Analyst: Slowing wafer demand hinges on 300mm fab schedules

Jan. 7, 2008 – Worldwide demand for silicon wafers began slowing in 3Q07, and though a demand plunge caused by US economic problems is unlikely, wafer vendors should keep a close eye on progress in new 300mm fab activity, according to a market note from Gartner.

After projecting about 10% growth in silicon wafer demand for both 2007 and 2008 back in mid-October, Gartner has lowered its 2008 outlook to 8.4%, following a similar reduction in its outlook for the semiconductor market (to 6.2% from 8.2%), which reflected weakening demand for electronic equipment thanks to fears of a US economic recession and continued weakness in memory ASPs. That softness of end-user demand is being reflected in unit demand for silicon wafers, notes Gartner analyst Takashi Ogawa in a research note. Though general wafer demand seems unlikely to suffer a significant dropoff, “demand for 200mm wafers seems to be declining, and smaller-diameter segments are facing sluggish orders,” a situation that should continue into 1Q08, he writes. Semiconductor device inventories finally rebalanced to roughly normal levels by 3Q07, which should translate into increased semiconductor device production by 2H08, which in turn will support an ~8% boost in wafer demand, he thinks.

Still, with 300mm wafers the dominant growth driver, the wafer industry is “somewhat vulnerable” to companies’ 300mm fab construction/expansion plans, Ogawa notes. “In the next three to six months, the semiconductor industry needs to be alert to any changes in spending and expansion plans for 300-mm fabs in order to judge if a recession would greatly affect demand for silicon,” he writes. “Although a marked deterioration in economic and market conditions looks unlikely, wafer vendors must prepare for the possibility.”


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