Market research
The World Semiconductor Trade Statistics (WSTS) organisation issued forecasts for 2004-2006. World IC sales are expected to flatten in the next two years with growth of 1.2% in 2005 and 3.0% in 2006. These compare with a 2004 growth forecast of 28.5%. The money totals for the three years are put at $213.78bn, $216.32bn and $222.82bn.
Even growth in Asia Pacific is expected to fall from 2004's 42.1% to 2.8% and 4.9% in the following two years. The Americas market is forecast to shrink 1.5% and 1.0% in these two years after 21.2% growth in 2004. Europe is forecast to keep its head just above zero with growth of 0.2% and 2.2% (2004, 21.2%). Japan is due increases of 1.4% and 3.3% on 2004's 18.5% In 2007, double-digit growth is hoped to return at 11.4%. Europe's growth that year is set at 10.4%.
The World Semiconductor Trade Statistics (WSTS) reports September 2004 three-month average sales at $18.410bn, a 27.4% increase year-on-year. Sales into Europe came to $3.348bn (EUR2.742bn), making for year-on-year growth of 23.4% (13.6%). Other regions: Americas $3.317bn (+20.6%), Japan $3.955bn (+17.7%), Asia Pacific $7.790bn (+38.6%).
The Information Network is predicting negative growth for semiconductor equipment sales next year.
"Our analysis showed that only 37% more equipment needed to be purchased in 2004 and another 10% in 2005 to meet semiconductor growth of 27% and 5% for 2004 and 2005. Anything above 37% equipment growth in 2004 would have to come from 2005 equipment sales. And obviously anything above 47% would drop 2005 into negative territory," notes Dr Robert N Castellano, president of The Information Network.
"The burning question I have is why do these semiconductor executives have such short memories. Was it because of all the 'hyper growth' in equipment forecast by other market research companies in late 2003 that instilled such fear that equipment lead times would be long they should order...order...order so they wouldn't be left 'holding the bag'? Or was it greed that the more they ordered the more chips they made and they could steal share from their opponents with shallower pockets? Probably both." Castellano sees equipment purchases in 2004 exceeding 50% growth with only a 27% increase in IC sales. Next year, technology purchasing will dominate over capacity, he says.
Hewlett- Packard topped iSuppli's ranking of chip buyers and is expected to continue to do so. In 2003, HP bought an estimated $11.025bn worth of chips and looks set to pay $14.482bn for ICs in 2004. Next year, further growth in chip spending is expected to $16.070bn. Second place goes to PC assembler Dell with $10.079bn, $13.442bn and $15.606bn being the respective figures.
European mobile phone producer Nokia comes third with $7.026bn, $8.033bn and $8.254bn. The only other Europe-based company was Siemens at No.9 ($4.679bn, $5.180bn, $5.672bn). Electronic manufacturing services (EMS) and original design manufacturers (ODMs) are expected to account for 40% of global chip consumption in 2004.
The Information Network that China's IC production of 18.5bn chips only accounts for 22.1% of domestic demand. The compares with 2002 when the 9.6bn chips produced in the country accounted for 21.5% of local demand. Wafer capacity over the period has expanded from 197,000 200mm-equivalent wafers per month in 2002 to 330,000 in 2004. By 2006, IC production is expected to reach 40bn chips, meeting 26.6% of China's demand.
Dr Robert Castellano, president of The Information Network, comments: "IC executives and Mainland China officials have finally awakened to the fact that the industry cannot flourish with hand-me-downs and used equipment.
Much of the production equipment used in fab expansion has been tools transferred from older lines by Japanese and Taiwanese IC manufacturers. IC production had been limited to 180nm on 200mm wafers. But that is changing.
"China's IC manufacturers are buying state-of-the-art 90nm tools for 300mm production for their existing facilities. Ready to erode the need for imports are SMIC's 300mm existing fab and two more planned for 2006, GSMC's 300mm fab scheduled for 2005, and He Jian's 200mm fab that will probably be converted to 300mm next year. The potential for an explosive equipment market is high."
