Mixed news circulates from SEMICON Southwest
12/01/2002
By Hank Hogan
AUSTIN, TX—As the old joke goes, THERE.WAS.SOME good news and some bad news coming out of Semicon Southwest 2002.
First the good news: The semiconductor industry shows signs of recovering from its two-year-old slump.
The bad news is that this reported rebound was hard to find on the show floor at SEMICON Southewest, held here in mid-November.
In a market briefing, Lubab Sheet, senior market analyst with Semiconductor Equipment and Materials International (SEMI; San Jose, CA), charted growth in the number of semiconductor units sold. Second quarter 2002 sales were quite strong, approaching the level seen in the third quarter 2000 peak of the last boom. On the other hand, continued erosion in the average unit selling price has offset that and stifled revenue recovery.
However, the latest numbers show growth in all regions. While there is still some uncertainty, the trends are positive.
"Things are looking promising," Sheet notes.
Manufacturing capacity and utilization figures reinforce this hopeful picture. The second quarter 2002 number was 86 percent, up from the first quarter's 77 percent. Sheet notes that this does not necessarily mean new facilities will be built soon; for that to happen, utilization would probably have to be above 90 percent for several quarters.
On the capital equipment front, things don't look so rosy. According to Sheet, capital equipment revenues are at the lowest ratio relative to semiconductor revenues since 1994. The trend may be, she says, to tweak and use old equipment instead of purchasing new gear.
Through July 2002, equipment billings were running a little bit more than a third of the 2001 total. The consensus is that equipment spending will decline about 20 percent this year relative to last with recovery postponed until 2003.
Overall, that assessment was echoed by those on the show floor.
John Early, vice president of sales at Pacific Scientific Instruments (Grants Pass, OR), noted that his company is seeing a lot of activity in the 300 mm wafer area. This has so far been in the form of product evaluation without any actual product purchases. The company had expected recovery in the first half of 2002 but that has been delayed. The latest signs, however, are promising.
"It's very optimistic now," says Early.
Prudential Cleanroom Services (Austin, TX) tracks a trailing indicator of an uptick: employment. Prudential provides garment cleaning and other services that are closely tied to the number of cleanroom employees. According to Prudential account manager Jeff Williams, his company hasn't seen any signs yet of an increase in hiring.
At the booth of the engineering and construction company Lockwood Greene (Spartanburg, SC), the word was that fab construction and upgrade projects were in a similar state. Bill Graham, director of sales and marketing at Lockwood Greene's advanced technology group, reported some activity in the Far East but none in the United States.
"Nobody's pulling the trigger just yet," says Graham.
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Capital equipment revenues are at the lowest ratio relative to semiconductor revenues since 1994. Source: Semiconductor Equipment and Materials International (SEMI; San Jose, CA) and Semiconductor Equipment Association of Japan (SEAJ) July 2002 equipment data and World Semiconductor Trade Statistics (WSTS) August 2002