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Fab tool market yet to get out of the woods

Posted: 19 Jan 2010     Print Version  Bookmark and Share

Keywords:fab tool  IC slowdown  2010 market outlook 

The presentations at SEMI's Industry Strategy Symposium (ISS) gave hope for a brighter future in which the IC and fab tool industries are expected to see a boom year in 2010 but the ground reality seems to be something else,

Happy days are here again. Or are they? Around the water cooler outside the conference room at the ISS venue, some quietly expressed a renewed sense of caution—or worry—heading into 2010. Some see a pause—or the dreaded double dip—for ICs in early 2010, creating uncertainty in the air for this year. LCDs and solar are in the same boat.

Others see a slowdown in fab tool orders, especially in the second half. That's the least of the worries for fab tool and materials vendors, as the migration towards the 28nm node and beyond will drive more consolidation in the IC industry.

Consolidation has been ongoing for some time, but the industry is still in denial over some painful trends: Going forward, there will be fewer and fewer customers for fab tool and materials vendors. And the two-year process cycle could slow, with some even predicting that the 22nm node could get pushed out due to soaring costs.

One could draw the following conclusion at ISS: The IC market is alive and well and vendors are seeing new applications. On the other hand, the fab tool sector appears to be doomed—at least on the IC side—given the current and ominous trends in the arena. That's somewhat far from the truth, but fab tool vendors face many challenges going forward.

"There was a huge amount of optimism" at this year's ISS, said G. Dan Hutcheson, chairman and CEO at VLSI Research Inc. "But when I look at the supply chain, there are signs of concern. (In the first quarter of 2010), it looks really weak on the semiconductor side. I'm starting to see some disappointed looks among some equipment vendors."

The Q1 09 is relatively slow due to seasonal factors, but this year's period is worse-than-expected. Early December 2009 was slow, China is softening, and the capital spending patterns remain cautious, he said.

So, here comes a pause in demand or the dreaded double dip. "We think there is a little 'W' out of the V-shaped recovery," he added.

In contrast, there were several bullish forecasts at ISS, as some were talking about a so-called "super-cycle" that could last this year and next.

"Recovery has been rapid, and Q4 09 wafer volumes are at close to peak levels for industry. Recovery is driven by growth of smart phones and digital consumer segment," said Handel Jones, CEO of International Business Strategies (IBS). "Recovery of semiconductor demand, ramp-up of 65nm, 45/40nm will result in additional capacity shortages in Q2/Q3 of 2010."

On the other hand, there are some ominous signs. "While semiconductor industry has recovered, many companies have not. Result is increased consolidation," he said, adding that there could be potential delays for the ramp of 32-/28- and 22nm technologies.


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