ISS US 2006 Day One Report
Consumer Electronics Will Drive Next Semiconductor Growth Cycle Device, Equipment Markets to Peak in 2008, Say Analysts
Half Moon Bay, California, January 9, 2006 -- The semiconductor industry looks set for healthy growth over the next three years, largely driven by the consumer electronics market, according to speakers at SEMI ISS 2006, which opened today at the Ritz Carlton in Half Moon Bay, California.
Consumer electronics was the “next big thing” for the semiconductor industry, according to Drew Peck, an analyst with Crimson Ventures. Each U.S. household currently has an average of 25 consumer electronics products, but developing countries will be the most important consumer markets in the future, according to Peck. Silicon solutions have enabled aggregation of complex circuitry onto single chips, which in turn reduces product cost and drives up demand. “Silicon has really changed the way the consumer electronics market works”, said Peck.
Rick Tsai, CEO of Taiwan Semiconductor Manufacturing Company, argued that the semiconductor industry needs to align its costs with the economics of the consumer electronics business, which means further improvements in manufacturing productivity. He noted that success in the consumer electronics market was dependent on three factors: product diversity, fast ramp and low cost.
A panel of industry analysts at the ISS 2006 press conference and webcast presented a number of scenarios for this year’s semiconductor device market, ranging from about 7 percent growth to more than 17 percent. Estimates for the capital equipment market outlook this year ranged from flat to 12 percent growth.
Bill McClean, president of IC Insights, said he sees 21 points of device market growth spread out over the next two years, and a further 20 percent growth in 2008 when the market cycle will peak. “We think we have some very high growth days ahead of us,” he said.
Klaus Dieter Rinnen, managing vice president at Gartner Dataquest, noted that wafer fab utilization has stabilized in the low 90 percent range for leading edge applications, which will result in controlled capacity increases through 2006. “Chip manufacturers will manage investments in new technology rather carefully, so we don’t expect to see a return of the ‘capacity-at-any-price’ investment mood of the 1990s,” he said.
During 2006 the device market should enjoy relative stability with no sharp declines in average selling prices (ASPs), according to Jim Feldhan, president of Semico Research. He is also bullish on consumer electronics as a driver for semiconductors, noting that multiple products are driving growth. “What’s different between today and a few years ago is that now we have a whole slew of consumer applications and markets are not just relying on a couple of end markets”, he said.
The outlook for the semiconductor materials market is bright over the next three years, according to Dan Tracy, senior director, industry research and statistics for SEMI. The materials market is forecasted to grow almost 10 percent this year, 7.5 percent next year and just over 10 percent in 2008. “The 300 mm ramp and advanced packaging technologies are key growth drivers”, said Tracy.
The economic keynote speaker on the first day of ISS, Richard Iley, senior economist at BNP Paribas, forecasts a soft landing for the U.S., with GDP growth of 3 percent this year. “In 2006, 2007 we will see slower demand growth, but not a recession,” he said. He credited strong consumer spending for the resilience of the U.S. economy over the past several years. However, risk factors ahead included a slowdown in the housing market, and continued hikes in oil prices.
SEMI is a global industry association serving companies that provide equipment, materials and services used to manufacture semiconductors, displays, nano-scaled structures, micro-electromechanical systems (MEMS) and related technologies. SEMI maintains offices in Austin, Beijing, Brussels, Hsinchu, Moscow, San Jose (Calif.), Seoul, Shanghai, Singapore, Tokyo and Washington, D.C. For more information, visit www.semi.org.
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