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Stronger second half tempered by uncertainty in some industry sectors

Posted: 04 Jul 2005 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor? electronics?

The electronics industry outlook for the second half of 2005 is a mixed bag of optimism

in areas like semiconductor manufacturing, uncertainty in key industry sectors like displays and worries about the direction of the global economy, according to surveys by EE Times editors.

The

href="http://www.eet.com/news/semi/showArticle.jhtml?articleID=164904427">global

chip market

appears poised for a second-half rebound based

on a flurry of revised industry forecasts. Topping the

listless first half shouldn't be a problem, analysts said, but

they disagree on the extent of the uptick and other IC market

dynamics.

Some industry executives have stressed in recent weeks that

system applications like multimedia mobile phones could

provide a significant boost in industry sectors like

href="http://www.eet.com/news/latest/showArticle.jhtml;jsessionid=LEKCM53AE0K2WQSNDBESKHA?articleID=164303085">memory

chips

.

But some mobile phone makers are calling for

href="http://www.eet.com/news/latest/showArticle.jhtml?articleID=164902629">restraint

when it comes to adding more features to next-generation

multimedia phones.

Either way, industry observers said chip makers are gearing

up to meet

href="http://www.eet.com/news/design/business/showArticle.jhtml?articleID=164303490">growing

demand

.

That doesn't necessarily mean a boost for IC equipment

makers. To the contrary, analysts said equipment makers are

headed for a

href="http://www.eet.com/news/semi/showArticle.jhtml?articleID=165600241">decline

in the second half of the year. One reason is that chip makers

are still integrating tools purchased during the last surge in

the chip business cycle.

The picture is less clear in key sectors like flat-panel

displays, an increasingly competitive market segment that is

becoming an industry bellwether. Market researchers expect

demand for flat-panel displays to grow, but uncertainty

prevails over whether surging capital spending for

href="http://www.eet.com/news/latest/showArticle.jhtml;jsessionid=ORWQNEHHY0FT0QSNDBESKHA?articleID=164904271">fab

expansion

will pay off in the second half.

Adding to the uncertainty are a range of troubling economic

variables, including steadily rising energy prices, the

continuing Iraqi insurgency and the threat of a

href="http://www.eet.com/news/design/business/showArticle.jhtml?articleID=164902864">housing

bubble

in the U.S.

Then there's China, which appears to be scaling back its

next-generation wireless plan as Beijing continues to delay

the issuance of

href="http://www.eet.com/news/design/business/showArticle.jhtml?articleID=164902099">3G

licenses

, which was expected later this year.

One bright spot is an anticipated second-half increase in

href="http://www.eet.com/news/latest/showArticle.jhtml;jsessionid=IHNN1V1A4AN2KQSNDBESKHA?articleID=165600243">venture

capital

funding for electronics. It appears poised to

surge in the second half after an uneventful first six months.

Nevertheless, the 2005 investment total could still come in

below last year's stellar figures.

- EE Times Editors

EE Times





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