We're a full quarter into the new year, we've turned all the knobs, and we still can't quite get things to come into focus. Last year was an up year, believe it or not, and the analysts at Semico Research are forecasting a 27.5 percent surge this year. We're in a recovery. So why do we feel as if we've just been washed up on the beach and are catching our collective breath, waiting to get swamped again?
"We're a bit cautious on 2005, when you add in all the 300-mm capacity coming online and [the fact that] the 130-nm process will be mature," Jim Feldhan, Semico's president, said at the recent Semico Summit. "On top of that, we're concerned that cell-phone demand will taper off in '05, and there's a possibility of some economic slowdown in the U.S." The current scenario is a 5 percent decline in revenue next year.
Meanwhile, I can't shake this feeling that the industry has just not come to grips with the latest phase of its evolution, in which the consumer's calling the shots.
My colleague Ron Wilson posits that microelectronics may have "succeeded to death." As integration goes up, the number of chips (and hence design starts, tools, wafers, packages, engineers and so on) goes down, unless end-user demand grows faster than integration can shrink things. Right now, demand is not outpacing integration. So the industry is systematically reducing its own revenue while it drives up its expenses.
End-user demand is not a smooth function of anything, especially in the all-consumer era. So without the bubble in end-user demand, we just see the industry devouring itself. Not new, just revealed, as everything is when the tide washes out.
A year ago we kicked off the "View from C-Level" video interviews to give c-level executives a platform from which to shine a flashlight into the darkness. We're holding four "C-Level 'Live' " panels this week at electronicaUSA with the Embedded Systems Conference in San Francisco. Brian Halla, T.J. Rodgers, John Daane, Chris Rowen and other executives will be on hand to make some sense of the recovery. Electronics Supply & Manufacturing editor-in-chief Bruce Rayner and I will chair the sessions and try to hold a few feet to the fire.
Check the schedule at esconline.com/electronicaUSA/special/c-level.htm.