LONDON – Here are six "myths of the semiconductor industry," according to Malcolm Penn, founder and principal analyst with Future Horizons (Sevenoaks, England).
By "myth" Penn positions these six items to be widely believed tenets of the industry that he asserts are not true. If you think he is wrong, right, or you have other "myths" to add to the list you are welcome to have your say in the forum below. Myth #1 - The cycles are over
Many people will say that as electronics comes to address ever broader application, region and market diversity, the boom-bust cyclicality becomes evened out. Penn looks to the historical record and to the fact that semiconductor manufacturing decisions have to be made on longer time scales than the design and much longer time scales than the whims of the market and says "nuts!" Myth #2 – The market is mature
Many people see a decline in average annual growth and say the semiconductor market is maturing and the industry's growth days are behind it. Penn asks: "If that is so why bother with long-term research projects?" He sees erratic short- to medium-term demand and stable long-term demand at 11 percent unit growth per annum. It then becomes just a question of who makes money servicing that demand and how they will do it. Myth #3 – ASPs will keep declining
Average selling prices (ASPs) cannot keep falling forever, says Penn, otherwise there would come a point where vendors would be paying customers to be allowed to supply them with chips. Individual IC prices decline as volumes increase but ASPs are pushed back up as companies introduce higher capacity or higher performing chips, with a price premium. Penn acknowledges that from 2002 until 2009 ASPs were under pressure for a number of reasons.
"There is NO historic precedent or economic justification for the assumption [that ASPs will keep on falling]. The markets self-correct," asserts Penn. He reckons that the tide turned in 3Q09 and has been rising for six quarters.
I agree with myth 5 and hope myth 4 really is true. Seeing ASP dropping from year to year is kind of pain to many IC companies. They didn't cut much on R&D cost. The manufacturing cost may not be as low as people expect so there is no reason to ask for lower and lower ASP every year. Higher ASP keeps jobs and it helps the economy anyway.
Sorry, iniewski. That is a myth. The bean counters do not control the cash in a properly organized company. They are there to analyze the finances and report the results to the business manager. The business manager has to be the one that controls the business decisions including where money is spent. If the finance department controls the money decisions, the company is doomed.
I also don't agree that PC is dead, but however the money for PC is not divided between mobility segment and PC. And mobility sector is growing at much faster pace than PC right now. In my opinion once mobility sector products are stable then people will move back to investing in PC as well.
I think the industry has become more mature in some areas like discretes but agree that the industry as a whole is far from mature. I don't know if it will ever become mature since we will continue to create new devices.
I agree on many point especially 4 without doupt as we saw many shortages at 2010 due to lost capacities.
From my side, i could add 2 more mtyhs to the list.
#7 There wont be bigger wafer size as many players of the market strictly stuck to 300mm size. Besides thats not true intel, tsmc have on going projects to jump into 450. And even bigger sizes, as plate bigger there are more place to chips
#8 There wont be new founderies due to fact its very pricey to build up new factories. This assumption is true that indeed factory build up is expensive but still there are many players who would like to jump into business. Few years before we didnt have global foundries who know few years later we will have whom...