SAN JOSE -- Is it real or wishful thinking? For sure, it is the SIA annual fall forecast, which was released here on Wednesday calling for 6.3% growth in semiconductor sales to $149.5 billion this year followed by a 21.1% increase to $181.1 billion in 2003 (see Nov. 7 story).
The new U.S. consensus outlook from the Semiconductor Industry Association appears to be slightly more optimistic than other forecasts, which range from around 3% growth in 2002 to a decline of nearly 10% next year. The SIA's fall forecast last year called for a 22% growth in chip sales during 2001, but after the current downturn clobbered the industry, the trade group revised its outlook down to a decline of 14% in the middle of this year. Now, the SIA is estimating that chip sales will plunge 31.2% to $140.7 billion.
To be fair to the SIA, nearly all other forecasters were completely wrong about 2001 at the end of last year. What's more, many industry pundits still seem to be cutting their estimates.
During the SIA forecast dinner on Wednesday night, U.S. executives insisted that the glory days for the IC business are not over yet, despite the severe downturn of 2001.
But while chip executives said they believe the industry has a long ways to go before it matures, they also expressed some skepticism and jokingly took potshots at the new forecast from the SIA.
"Our future is bright," said Craig Barrett, president and chief executive of Intel Corp., during a speech at the SIA dinner. "The future of our industry depends on innovation and R&D."
But given the inaccuracies of the SIA forecast in recent years, Barrett also poked fun at the SIA's predications for 2002. "You all know the accuracy of the SIA forecast," Barrett joked, implying that next year could now be better than expected.
Even the presenter of the SIA forecast aired a certain amount of skepticism over the new numbers issued by the San Jose-based chip organization. "We've got 53 days left in 2001," quipped Richard Templeton, executive vice president and chief operating officer at Texas Instruments Inc. "That's probably the most accurate forecast I will give tonight," Templeton said, during his presentation of the new 2001 revenue estimates.
In a more serious tone, the Dallas-based TI executive said the chip industry would benefit from decent growth in PC, wireless, and other markets. Templeton projected that PC unit shipments will grow 7% in 2002 and 9% in 2003, but he refused to give a projection for the cellular phone industry. (TI stopped forecasting handset shipments a couple years ago, according to the COO.)
Many chip executives declined to comment on the SIA forecast. "We can say that 2002 will be better than 2001," said Jim Kupec, president of the U.S. subsidiary of Taiwanese silicon foundry giant United Microelectronics Corp.
In an interview during the SIA forecast dinner, Kupec did say that the IC industry looks bright despite current business conditions. "The semiconductor industry has a long ways to go," said the UMC executive. "Leading-edge technologies will drive us back to growth," he added.
Others were also unclear about the forecast. "I cannot predict what's going to happen based on the information from my customers," said Jim Healy, president of Asat Inc. The Fremont, Calif.-based operation is the U.S. subsidiary of Hong Kong's Asat Holdings Ltd., a provider of IC-packaging, assembly and test services.
Healy, a long-time veteran of the semiconductor and chip-equipment industries, was also bullish about the short- and long-term prospects of the IC industry.
"The number of design wins has recently skyrocketed," he said. "The industry has a long, long ways to go before it becomes a mature industry. The percentage of semiconductors going into electronic products is still rising."
The current IC downturn, coupled with the lack of visibility in the market, has changed the way Asat does business, according to Healy. "What we're are doing is moving fastest on our feet," he added.
During the SIA's press conference on Wednesday, one editor asked if chip executives believed the new fall forecast would be more accurate than recent projections from the trade group. SIA president George Scalise responded, saying recent forecasts were thrown off by the unanticipated inventory buildup in 2000, which caused too much growth last year and sharply cut revenues in 2001. Otherwise, he said, the original forecast from two years ago was basically correct.
But in a joking with journalists about last year's missed forecast, Scalise said they were now blaming Wilf Corrigan, president and CEO of LSI Logic Corp. Last year, Corrigan presented the SIA forecast, which called for no real downturn in chip sales during the next three years and only a modest slowdown in revenue growth in the 2002 (see Nov. 2, 2000, story).