Hsinchu, Taiwan–During the past decade and a half, the personal computer has emerged as the driver of the global semiconductor industry. With the explosion in communications and Internet product applications, the industry has been debating the future of the PC.
At the recent ISS Taiwan 2000, an annual industry conference organized jointly by Semiconductor Equipment and Materials International (SEMI) and the Taiwan Semiconductor Industry Association, speakers gave varied views on the role ahead for the PC. Not everybody sees the immediate demise of the computer as a major semiconductor, or chip, consumer. While PC’s share of total chip consumption will fall from about one third to one quarter over the next 5 years, PCs will still consume $84 billion worth of chips in 2004, according to Youm Huh, senior vice president of the system IC division at Hyundai Electronics Industries.
The next biggest product opportunity will be cell phones, accounting for $35 billion in chip sales by 2004. Within 5 years, the total chip market will grow from $171 billion in 1999 to $317 billion, said Huh. With the explosion in Internet and communications applications, the resulting service-oriented economy will provide huge demand for low cost hardware, according to Huh. “Low cost and high volume will be the role of the semiconductor industry,” he said.
Meanwhile, computer manufacturers in Taiwan see a new role for the PC. Barry Lin, chairman and CEO of Quanta Computer, said he was attracted by the opportunities in the post-PC era. “The PC will be redefined as a different product,” he said. Quanta’s vision of the new PC is one of a hand-held “personal companion” that allows users to access a central data bank via the Internet.
Tsuyoshi Kawanishi, a representative of TEK Consulting in Japan and retired Toshiba executive, said the traditional PC will transform into a mobile communications/consumer device. In the 21st century, the preferred Internet access platform will shift from the PC to the mobile phone. “E-commerce will change to mobile commerce,” he said. Those countries with higher cell phone usage rates, such as China, Japan, and Southeast Asian nations, will benefit the most, he added.
To illustrate the power of the Internet as a business tool, a Cisco Systems executive explained how it uses the Internet to dramatically reduced its cost of doing business and improved service to customers. For example, Cisco resolves most of its support issues by asking customers to visit a Website.
“We can halve the amount of engineers we need by doing 80% of support on line,” said Philip Belcher, Asia Pacific director for enterprise line business at Cisco. In fiscal year 2000 Cisco, with total revenues of $17 billion, saved $1.35 billion through Internet business solutions, according to Belcher.
One industry to benefit from the strong demand for Internet and information applications will be the LCD makers. This year eight new LCD fabs came on line, five in Taiwan, one in Japan, and two in Korea. While there are concerns over falling panel prices and oversupply, one Taiwan LCD maker is taking a longer-term outlook. “In the next 2 to 3 years more applications will come out, so I feel optimistic about demand,” said H.B. Chen, president of Acer Display Technology Inc.
Chen said falling LCD prices were more related to competition between panel makers than to slowdown in demand. He believes cost saving innovations in LCD design and manufacturing, coupled with alliances with key component and materials suppliers, will help panel suppliers cope with price pressures.