Q4 2008 revenues freeze semiconductor
industry to a dope less silicon
The bad weather is no stranger for semiconductor industry.
It may not be yearly but approximately once in five years
the industry experiences sudden fall in revenue to feel
very cold and seeking protection(by comparing the revenue
to dropping temperature in cold season).
However 4th Quarter of 2008 was terrible. On average any
leading semiconductor expert is posting approximately 20
to 30% fall in revenue. The hard hit section DRAM is most
affected and also is the first industry to show some signs
of quick recovery with slight increase in DRAM prices.Such
is the volatility of memory business; it can be advised
not to believe any analyst prediction in this sector.
Next badly hit area is consumer device, it can be MOSFET
used in MP3 player or an audio IC. The devices, which make
these handheld media gadgets, are resting in the inventory
glut of manufacturer and distributor. Until the overall
economy improves and the middle class buyer start spending
more it will be hard for these devices to come out of those
inventory stocks.
Drop in car and mobile phone sales is directly proportional
to drop in semiconductor demand used in them. There is a
paradigm shift underway in both automotives and telecom,
which may offer huge opportunity for power ICs, wireless
ICs, SOCs and sensors. The demand in this market may start
by end of 2009 or early 2010.
Wireless IC was one of the fast growing area a few quarters
earlier, but now these are also having bad time. One good
thing is wireless not only goes into these media convergence
consumer devices but also used in industrial applications.
Actually, it's difficult to estimate the semiconductor
device market by function. The loss causing variables are
application areas. If we look at FPGA, its hardly used in
consumer so its less affected. Same can be applied to precision
analog (minus audio/video ICs) which is in better position.
The application areas least affected by recession are aerospace/defense,
medical electronics and industrial (in this order). It's
not everyone's pie. There is a sizable market but only few
players are capable.
While solar is buzzword for time being, the drop in crude
oil is haunting it.
It looks like some new business application (something
more powerful than computer and internet) coupled with environment
friendly 'energy production and saving technology' might
be the next take for semiconductors. Now people want to
earn money, improve business efficiencies, and conserve
energy as much as possible. Once that's achieved than will
go for some piped music on a beach again enabling the consumer
market.
The clear visible notice, whenever the semiconductor industry
down is, the sector must have changed the role from driver
to dependent. Once the industry get back to driver seat
through innovation, the revenues start growing.