News Article
Something to show
Every year at Semicon West there is a theme that develops throughout the show. Despite the best intentions of organisers and attendees to push a certain agenda the show always provides its own emphasis reflecting concerns in the industry. David Ridsdale reports on what was bothering the industry in 2004.
Everyone knows the industry has come out of the worst downturn in this industry's young life. A range of internal and external influences converged to ensure the market needs no longer met the output. The historical process has been to wait out the downturn with the wad of cash you saved from the previous upturn and then enter the new cycle with renewed vigour loaded with ideas.
The semiconductor cycle still continues in its remarkable pursuit of Moore's Law enabling the broader electronics industry to develop faster and more powerful devices for consumer and industry. A business model has developed over time that supports the development of new products and processes. Semicon West 2004 appeared to be the show when the historical business methods are being called into question. Once again Moore's Law is under threat but this time it is not due to technical considerations but the economic. The caution that has accompanied this upturn best defines the overall mood of the 2004 Semicon West show. There was acknowledgement of the changing industry but little in terms of open discussion of a potential problem.
The mood at the show in San Francisco was definitely more upbeat than the last two years. It was only when I walked around the show and talked to people on the floor that the caution became more obvious. The major reason for this caution was that the market may drop again before the end of 2005. Companies are worried there is not enough time to create cash reserves to ride the next downturn. This is compounded by the growing fear of the cost of R&D for new products and processes.
This sort of concern found the industry and financial analysts in great demand and under extreme pressure to explain the differences in analysis. Unfortunately predictions are not an exact science and only retrospection identifies those who get close to the mark. Despite the hit and miss potential, the European based Future Horizons has provided the closest predictions for the last few years. Knowing that this accuracy may not last they have rightly highlighted the fact that they refused to change their opinion when everyone else did and have proven that stubborn adherence to what you think is happening rather than what others want to happen will pay off.
European success was evident throughout the show with European companies being the focus of many major topics. ASML led the way in Lithography with a renewed sense of purpose that the number one spot can give. EVG seemed a popular company wherever you went, with bonded wafers in such demand and indifferent applications. Another Austrian, SEZ was happy to discuss that they, like EVG, have made great roads into the Japanese and broader Asian market. Europe leads the way in optics with both Carl Zeiss and Leica commanding great respect. Micronic Laser Systems has continued its impressive technological growth and have made a strong market for themselves in the growing flat panel display market. These are just a few of the companies that continue to display the strengths that exist in Europe.
Despite these strengths, there remains the concern that the mathematics are very tight when trying to manage research costs over profits. Historically the electronics food chain has been able to regulate its research costs internally. The semiconductor sector has never been sexy enough to entice government funds and, except for IMEC and LETI, Europe has followed this trend. The evidence is there that an economic crisis in research costs and capabilities is looming.
This problem along the food chain was highlighted by news a week after the Semicon West show. While the manufacturers and designers of semiconductors, the driving force behind the growth of electronics, concern themselves with cash flow and economic returns after providing key technologies, Microsoft announced they were giving back seventy five billion US dollars as they had squirreled away too much cash.
The semiconductor cycle still continues in its remarkable pursuit of Moore's Law enabling the broader electronics industry to develop faster and more powerful devices for consumer and industry. A business model has developed over time that supports the development of new products and processes. Semicon West 2004 appeared to be the show when the historical business methods are being called into question. Once again Moore's Law is under threat but this time it is not due to technical considerations but the economic. The caution that has accompanied this upturn best defines the overall mood of the 2004 Semicon West show. There was acknowledgement of the changing industry but little in terms of open discussion of a potential problem.
The mood at the show in San Francisco was definitely more upbeat than the last two years. It was only when I walked around the show and talked to people on the floor that the caution became more obvious. The major reason for this caution was that the market may drop again before the end of 2005. Companies are worried there is not enough time to create cash reserves to ride the next downturn. This is compounded by the growing fear of the cost of R&D for new products and processes.
This sort of concern found the industry and financial analysts in great demand and under extreme pressure to explain the differences in analysis. Unfortunately predictions are not an exact science and only retrospection identifies those who get close to the mark. Despite the hit and miss potential, the European based Future Horizons has provided the closest predictions for the last few years. Knowing that this accuracy may not last they have rightly highlighted the fact that they refused to change their opinion when everyone else did and have proven that stubborn adherence to what you think is happening rather than what others want to happen will pay off.
European success was evident throughout the show with European companies being the focus of many major topics. ASML led the way in Lithography with a renewed sense of purpose that the number one spot can give. EVG seemed a popular company wherever you went, with bonded wafers in such demand and indifferent applications. Another Austrian, SEZ was happy to discuss that they, like EVG, have made great roads into the Japanese and broader Asian market. Europe leads the way in optics with both Carl Zeiss and Leica commanding great respect. Micronic Laser Systems has continued its impressive technological growth and have made a strong market for themselves in the growing flat panel display market. These are just a few of the companies that continue to display the strengths that exist in Europe.
Despite these strengths, there remains the concern that the mathematics are very tight when trying to manage research costs over profits. Historically the electronics food chain has been able to regulate its research costs internally. The semiconductor sector has never been sexy enough to entice government funds and, except for IMEC and LETI, Europe has followed this trend. The evidence is there that an economic crisis in research costs and capabilities is looming.
This problem along the food chain was highlighted by news a week after the Semicon West show. While the manufacturers and designers of semiconductors, the driving force behind the growth of electronics, concern themselves with cash flow and economic returns after providing key technologies, Microsoft announced they were giving back seventy five billion US dollars as they had squirreled away too much cash.
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Time to chase income was a major concern |
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After a dark couple of years the feeling was that the sun was returning for the global semiconductor industry. |
