Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
?
EE Times-Asia > Memory/Storage
?
?
Memory/Storage??

DSP, memory chips face bittersweet year

Posted: 03 Jan 2005 ?? ?Print Version ?Bookmark and Share

Keywords:nand flash memory? dsp cagr sia? dram mobile phone? convergence IC? power management trend?

The widespread demand for various electronic products has pushed the growth of the IC industry. However, as some things are not bound to last, the intense growth that the industry has enjoyed for the past couple of years is expected to reach a plateau in 2005.

Reports from the Semiconductor Industry Association (SIA) and Gartner Inc. project a gloomy 2005. Although SIA forecasts 2004 chip sales to reach $214 billion for a growth of 28.5 percent, no significant growth is expected in 2005. However, a rebound is anticipated as sales will grow by 6.3 percent in 2006 and by an additional 14.2 percent in 2007. The SIA projects a CAGR of 11.8 percent within the 2004-2007 period.

Equally bullish, Gartner pegs the 2004 global semiconductor revenue at $226 billion, a 27.4 percent increase from the previous year. This supports the World Semiconductor Trade Statistics (WSTS) forecast of $213 billion, a year-on-year increase of 28 percent.

Projections of a less favorable supply-and-demand balance for memory products will be the major factor in dampening industry expansion in 2005, according to SIA. Both DRAM and flash markets will see a slowdown in 2005, with declines of 14.7 percent and 1.8 percent, respectively. The LCD and NAND flash prices are likely to go down and the trend may continue to the first half of 2005. The DRAM market might show a downward trend in the second half as DRAM manufacturers' 300mm fabs stabilize and increase their production volume.

The prospect for flash is brighter as consumer electronics and mobile phone markets increase their demand for more NAND flash memories.

Unlike the DRAM and flash markets, DSP will experience the highest growth in 2005!6.9 percent to reach $8.4 billion. Between Q1 and Q3 of 2004, DSPs accounted for 35.7 percent of non-memory shipments to the cellphone market, WSTS and Forward Concepts reported.

Gartner disclosed that at the end of last year's Q2, semiconductor vendors and distributors saw a notable increase in inventory days on their balance sheets, which brought a wave of concerns about excess supply.

"Despite the improving market conditions that vendors have enjoyed over the past several quarters and the expectation that revenue growth last year will be close to 30 percent, this industry upcycle is notable in that few in the industry have felt able to acknowledge it as a boom," said Richard Gordon, research VP at Gartner.

"The hangover from the severe market downturn in 2001 still lingers, just as concerns about the next downturn have begun to worry industry executives," Gordon added. "The classic signs of an approaching peak in the market!such as increased channel inventory, increased capital spending forecasts and reduced device pricing and lead times, which in the past would have been treated lightly at this stage in the cycle!are making executives nervous."

Jackson Hu, CEO of United Microelectronics Corp. said, "There are stock problems in the fields of mobile phones, consumer electronics and PCs, which need one to three quarters to eliminate."

IC bright spot
In terms of overall IC consumption, SIA predicts that the Asia-Pacific market will grow by only 1.9 percent in 2005, 7.7 percent in 2006 and 16.2 percent in 2007.

SIA sees Asia as one of the few bright spots for the semiconductor industry in 2005. The Asia-Pacific chip market is projected to grow the fastest in 2005, followed by Japan, Europe and North America.

"In Asia, growth opportunities for all three target markets!transportation and standard products, wireless, and networking and computing!are very promising," said Kenny Cheung, GM at Freescale Semiconductor's wireless and mobile systems group in the Asia Pacific.

"Asia and Japan make up 61 percent of the global semiconductor market. To capture these fast growing markets, we have concrete plans to expand our design teams in the region, especially in China," added Cheung.

