from certain published reports that the Indian fab story has gone all wrong. I'll take up this topic in a future blog for sure!
Tuesday, 1 January 2008
Can we expect exciting times in 2008?
Welcome 2008! May I wish all my readers a very happy and prosperous 2008. Another year's gone past. We have a habit of looking back to see at what happened and what could have been.
A lot has been written already about 2007 and what to expect in 2008. So let's just touch upon some of the events from 2007 and some expectations from 2008.
For India, 2007 was a great year for the semiconductor industry -- first, the Indian government announced the semiconductor policy, followed some months later by the fab policy. Both were tremendous firsts in India's science and technology, and not IT, history. Everyone hopes that the Indian semiconductor industry will take off this year. Eyes are focused on the embedded segment, what with the global semiconductor industry reportedly facing 'an embedded dilemma.'
An issue hitting the EDA industry is that, the cost of designing or developing the embededded software for an SoC actually passed the cost of desgining the SoC itself in 2007. The world needs to avoid this software crisis, and India is well placed to take full advantage and play a major role, given its strength in embedded.
In IT, it's been a mixed sort of a year for Apple, which hit big time with the iPhone, seemed not to make waves with either the Safari browser or the Leopard OS. Microsoft had the Vista OS, but then, Vista didn't exactly warm the hearts of users or those who wished to upgrade their OS, including yours truly. Maybe, 2008 would ring in better times for Vista.
While on browsers, Firefox has gained lot of ground. However, by the end of 2007 came the news that the Netscape Web browser -- which started it all -- would soon be confined to history.
Netscape Navigator was the world's first commercial Web browser and launch pad of the Internet boom. It will be taken off on February 1, 2008, after a 13-year run. Time Warner's AOL, its current owner, has reportedly decided to kill further development and technical support to focus on growing the company as an advertising business. The first version of Netscape had come out in late 1994.
In gaming, there are admirers of Wii, PS3 and Xbox 360, and will remain the same. Which one of these gaming consoles will reign supreme, eventually, is difficult to predict.
In consumer electronics, lines are surely blurring between portable media players (PMPs) and portable navigation devices. Also, it would be interesting to see how digital photo frames survive 2008. A reported tight supply, especially for seven-inch models, has led to some makers in Asia either postponing mass production or extending lead times. Surely, makers cannot add more entertainment functions in smaller screen models, to keep costs down.
In the security products market, IP cameras and video servers should have a better year, with more emphasis now on video surveillance. In fact, some friends have been querying me as well regarding their potential.
On components, we can hope to see more growth for solid polymer capacitors in 2008, and among PCBs some fabricators should start manufacturing high-density interconnect (HDI) PCBs this year.
In wireless, we should witness TD-SCDMA in operation prior to the Beijing Olympic Games. Backers would like to see TD-SCDMA succeed, given the effort Datang-Siemens has made on the technology, as also the Chinese government, which issued spectrum for TD-SCDMA nearly five years ago!
Let's all welcome 2008 and look forward to more exciting things happening.
A lot has been written already about 2007 and what to expect in 2008. So let's just touch upon some of the events from 2007 and some expectations from 2008.
For India, 2007 was a great year for the semiconductor industry -- first, the Indian government announced the semiconductor policy, followed some months later by the fab policy. Both were tremendous firsts in India's science and technology, and not IT, history. Everyone hopes that the Indian semiconductor industry will take off this year. Eyes are focused on the embedded segment, what with the global semiconductor industry reportedly facing 'an embedded dilemma.'
An issue hitting the EDA industry is that, the cost of designing or developing the embededded software for an SoC actually passed the cost of desgining the SoC itself in 2007. The world needs to avoid this software crisis, and India is well placed to take full advantage and play a major role, given its strength in embedded.
In IT, it's been a mixed sort of a year for Apple, which hit big time with the iPhone, seemed not to make waves with either the Safari browser or the Leopard OS. Microsoft had the Vista OS, but then, Vista didn't exactly warm the hearts of users or those who wished to upgrade their OS, including yours truly. Maybe, 2008 would ring in better times for Vista.
While on browsers, Firefox has gained lot of ground. However, by the end of 2007 came the news that the Netscape Web browser -- which started it all -- would soon be confined to history.
Netscape Navigator was the world's first commercial Web browser and launch pad of the Internet boom. It will be taken off on February 1, 2008, after a 13-year run. Time Warner's AOL, its current owner, has reportedly decided to kill further development and technical support to focus on growing the company as an advertising business. The first version of Netscape had come out in late 1994.
In gaming, there are admirers of Wii, PS3 and Xbox 360, and will remain the same. Which one of these gaming consoles will reign supreme, eventually, is difficult to predict.
In consumer electronics, lines are surely blurring between portable media players (PMPs) and portable navigation devices. Also, it would be interesting to see how digital photo frames survive 2008. A reported tight supply, especially for seven-inch models, has led to some makers in Asia either postponing mass production or extending lead times. Surely, makers cannot add more entertainment functions in smaller screen models, to keep costs down.
In the security products market, IP cameras and video servers should have a better year, with more emphasis now on video surveillance. In fact, some friends have been querying me as well regarding their potential.
On components, we can hope to see more growth for solid polymer capacitors in 2008, and among PCBs some fabricators should start manufacturing high-density interconnect (HDI) PCBs this year.
In wireless, we should witness TD-SCDMA in operation prior to the Beijing Olympic Games. Backers would like to see TD-SCDMA succeed, given the effort Datang-Siemens has made on the technology, as also the Chinese government, which issued spectrum for TD-SCDMA nearly five years ago!
Let's all welcome 2008 and look forward to more exciting things happening.
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