Home
News
Products
Corporate
Contact
 
Thursday, March 28, 2024

News
Industry News
Publications
CST News
Help/Support
Software
Tester FAQs
Industry News

Semiconductor industry heading for a slow down


Wednesday, January 9, 2019

The semiconductor industry is expected to slow down and maybe even contract slightly this year, but analysts are hopeful of a soft landing once the sector navigates the bumps of a few big uncertainties ahead.

Gartner forecasts chip revenue growth will slow to 2.6% this year. It expects a bounce back to 8.1% growth in 2020, followed by a 1.8% contraction in 2021 for an average of 5.6% growth in 2017-2022.

VLSI Research predicts a 1% decline in semi revenues this year, recovering to 7% growth in 2020. It forecasts the market for wafer fab equipment will drop 11% this year. Separately, Linx Consulting sees the materials market rising 6.9% through 2022, with just one down year in 2021.

“Next year looks a bit wobbly, but the long term prospects are pretty strong,” said Bob Johnson of Gartner in one of several talks by analysts on the first day of the Industry Strategy Symposium hosted by the Semi trade group.

Slumping memory prices after a DRAM super cycle are a main factor in the 2019 downturn. Since Gartner finished its forecast a few weeks ago “NAND flash prices are in free fall, so 2019 may go negative,” Johnson said, noting Gartner had pegged NAND growth at 9.4% through 2022.

The memory shift is good news for customers who paid top dollar for DRAMs, essentially funding 3D NAND fabs for Samsung, SK Hynix and Micron. “The DRAM market definitely is an oligopoly and will probably stay that way a while” now that server and smartphone makers have shown they will pay top dollar for capacity, he said.

The good news is “we’re seeing a shift toward more of a commercial chip market and less of a consumer market in the future,” he said.

Automotive, industrial and storage markets will drive more than their share of growth while smartphones slow. “That’s a positive trend,” promising more stable markets with better RoI, Johnson said.

Wafer supply is a wild card to watch for, said Michael Corbett, managing partner and co-founder of Linx Consulting, which tracks materials markets.

One or two brand new silicon-wafer plants will need to come online by 2022 to meet a projected 16% rise in millions of square inches of chips. It’s been a decade since today’s vendors built a new plant, a job that takes two to three years, Corbett said.

Wafer prices will have to rise as much as 35% to fund a new plant. Small and medium chip vendors will likely have to bear the freight because top chip makers will continue to get the lowest prices. And don’t expect a bail out from China, which has not yet shown an ability to deliver 300mm wafers with sufficiently low defects, he said.

Meanwhile M&A will continue among materials suppliers trying to survive and diversify amid profit pressures, Corbett added.

Several dark clouds hover in the big picture

Plenty of dark clouds obscure the horizon at 30,000 feet, according to economic and political analysts.

Wall Street flirted with a bear market in December in part due to uncertainty around everything from rising debt and interest rates to trade disputes and Brexit, said Duncan Meldrum of Hilltop Economics.

“Things could go wrong, but they don’t have to. The consensus is we will settle back safely to a lower rate of [macroeconomic] growth long term around 2.7%,” said Meldrum, suggesting tariff wars with China that have spooked corporate executives and investors could clear up in a few months.

“I would suggest preparing for a hard alternative and a possible recession” just in case, he added.

Nicolas Burns, a former U.S. diplomat and current Harvard business professor, sounded a deeper warning about the long-term movement of the political tectonic plates.

“By 2050, certainly by 2080, the Indo-Pacific will be the locus of world [economic and military] power…this is disruptive to global politics and can create instability and conflict,” said Burns, who also sits on the board of Entegris.

The recent shift in the nature of U.S./China relations is even more worrisome, he said. “From 1979 until last year, we were engaged with China, but we have shifted rapidly and ominously from strategic cooperation to competition,” Burns said.

“We should compete with them in military power in Asia. I want us to be the lead military power, but we are rapidly shifting from a balanced relationship to one of [economic] competition,” he said.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved

CST Inc. Memory Tester DDR Tester
Copyright © 1994 - 2023 CST, Inc. All Rights Reserved