Meanwhile, South Korea's non-memory industry is rapidly growing, focusing on mobile phones and DTVs!segments where local manufacturers have shown global competitiveness.. Even big non-memory companies like MagnaChip Semiconductor is setting their sights on cellphone-related products such as display driver ICs and CMOS image sensors. According to MagnaChip President and CEO Youm Huh, the company plans to introduce more products like MCU-based application processors for use in consumer electronics in early 2005.

Korea's non-memory companies are concentrating more on the mobile phone and DTV markets!segments where local manufacturers have shown global competitiveness. Companies like CoreLogic and Mtek Vision have achieved success with their mobile phone chips.

This unusual level of focus is stiffening the overall non-memory industry and drawing a shadow over its mid- and long-term prospects. In case of a sudden trend shift, this focus could shake the non-memory industry from its foundation.

Production growth
Market research firm iSuppli Corp. reported that China's fabless semiconductor market will see a CAGR of 32 percent from $288 million in 2003 to $1.2 billion in 2008 brought about by the huge potential demand and strong government support.

The supply of locally designed ICs is expected to grow 37 percent CAGR from 2003 through 2007. China was expected to import 94 percent of its demand in terms of value and 85.8 percent in terms of volume in 2004.

In Japan, Fujitsu has constructed a logic chip factory that will mass-produce chips using 90nm volume process technology, as well as next-generation 65nm technology with 300mm wafers.

Located at its Mie semiconductor plant, the new facility is scheduled to be operational this April and volume shipments beginning September, where demand for 90nm products is expected to intensify, Fujitsu said.

With competition for advanced technology getting fiercer in the global market, companies like Samsung Electronics are actively expanding their partnership with foreign companies for co-development and sales of next-generation products. The partnership is aimed to reduce both R&D time and cost spent on the non-memory segment in which local companies are still not strong enough.

Empowering devices
The convergence trend has driven the demand for semiconductors, especially for components of cellphones, digital cameras and other handheld devices. In last year's Q4, Cirrus Logic Inc. released a digital home theater recorder chipset platform that merged the company's class D-based digital amplifier IC with its reference platform of ICs and software.

With regard to 65nm process, both UMC and TSMC plan initial production in late 2005 or early 2006. Although both companies are keen on developing this process technology, analysts think that demands for 90nm and 65nm are quite limited.

Addressing the demand for low-cost power-management solutions, Xilinx Inc. formed Power Initiative, a corporate-wide focus on delivering solutions that address customers' urgent power requirements. Since power consumption is a major issue when designing applications, the company released late last year its Spartan-3L family, which has a 98 percent quiescent power reduction than comparable Spartan-3 devices.

"Modern applications are increasingly being developed with power management in mind. With the Spartan-3L family, companies can now use programmable logic in applications where cost and power consumption are critical factors," said Clay Johnson, VP at Xilinx's general products division.

'Greener' products
Manufacturers are producing lead-free versions of their products to comply with various government regulations and industry standards such as the European Union's Directive 2002/95/EC on the restriction of the use of certain hazardous substances in electrical and electronic equipment.

Microcontroller and analog IC company Microchip Technology Inc. disclosed the conversion of its product packaging to lead-free plating beginning early this year.

Higher functionality of end products will increase the need for embedded components and push makers to create products with smaller board spaces, less power-hungry, yet packed with more features.

Since the industry is expected to experience low to zero growth this year, it is imperative for IC manufacturers to take all possible means to survive the plateau!by encouraging application innovation and strengthening cooperation in the industry. After all, growth is expected to resume in 2006.

Karen Kou of Taipei, Park Dong-Wook of Seoul, Majeed Kamran and Vivek Nanda of Manila contributed for this story.

- Margarette Teodosio
Electronic Engineering Times-Asia




Article Comments - DSP, memory chips face bittersweet y...
Comments:??
*? You can enter [0] more charecters.
*Verify code:
?
?
Webinars

Seminars

Visit Asia Webinars to learn about the latest in technology and get practical design tips.

?
?
Back to Top