Semis to grow, IC-equipment to fall in Q4

The fourth quarter is projected to go in opposite directions for the individual semiconductor and chip-equipment industries. According to SG Cowen Securities Corp., semiconductors will be up while equipment is expected to fall in Q4. Overall semiconductor-equipment orders are projected to fall 10-to-15 percent in Q4.

While the semiconductor-equipment market has been slowly losing steam, ICs are finally gaining traction after a lackluster start this year. The worldwide semiconductor market fell 2 percent sequentially in the Q1 and dipped another 2 percent in the second period, according to IC Insights Inc.

Seasonal demand is expected to push the worldwide IC market up 8 percent in the Q3 and another 3 percent in the Q4, said Bill McClean, president of IC Insights. He said IC revenue growth this year will match the 8 percent growth seen in 2005. Chip makers will see 9 percent growth in 2007, and then the cycle will peak with a 20 percent revenue increase in 2008, McClean said.

He listed a number of "positive factors" for 2006 including strong cellular phone shipments, stronger-than-expected GDP in China and the United States and strong IC unit shipments. Also, he cited some "negative factors" such as oil prices, rising interest rates, slowing housing market, double ordering of ICs and increasing inventories.

However, the biggest concern according to McClean is the average selling prices (ASPs). Based on new fab capacity data, there will be no uptick in ASPs for ICs in the near term, said IC Insights.

- Mark LaPedus
EE Times