Where do we go from here?

09/01/1998

Where do we go from here?

Robert Haavind, Editor in Chief, [email protected]

When the semiconductor industry was escalating, full steam ahead, back in the 1994-1996 era, "experts" assured us that the upward trend would continue into the new millennium. (Those were the days, my friend, we thought they`d never end.) The gurus told us that the world would need a new fab coming on stream every week for the foreseeable future, in order to keep up with the market`s insatiable thirst for chips. The problem, according to those with clear vision, was that the worldwide boom in fab construction wasn`t going fast enough.

Many heeded the call - perhaps too many! Korea had darted ahead of Japan in DRAMs, so the Japanese had to catch up. Singapore was cooking, and Thailand and Malaysia didn`t want to be left behind. Taiwan was entering the hunt. Companies in Europe and the US scrambled to climb onto the gravy train. Many fabs pushed the state-of-the-art to beat the timetable laid out by the SIA Roadmap, hoping to gain a competitive edge in rising markets.

As has repeatedly happened, the industry got ahead of itself. Over-capacity led to plummeting prices, especially for DRAMs. Massive loans for billion-dollar-plus fabs stressed the fiscal systems in places like Thailand and Malaysia, and the banking crisis that had been swept under the rug for years in Japan suddenly faced a whole new set of potentially bad loans in South Korea. Meanwhile, US personal computer prices, which had hung around the $2000-$4000 range through a number of generations, suddenly dropped below $1000. Those fat margins on advanced chips that had helped finance the fab-building explosion suddenly shrank.

Gloom and doom has now supplanted theunfettered ebullience. "Ah ha," some new `experts` preached at SEMI West, "This time it`s different! Once the public has seen PCs for a few hundred bucks, we can never go back again," they explained. "Tools can be added for years to the spare areas of new fabs without filling them up. The rapid growth markets of Asia that fueled the recent electronics boom are gone for good, and there is nothing on the horizon that will trigger a new boom."

Haven`t we heard this all before? It`s over-optimism in the good times, over-pessimism in the doldrums, every time. The world continues to move toward an Information Age, and the tools to enable it are still taking shape. A few years from now, we will wonder how we ever functioned with clunky desk-top PCs, 28.8 k modems, stupid software, and spam. How could we have enjoyed fat television sets with tiny flickering pictures and no computer/internet hookups, static-plagued, erratic cell phones, and 2-D movies? Or cars that slid around on ice and snow, non-interactive cable TV, and computers that couldn`t understand us when we talked to them? The thirst for new electronics will not stop or go away. The fastest growth areas may shift to Eastern Europe or South America, but Asia will make a comeback before too long.

Already the shift to 300-mm wafers has started with a Siemens/Motorola project, and if it offers an advantage, others will follow. The shrink to 0.13 ?m is accelerating. Systems-on-chips are already packing more functions at less cost, enabling new and expanded applications. Scores of enterprises are designing and installing the pieces of telecommunications infrastructure needed to move video and multimedia easily and conveniently to just about everywhere. Electronic commerce is in its infancy, and while many problems remain, the untapped potential is enormous. Technology advances require producers to keep upgrading, so the need for new and better tools will continue. If computers are less costly, more users will be able to buy more of them. If we can send video over the phone, we will. Once we see HDTV, we`ll buy it.

The history of the electronics industry is like a sine wave, but it climbs up a steadily rising ramp. It goes up, it goes down. But then it goes up again - along a growing base. Don`t despair - the world has not ended.