Malcolm Penn, CEO of chip analyst Future Horizons, gave his annual rundown on the semiconductor market at the IEF2013 in Dublin, and he had some warnings of what the industry should expect.
The financial crisis is clearly not over: “We’ve got three more years to go through, but still the [semiconductor] industry was not that bad".
"We’re cruising at slow speed,” this year, Penn said. Companies have got money but they’re not spending it. “We’re still in this lack of confidence period. Everyone is still waiting, waiting, waiting.
“The real fundamentals of the chip industry is that peaks and troughs are the natural part of the fabric. When this industry does rebound, it will rebound more strongly than it ever has.
“ICs represent 10 percent of the world’s GDP because of its influence. It varies from country to country. Long term demand for units has been incredibly consistent over the last 30 years. The amount of units shipped over the last 30 years is 10-11 percent per annum.
Penn said that sales are coming from capacity not stock, and most saleable inventory is gone. A small increase in demand will trigger a massive undersupply, he warned.
“The basics of fab capacity is cast in stone," Penn said. "Capacity can’t be influenced for a year. We’ve not being building capacity which I think is dangerous.
“There’s a silicon crunch just around the next corner. The most crucial part of the food chain is being treated with complete cavalier indifference,” said Penn. “That’s because the capital spend is too low.”
Revenue per wafer starts continues to be flat at $9 per square centimetre on average for a very long period of time. Penn said that chip industry growth is driven by the four horsemen of the Apocalypse – economy, unit demand, fab capacity and ASPs.
He forecast semiconductor growth in 2013 last year would be plus 10 percent growth at around $325 billion, but the first quarter was particularly bad. In 2014 he forecasts six percent growth.
All new fab shell constructions are 450mm ready but the industry is divided on whether to say yes or no. The semi industry says no, or rather, wonders who is going to pay for it.
If 450mm wafers do happen it will affect all the industry and the cost structure will annihilate any firm that is still 300mm based. The 200mm fabs will struggle.