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Analysts agree on chip growth forecast this year

Posted: 20 Jan 2004 ?? ?Print Version ?Bookmark and Share

Keywords:semi? semiconductor? ic equipment? semiconductor device? wafers?

According to a panel of industry analysts participating in SEMI ISS 2004, semiconductor revenues will grow in a range of 19 to 31 percent in 2004 while the IC equipment market will grow between 36 and 42 percent.

At the lower end of these growth estimates, the semiconductor device market will reach $195 million this year and equipment will be worth about $29 billion.

Helping the industry recover will be a trend towards firmer average selling prices for chips. Bill McClean, president of IC Insights, said ASPs would rise 7 to 8 percent this year, about the same level as 2003. He also believes that in the longer term - around 2007/2008 - the balance of power in terms of IC pricing will shift from system suppliers to the device makers.

In the semiconductor materials market, revenue growth of 12 percent is expected this year, driven by the use of advanced materials, according to Dan Tracy, director of industry research and statistics, SEMI. The materials market is forecasted to grow at 9 percent in 2005 and slow to 3 to 4 percent in 2006.

Carl Johnson, president of Infrastructure, said the capital spending forecasts could even be on the conservative side. He believes revenue growth of around 60 percent could be achieved this year given increasing market demand and the under-investment in fab capacity over the past two to three years.

McClean of IC Insights offered a different view. "We believe the industry can shift 40 percent this year," he said. He noted that the equipment industry "surprised everybody" in 2000 when it was able to recover from a downturn year and ship more than 80 percent more in equipment revenues.

On the potential for device inventory build ups during the current upturn, Klaus Deiter Rinnen, chief analyst, Dataquest, believes the risk is low given that the excesses of 2000 are still fresh in people's minds. Most companies have put in measures to avoid significant inventory build up going into this upturn, said Rinnen.

The panel agreed that the long awaited industry conversion to 300mm wafers has occurred.

Hutcheson of VLSI Research said that 70 to 80 percent of all semiconductor capital investment this year would be for 300mm wafer fabs. "Clearly the balance has shifted. It's becoming a no brainer for 300mm," he said. That was because the larger wafers offer a cost saving of 30 percent per die over 200mm wafers.

During a presentation to the ISS audience George Scalise, president of the Semiconductor Industry Association (SIA), said that PCs and cell phones remain the major markets for chip consumption, at 30 percent and 12 percent of total sales respectively for 2004. However, Scalise noted that consumer applications such as DVD players, wireless Internet and automotive applications would become key growth markets for chip consumption. "We see broad based growth. There won't be one killer application," he said.

Jim Feldhan, president of Semico Research, noted that PCs and cell phones were the only two markets large enough to generate enough capacity per annum to fill one 300mm fab, indicating that other applications would need to be developed to support future investment in these next generation fabs.





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