March 6, 2003 – San Jose, CA – The Fabless Semiconductor Association (FSA), has announced the results of its annual “Wafer Supply & Demand and Packaging Survey”, with analysis provided by Gartner Dataquest and conducted in conjunction with PricewaterhouseCoopers, LLP.
The responses indicate a positive trend with a 38% average annual growth in wafer demand in 2003 over 2002. Survey participants, which included 152 fabless companies and IDMs, expect a short-term 3% decrease in wafer demand from 4Q02 to 1Q03.
Looking into the future, the survey indicates continued compounded growth for 2003 and 2004. The findings show a trend toward a sequential increase in wafer demand/quarter during 2003. Long-term forecasts were optimistic, with all respondents also forecasting a 38% wafer demand increase in 2004 over 2003.
“In the face of so many negative forecasts in the industry, it is pleasantly surprising to find that there is potential for growth in 2003, continuing into 2004,” stated Jodi Shelton, co-founder and executive director of the FSA. “In addition to these more favorable results on the demand side, we are also pleased to begin offering the industry a more complete picture, adding a capacity forecast by Gartner Dataquest to this year’s report.”
As a result of attrition of older fabs and the delay in 300mm ramp-up schedules, 2002 worldwide foundry capacity shrunk by 6.6%, down from 2001’s production high of 13.9 million to 13.0 million 200mm wafer equivalents. Many of the cash-strapped companies were forced to rationalize holdings or sell divisions in order to stay lean and viable. Further consolidation is likely as market competition heightens in the future, the FSA said.
“Looking ahead, it is likely that overall capacity will gradually expand in 2003 once anticipated demand resumes by the second half with leading-edge capacity tightening quickly if a sudden surge in demand arises more rapidly than projected,” said Jim Hines, principal analyst at Gartner Dataquest. “Based on an uncertain economic outlook and depressed capacity utilization, a 2.8% incremental expansion in 2003 is expected. Strong demand and a tightening capacity picture in 2004 will fuel capacity growth of 10.2%, although this estimate has significant upside potential if and when real end-market demand picks up.”
In terms of the projected packaging demand, respondents indicate an increase in unit requirements for 2003. This forecast includes many of the newer packages based on leadless offerings in addition to array packaging configurations.
“There is not only the continued shift away from leaded through-hole that has happened for many years, but now there is a growing shift away from traditional, leaded surface mount packages to array and, more recently, leadless packages,” said Jim Walker, principal analyst, Semiconductor Packaging and Assembly Worldwide Program at Gartner Dataquest. “This is further evidence that the industry’s transition to the third generation of packaging technology is fully underway. By 2004, the demand for QFP and BGA packages are forecast to be essentially equal at 25 % vs 24%, respectively.”
Regarding revenue performance, public fabless revenues increased 7% year-over-year for 2002, totaling $14.8 billion, compared to $13.8 billion in 2001.