MOUNTAIN VIEW, CA—In my SEMICON West review in the last issue of Optoelectronics Report (see www.laserfocusworld.com/articles/336193), semiconductor capital equipment manufacturers were no doubt unhappy to learn that market research and forecasting firms SEMI (San Jose, CA) and Gartner Dataquest (Stamford, CT) both independently forecasted an approximate 20% decline in the semiconductor capital equipment market for 2008. But not included in that gloom-and-doom scenario was the fact that despite this equipment decline in 2008, the overall semiconductor industry itself is forecasted for steady growth between 3–9% for the foreseeable future with a rebound in the semiconductor capital equipment market anticipated for 2009 and beyond. But “Forecasting is a tricky business,” warns Tom Hausken, director of components research at market research firm Strategies Unlimited (Mountain View, CA), adding that “Of the dozen or more market firms out there forecasting the health of the semiconductor industry, there is quite a span from pessimism through optimism that needs to be considered.”
On the optimistic side (at least according to two analysts I spoke with), is Malcolm Penn, chairman and CEO of market research firm Future Horizons (Sevenoaks, England), who just issued a short press release commenting on the June semiconductor market numbers from World Semiconductor Trade Statistics (WSTS; San Jose, CA), a non-profit mutual benefit corporation that provides services for the world semiconductor industry, including management of the collection and publication of trade net shipments and semiconductor industry forecasts. According to WSTS, June semiconductor sales were up 12.2% versus June 2007 and Q2 sales were up 3.0% on Q1. “These results are outstanding, way better than even we dared to expect less than two weeks ago when we raised eyebrows by suggesting a 2.3% quarterly growth,” said Penn. “This is clearly vindicating our optimism for the industry … We can only reiterate our recent forecast message; the momentum and underlying fundamentals are strong … the fire is stoked for a strong second-half rebound.”
This optimistic forecast for the overall semiconductor industry complements the forecast from Gartner Dataquest at the SEMICON West Market Symposium that revenue growth for the semiconductor industry would increase from $274 billion in 2007 to $287 billion in 2008 and up to a further $309 billion by 2009. Among various semiconductor device categories, WSTS found that the star performer both in terms of sales and average selling price (ASP) was logic (up 25.3% and 16.6%, respectively), followed by analog (14.5% and 0.2%) and micro (12.2% and 6.5%), let down only by memory (minus 5.8% and minus 10.2%). Again, Gartner Dataquest similarly expects to see steady device unit growth at around 10%. From the WSTS numbers, Penn observed, “The market excluding memories was up 18.1% in value versus June 2007, driven by an 11.2% increase in units and 6.2% growth in ASPs. It really begs the question, why is everyone still so down on semis?” Penn added, “In any other circumstances, these are numbers to die for.”
Penn summed up his optimism by saying, “Just because one company does badly does not mean the sector or industry as a whole is bad … it’s execution that always makes all the difference.” Indeed, forecasting the semiconductor industry is a complex analysis of individual companies, myriads of different material areas, and hundreds if not thousands of application-by-application components—some that may be growing while others are in decline. “The capital equipment market is cyclical; and drilling down another layer to say, the lasers used in semiconductor capital equipment for lithography, adds another layer of company-by-company and application-by-application complexity,” says Hausken, who is interested in forecasting the health of specific components within a broader industry sector. Hausken is more interested in overall industry trends. “As long as the overall semiconductor industry remains healthy, there is hope that the semiconductor capital equipment industry will eventually turn around and again spur the growth of individual components within that equipment sector.”
Fortunately, semiconductor capital equipment manufacturers should be reminded that even though 2008 looks bleak, both SEMI and Gartner Dataquest (and apparently, Future Horizons as well) have forecast a rebound for 2009 and beyond. “Despite the sharp cutback in capital spending for 2008, if the overall healthy semiconductor industry forecast plays out in 2009, then capital equipment is set to rebound,” says Dan Tracy, senior director of industry research and statistics at SEMI. That is, growth in chip demand will eventually overtake capacity and equipment needs will increase. Of course, we will all need to carefully follow the conflicting messages we see on a daily basis—all the while keeping in mind that analysts can’t even agree as to whether the U.S. is in a recession or not.
—Gail Overton