Market research
R&D spending in the semiconductor industry is set to reach a record high in 2004, according to European electronics analyst Future Horizons. R&D spending in the industry is set to rise by "double digits" to $20bn in 2004, from $14.2bn in 2001, according to the analyst's Semiconductor Monthly Update Report.
Malcolm Penn, Future Horizons CEO, comments: "Consumers are demanding beasts. They want more, cheaper, now. The good news is that the electronics industry is delivering thanks to the fact that semiconductor manufacturers maintained R&D throughout the downturn."
Despite the downturn in the electronics industry between 2001 and 2003, Future Horizons reports that semiconductor manufacturers have never stopped experimenting with new materials and manufacturing methods.
Future Horizons reports that the current phase of innovations is focused on four areas:
* Integrating more functions onto fewer and fewer pieces of silicon
* Improving packaging so chips can be used in a wider variety of products
* Developing entirely new kinds of semiconductors
* Improving chip materials and manufacturing processes improvements in EDA software and the practice of loading chips with pre-designed modules has cut design times by up to 50% in the last two years. Future Horizons forecast in January that the worldwide semiconductor industry will grow by 32% in 2004 to $220bn.
iSuppli is expecting semiconductor production oversupply to be reached within two years as a result of installations beginning in H2 2004 and continuing into 2005. Oversupply will lead to declining chip prices and a stalling of the industry in 2006. In that year, growth is expected to be a nominal 1.7%.
For this year, capital spending is predicted to grow 34.8% for a total of $45.2bn. In 2005, growth will be a more modest 6.2% to $48bn. Contraction of 8.3% to $44bn is forecast for 2006. A new spending cycle starting in 2007 is expected to bring spending of $48bn. The market analyst does not expect a return to the heady days of 2001 when spending reached $71.3bn.
Freedonia estimates that the growth in the micro-electromechanical system (MEMS) market will be better than 19% per year up to 2008, when sales are expected to reach $3.3bn. The three best established products in the sector are airbag accelerometers, ink-jet printer heads and blood pressure monitoring sensors. These markets are maturing and new gains will depend on other applications such as telecoms and RF.
TSMC's sales in May 2004 came to TWD21.72bn, up 29.2% on the previous year.
