Analyst Future Horizons forecasts new sales record but warns on shortages, confidence.
The global semiconductor industry will see sales rise this year by a “good” 9 per cent to $325bn, possibly more, according to analyst group Future Horizons.
The number is some way behind the 31.8 per cent achieved in 2010, but that was the consequence of the market recovering from a “highway pile-up”, said CEO Malcolm Penn.
“Economics is all about confidence and trust. If the money stops moving, the whole system collapses,” he added. “The money stopped moving in the post-Lehman [Brothers] crash.”
There is still some instability in the market, but the outlook for both 2011 and 2012 (forecast to be up 16 per cent) is bright. “Choppy first-half waters for sure, but watch out for a whopping second-half 2011 ricochet,” Penn said.
However, there may well be a capacity crunch on the horizon with fabs already operating at around 90 per cent.
“The connector and foundry industries are tight as a drum, and all this in the seasonally slow first quarter of the year,” Penn said. “Yet few people believe there is a supply problem in prospect. Just like this time last year, industry denial is rampant, way beyond reasonable caution and ignoring the underlying trends.”
In a presentation to the SEMI Industry Strategy Symposium in Grenoble, France, Penn said that while the chip business had been fundamentally sound before the Wall Street crisis, it was still being hit by the wider loss of confidence that caused. Its basic model has been broken.
He cited such issues as difficulties in funding start-ups to foster innovation, a lack of long-term planning (“now in months rather than quarters, let alone years”) and the absence of strategic agreement on chip-to-chip interfaces or 450mm wafers.