Monday, December 15, 2008
A press release popped into my e-mail this morning from Malcolm Penn of Future Horizons. Here's what he's saying: "Amidst all the doom and gloom, now is the time to make investments and come out of the recession strong," Penn said. By investing now companies can secure their long-term future and come out of the recession in a great position. "R&D is always one of the first things to get cut in times of economic crisis," says Penn. "But by doing this companies are harming their long term future. If they don’t continue to look forward now, they will be behind the competition in 12 months time – and find themselves in even greater trouble. While the short term gains of cost cutting are obvious, in the long run it will come back to bite. By taking the lead now companies can seize the initiative, and come out of these difficult times in a strong position." Penn was speaking ahead of the 2009 Forecast Seminar that is taking place in London.
Friday, November 21, 2008
The extent of the financial crisis is still unknown, of course, and most agree that it will get worse before it gets better, but at Small Times and Solid State Technology magazine we have been gathering reports from leading market forecasters and analysts and can share what they’re telling us. I think MEMS and nanotech will weather the storm well, but it looks like some rough sailing ahead for my semiconductor friends. The good news is that market fundamentals are quite different than they were in 2001. “Staring a global economic recession in the face, will 2009 be a re-run of 2001? We think no,” said Malcolm Penn, CEO of Future Horizons, Kent UK. Penn said that downturns in the semiconductor industry over the last 60 years were always caused by excess capacity, triggered either by demand or supply side issues e.g., by over investment (making capacity overshoot demand) or a demand slowdown (whether through an inventory burn or recession) making short-term capacity exceed near-term demand. “The 2001 slowdown was unique in that it was triggered by both demand and supply-side issues, namely; the collapse of dot-com inflated demand euphoria, a 9-11 driven economic slowdown, a resultant massive inventory burn, just as a huge amount of excess capacity was coming on stream,” Penn said. “Entering 2009, we have no serious overcapacity in place (pre-slowdown utilization rates were in the 90% region), a cap ex cut back that started 12-18 months before the slowdown hit, and IC ASPs in the middle of a cyclical upward trend. In addition, IC units had been running at or below the 10%/yr long-term trend line, with no serious excess inventory in the supply chain. For once, the industry is in structurally good shape to enter a recession. This will make the 2009 downturn statistically shorter than it would otherwise have been,” Penn added. Bill McClean, President of IC Insights, Scottsdale, Arizona, believes the effect of a global recession on the worldwide semiconductor market in 2009 depends greatly on the magnitude and duration of the recession. “A severe U.S. recession and steep global recession (i.e., worldwide GDP growth of <2.0%) would probably cause the worldwide semiconductor market to show a 10% decline,” McClean said. He further states that worldwide semiconductor industry capital spending is forecast to decline 15% in 2009 after falling 24% in 2008. “Even with these cutbacks in spending, IC ASPs are expected to fall another 6% in 2009, the same as the decline forecast for 2008. However, as a direct result of these steep capital spending declines, and a capital spending as a percent of sales ratio that is likely to reach an all-time low (15%) in 2009, IC ASPs are forecast to rebound (very strongly for DRAM and NAND flash memory) and spur double-digit semiconductor industry market growth in 2010, 2011, and 2012.” Aida Jebens, Sr. Economist, VLSI Research, Santa Clara, California, said that despite all the negative sentiments about the economy, she does not believe electronics sales will be in negative territory next year for several reasons: “With the exception of 2000-2001, there has never been a case in history when an economic slowdown or recession resulted in a drop in electronics sales. The 2000-2001 period is different because it was driven by the Y2K tech boom and was made worse by the terrorist attacks. We do not have the same situation today. We simply have a very nervous sentiment because of the economy. Electronics tend to do well in a slow economy. At the consumer level, people tend to cocoon in their homes when times are tough. Instead of going away on vacation, or going out for entertainment, they tend to buy electronics. At the business level, sure there will be a pullback in spending on high-end servers, but even in recessions, businesses