World News
07/01/2005
BUSINESS TRENDS
Chipmakers deliver surprise 1Q inventory burnoffs
The value of surplus chip stockpiles in the electronics supply chain plunged 51.5% from 4Q04 to $500 million in 1Q05, according to iSuppli Corp., far outpacing the analyst firm’s estimates of a 25% drop. Excess inventory levels had grown to more than $1.6 billion in 3Q04, prompting the El Segundo, CA-based analyst firm to sound a “yellow alert.”
A workdown in inventories during the first calendar quarter, typically a slow period, “is undeniably a positive development,” stated iSuppli analyst Rosemary Farrell. Thanks to better-than-average sales of “bellwether” products including microprocessors, digital-signal processors, discrete devices, high-performance analog parts, and power-management chips, most companies in the electronics supply chain expect to eliminate their oversupply by the end of 2Q05, if not sooner.
 Chipmakers tightened their inventory belts in 1Q05, as shown by the levels of excess semiconductor inventory in the global electronics supply chain. (Source: iSuppli Corp.) |
As a result, iSuppli has raised its semiconductor revenue forecast for 2005 - but only slightly, to a 6.1% increase from 2004, up from earlier estimates of 4.7% growth. Compressed inventory levels will lead to renewed capital spending and production ramps, but the analyst firm noted that market conditions remain weak.
WORLDWIDE HIGHLIGHTS
Total worldwide silicon-wafer area shipments slipped to 1465 million sq. in. (MSI) in 1Q05, down 1.4% from 4Q04 and 4.2% from 1Q04, according to the Semi Silicon Manufacturers Group (SMG) in its quarterly analysis of the silicon wafer industry. It’s the fifth straight month of shipments >1400 MSI, although they are down 10% from the peak reached in 3Q04. Makoto Tsukada, chairman of Semi SMG and GM of Shin-Etsu Handotai Co. Ltd., noted that shipments have leveled off from 4Q04’s 8.8% sequential slide, due in part to strong growth in shipments of 300mm wafers.
USA
Supporting university R&D on microchip technology contributes to economic prosperity and national security, according to chip industry representatives lobbying Congress to appropriate $20 million for the Focus Center Research Program (FCRP) for fiscal 2006. “DoD funding needs to keep pace with industry contributions,” said Semiconductor Industry Association president George Scalise.
ASIAFOCUS
China
Semiconductor Manufacturing International Corp. (SMIC) and Singapore-based United Test and Assembly Center Ltd. (UTAC) have agreed to form a joint venture to provide assembly and testing services in Chengdu, targeting memory and logic. SMIC will invest $51 million for a 51% stake in the operation; UTAC, which already has a facility in Shanghai focusing on mixed-signal and advanced memory chips, will pay $30 million for a 30% stake, with the remainder supported by financial investors and employees. Construction of the 11,000m2 facility is underway, with mass production expected to begin in 4Q05.
Japan
Samsung Electronics Co. Ltd. has developed new diagnostic software to detect design errors before moving into the prototype stage. ESCORT (Estimation of Chip Performance on Process Tolerance) simulates early stages of product development to help increase wafer yields, while SRSIM (Samsung Reliability Simulator) projects deterioration times for transistors in memory-chip circuits based on a series of designated time lapses.
Korea
MagnaChip Semiconductor Ltd., the former nonmemory business of Hynix Semiconductor spun off last year, reported a 1Q05 net loss of $31.3 million on sales of $213.4 million, vs. a net loss of $23.8 million on $243.6 million in sales in 4Q04. President and CEO Youm Huh predicted a pickup in 2Q05, with projected revenue growth of ~8%.
Singapore
Semiconductor packaging design/assembly/test provider STATS ChipPAC Ltd. plans to begin offering 300mm electroplated wafer-bumping services in 3Q05, by using consigned equipment at Taiwan Semiconductor Manufacturing Co. (TSMC). The company also said it has added ultralow-alpha HiPb composition solder alloy to its eutectic and lead-free flip-chip offerings.
EUROFOCUS
Royal Philips Electronics, Amsterdam, The Netherlands, has regrouped its semiconductor division into four units: a new unit for automotive and identification applications; and mobile and personal; home; and multimarket semiconductor applications.