Semi industry still weak
08/01/2001
Meg Villeneuve
FRANKFURT, GERMANY—Talk of the downturn permeated the discussions on the floor at the fourth annual CleanRooms Europe. For many companies the decrease in sales to semiconductor-specific cleanroom technology is causing vendors to expand into other areas. "Eighty percent of our business is in semiconductors. With the help of this show we expect to expand into pharmaceuticals," says Gitte Hansen-Wagner, area sales manager for Basan.
Continued softness in the semiconiductor industry is causing equipment and materials manufacturers to make hard choices to either expand their business offerings or consider closing plants.
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For the month of May, the Semiconductor Industry Association (SIA) reported worldwide sales of semiconductors to be $12.70 billion, a decrease of 7.3 percent from April's figure of $13.72 billion. "The sales for May reflect the current inventory overhang that the semiconductor industry has been experiencing since November," notes George Scalise, SIA president.
The region hardest hit during May was the Americas with a decline of more than 10 percent from $3.75 billion in sales to $3.34 billion. Second to the Americas was Europe with sales of $2.83 billion in May, a decrease of 7.8 percent from April.
On a brighter note, Semiconductor Equipment and Materials International (SEMI) reported that North American-based manufacturers saw a preliminary book-to-bill ratio of 0.46 in May, a slight increase from April. A book-to-bill of 0.46 means for every $100.00 worth of products shipped, new orders of $46 were received.
"It is likely that the prospects for sustained year-over-year improvements in monthly shipments are three to four quarters away. On a worldwide basis, we currently anticipate a 30 to 32 percent annual decline in the semiconductor equipment market in 2001. While this severe drop presents a painful environment for SEMI member companies, this would still result in the second best revenue year in the history of our industry," notes Stanley Myers, president and CEO of SEMI.
However, there are companies that cannot expand, and for them it's a waiting game. Recently, it was predicted that the third and fourth quarters of 2001 might bring some relief that has not happened yet. "We continue to believe that the industry will begin to see the final phases of the inventory correction late in the third quarter with a broad-based sequential recovery commencing in the fourth quarter," adds Scalise.
For Taiwan chipmaker United Microelectronics Corp. (UMC) expanding is not an option, however shutting down production is. In a recent report from Reuters, UMC chairman Robert Tsao sent a memo to his employees saying that UMC would not lay-off any employees even if the fab had to shut down. "Every downturn in the semiconductor cycle can be viewed as bad in the short term and good in the long term," notes Tsao.
"The important thing is how to fully use the opportunities given by a downturn," he adds.