tend to buy computers and peripherals, and networking hardware to improve efficiency and boost productivity,” Jebens said. VLSI expects both consumer and business spending to stagnate in 2009, resulting in a very slight 3.5% growth in electronics. At this rate, worldwide electronics shipments should amount to $1.7B. Klaus Rinnen, Managing VP, Gartner, Washougal, Washington, said that Gartner now expects 2008 semiconductor growth to be ~2%, and predicts that, in 2009, the market will experience anything between a decline of 2% and growth of 1%. “In addition, we currently expect a capital spending decline of ~17% in 2009, and capital equipment to drop roughly 18%. In excess condition for all of 2008, we believe inventories will rise in 4Q, overshadowing demand and reducing production needs for 1H 2009. This will lead to a reduction in factory utilization,” Rinnen said. “Continued weakness in memory sectors combined with reduced production due to increased inventory levels are causing many manufacturers to drop spending projections. Memory financials continue to worsen, causing suppliers with cash flow problems to delay or eliminate capacity expansions. Some vendors are even postponing investments for needed technology improvements because of profitability problems.”Next week will, of course, will provide us all with an interesting barometer in the form of consumer spending in the U.S. on the day after Thanksgiving, the so-called “Black Friday.” Traditionally, it is one of the busiest shopping days of the year, putting merchants into the “black.” I'm hoping everyone is out buying the latest electronic gizmos!
Tuesday, September 16, 2008
Welcome to my Small Times blog. Since this is the first of what will hopefully be many posts, I’d like to briefly share my personal perspective on micro- and nanotechnology and my plans for Small Times as the new Editor-in-Chief. First and foremost, let me assure you that I clearly see the difference between working at very small dimensions and nanotechnology. During my 26+ years working as a technology editor, I have mostly focused on the semiconductor manufacturing industry. To give credit where credit is due, there can be no question that the true pioneers of nanotechnology are semiconductor guys. They have been working at nano dimensions for years -- the thickness of a gate dielectric on advanced integrated circuits in manufacturing today is less than 10 atoms thick, for example – and much of what we know about how electrons and ions and atoms behave at the nanoscale has come from semiconductor research work. Innovations such as the atomic force microscope and the advancements made in carbon nanotube research largely stem for such work as well. There’s a big difference though, between relentless scaling of dimensions as has been the course of the semiconductor industry (at least to date) versus what most consider the real potential of nanotechnology: changing and controlling the very essence of matter itself, often in strange new ways. Richard Feynman described this well in his now famous talk in 1959: “There's Plenty of Room at the Bottom: An Invitation to Enter a New Field of Physics.” http://www.zyvex.com/nanotech/feynman.html What’s happened over the last decade, of course, is that basic semiconductor device research and straightforward materials science has been recast as “nanotechnology” research. In some ways, I think this has been driven by an understandable desire to get on the nanotech bandwagon in order to not miss out on billions of dollars in government and VC funding. But it’s also because the semiconductor industry’s scaling has reached some fundamental limits. A new “switch” needs to be found, and nanotech offers up a tantalizing array of possibilities. A good overview of this can be found on the Intel website: http://download.intel.com/technology/silicon/nano-open-house-george-bourianoff.pdf I’ll be talking/blogging about all these kind of things, as well as some of the nonsense related to the perceived threat to public health safety posed by nano. I’ll also be zeroing in on some the dynamic work now underway at the university level. The focus of Small Times magazine, however, will be less on gee-whiz nanotech and more on practical applications and the manufacturing know-how that's used to produce devices for those applications. Progress in Microelectromechanical systems (MEMS) in particular will be highlighted. Everyone seems to define MEMS a little differently, but to me it’s an amalgamate of many diverse functions, from accelerometers to microfluidics, from energy harvesting piezoelectric devices to fuel cells, from RFMEMS to wireless sensors. As always, let me know what you think. You can reach me by phone at 603-891-9217 or e-mail at email@example.com.