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Gartner ups 2008 IC forecast to $287B

Posted: 03 Jun 2008 ?? ?Print Version ?Bookmark and Share

Keywords:IC forecast? semiconductor market? fab equipment?

Gartner Inc. has raised its worldwide IC forecast from 3.4 percent to 4.6 percent for 2008, to reach $287 billion, up from $274 billion in 2007.

Richard Gordon, an analyst with Gartner, said that the firm raised the IC forecast, because the market remains stable despite the economic climate and concerns. Global sales for semiconductors were seasonally normal in Q1, thanks to a strong PC and cellphone market, he said.

In March, citing a weak demand picture and slumping chip prices, Gartner cut its worldwide IC forecast by nearly half. In December, Gartner said that the overall IC market would grow by 6.2 percent in 2008 over 2007. In March, the firm said the semiconductor market would grow only 3.4 percent in 2008.

Gartner is bucking the trend. Last week, the World Semiconductor Trade Statistics (WSTS) group cut its IC forecast by nearly half. The global semiconductor market is expected to grow by 4.7 percent to $267.7 billion in 2008, according to the WSTS. In 2007, the IC market grew 3.2 percent.

The current projections have been reduced by 4.4 percentage points compared to the forecast that WSTS issued in November last year, "mainly due to a weak fourth quarter 2007," according to the group.

Mixed forecasts
There are still mixed signals in ICs and related end-user markets, such as PCs and storage. "Consumer notebook PC demand is tracking in line with historical trends. Notebook vendors with greater exposure to the consumer segment are maintaining their earlier expectations of a 10 percent plus quarter-over-quarter increase in shipments in Q2 08," said Longbow Research semiconductor analyst Tayyib Shah in a report.

"Our checks indicate weakness in U.S. corporate notebook demand with major OEMs including Dell and Acer showing some weakness in their orders," Shah said. "This is in line with our survey work into the enterprise storage market which is also showing signs of weak IT spending."

IC makers are also all over the map. For example, chipmaker Atmel Corp. is "cautiously optimistic about business trends, noting its customers still have significant macro and consumer-driven fears," said Craig Berger, an analyst with FBR, in a report.

"This commentary was more cautious than comments from peers like Fairchild Semi, Microsemi, or On Semi, in our view," Berger said. "Management (from Atmel) said that inventories remain at normal levels and lead times remain stable and are not stretching out, thus motivating chip customers to maintain normal buffer inventories."

Last week, "Marvell reported very strong financial results and gave robust Q2 guidance," he said. "Q2 revenue guidance was much better than expected with strength in storage, Wi-Fi, and cellular-related chip businesses, fueled by a robust global PC market and by strength at top cellular customer RIM ahead of its Blackberry 'Bold' launch in Q2."

Meanwhile, On Semiconductor is "saying that bookings and order trends strengthened in April, with that strength continuing into May across most end markets and product categories," the analyst said.

"Management said the pricing environment remains benign, which we interpret to mean that chip prices are falling by between 0 percent and 1 percent quarter over quarter, below historical long-term trends," he said. "On the inventory front, distributor inventories rose slightly in 1Q to about 10 weeks but remain within normal levels of 8 to 10 weeks."

Fab slowdown
On the fab-equipment front, the picture is mixed as well. Most vendors are seeing a slowdownor a downturn.

Last week, Novellus Systems Inc. "maintained its Q2 08 guidance ranges at its mid-quarter update. While business remains weak, guidance suggests that its business is slightly better than competitors," said Edwin Mok, an analyst with Needham & Co. LLC.

Japanese equipment maker Disco recently saw its "earnings growth deteriorate in the 2H of FY3/08, owing to weaker sales of grinder and dicer equipment," said David Motozo Rubenstein, an analyst with Jefferies Japan Ltd, in a report.

"For the full year, sales rose 6 percent and operating profit fell 1 percent in FY3/08, which was better than peer back-end (vendors like) Tokyo Seimitsu and Advantest, but worse than front-end companies such as Tokyo Electron and Nikon," he said.

Another Japanese fab-tool vendor, Dainippon Screen, recently said its "order outlook is mundane while LCD gear is robust," the analyst said.

Display boom
On another front, the worldwide market for array processing equipment for TFT-LCDs will more than double by 2010 after dropping 34.3 percent in 2007 and 15.8 percent in 2006, according to The Information Network.

"The LCD equipment market was in a tailspin in the past two years, dropping 50 percent since 2006," noted Robert N. Castellano, president of The Information Network.

The supply glut for TFT-LCD experienced in 2006 and 2007 will turn into an industry-wide supply shortage in the second half of 2008 as demand outstrips supply by 6.5 percent for the year, according to the firm.

Large area panel shipments will grow 19 percent in 2008 on top of a 34 percent growth in 2007. On an area basis shipments will reach 67 million square meters in 2008, a growth of 28.5 percent, according to the firm.

Solar is booming as well. "We forecast equipment for the thin-film solar market to double through 2010, according to Castellano.

- Mark LaPedus
EE Times

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