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CE sector boom could ease out small players, chip execs warn

Posted: 15 May 2007 ?? ?Print Version ?Bookmark and Share

Keywords:Semiconductor industry? consumer electronics? CE sector boom?

The CE boom will continue to drive the semiconductor industry, but it may also create an environment where only the biggest players thrive, executives said at a recent industry forum in Singapore.

Tien Wu, chief operating officer of Advanced Semiconductor Engineering, told the SEMI Singapore conference that further consolidation in the technology sector means only a few chipmakers and subcontractors would be capable of meeting their "massive orders," Wu warned.

Companies will have to accept that pricing erosion will be a "constant" in a "consumer- and volume-driven market" and focus on "maintaining margins, not maintaining prices," he added.

Wu said the emerging landscape would force companies to adopt one of two strategies: pursue "nothing but intellectual property" or manufacturing excellence and economies of scale.

His comments were echoed by Gartner semiconductor analyst Kay-Yang Tan, who told EE Times that some smaller companies would "definitely" be squeezed out of the sector over the next few years.

Some mid-sized companies were more upbeat. J.C. Lee, president and CEO of Singapore-based United Test and Assembly Center Ltd, told the forum that outsourcing of test and packaging was "getting stronger and stronger."

"The next interesting thing is Vietnam," Lee said. "The workforce will take some time to pick up, but at least they have the fundamental education in place." He added that "in the longer term it's another place that can compete with countries like China in assembly and test, even fabs."

Others see the CE boom posing particular challenges for back-end companies. Jan Vardaman, president of market researcher TechSearch International, said advanced packages required by consumer products account for current industry growth. But Vardaman warned that companies would also have to cope with massive package proliferation and possible substrate shortages after suppliers work their way through the current glut.

- Jonathan Hopfner
EE Times

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