Happy New Year! 2010 is just beginning to unfold in the electronics industry and there is already uncertainty in the air.
Looking into my crystal ball, I have released my own chip forecasts--and other predictions--for 2010. These are my top 25 predictions, which are strictly my opinions.
1. IC forecast: Funny money demand?
It's time for my annual chip forecast. Drum roll, please! Most forecasters see a big double-digit growth year in 2010. Unfortunately, I don't. My IC forecast for 2010: Plus 5 percent.
I see a small recovery, but I'm not as bullish as some. First, the worldwide economy still feels weak to me. It's better than last year. The economy is resilient in some nations and weak in others. I'm afraid the governments in some nations (i.e. China, Japan, U.S.) have propped up their respective economies with ''crazed money'' or what I call funny money. Stimulus packages, bail outs, cash for product programs (i.e. appliances, auto clunkers) have certainly jumpstarted some sectors, but will they have a lasting effect?
In some respects, I believe the bail outs and ''cash for whatever'' programs sends the wrong message to consumers. Take the ''cash for clunkers'' programs in the U.S. or similar programs in China. Instead of buying a car when it makes sense, the government is providing false incentives--or bribes. Consumers may end up getting conditioned to buy -- if and only if the government bribes us to do so.
I'm also worried about lackluster consumer demand, the housing woes and unemployment, especially in the U.S. Too bad. For once, there are some cool products in the market: iPhones and iPhone wannabes, cheap netbooks, e-book readers, snazzy LCD/LED TVs, etc.
2. Yawn. Another fab tool downturn
Same old story. Another bad year for equipment makers. My semiconductor equipment forecast for 2010: Minus 10 percent.
I can barely remember a good year in semiconductor equipment. The business was booming when I started in high-tech journalism in the mid-1980s. In those days, chip makers believed that ''real men have fabs.'' Fabs were part of the equation in chip production. Equipment was also a valuable piece of the puzzle.
Those were the glory days in equipment. But those days are long gone. I also remember the fab tool boom during the ''dot.com'' explosion. I also remember the fab tool bust after the ''dot.com'' explosion and 2001 downturn.
Since then, it's been a struggle for fab tool vendors. 2009 was bad. Towards the end of last year, the signs did indeed improve. Intel, Hynix, Nanya, Samsung, TSMC and a few others bought gear.
I'm afraid the party is over. In 2010, there are no new fabs on the drawing board, according to SEMI. Repeat: No new fabs are expected to be built in 2010. That's just simply unbelievable. We will continue to see some technology and capacity buys, but without a new fab, the equipment industry may see another lousy and down year.
3. Solar hype--again?
2010 forecast for solar: Minus 5 percent. The solar industry suffered its first-ever downturn in 2009. The recession put a damper on credit, which impacted the procurement of solar cells for businesses and homes. I'm told credit is still tight, especially in the U.S. Solar still depends on attractive subsidies. That still concerns me.
But here's the real problem: In my opinion, the solar industry has failed to deliver on its promises. Efficiencies remain low. I see little evidence that grid parity is on the horizon. We were sold a bill of goods by some solar vendors. That doesn't mean solar is a flop. There are still opportunities for new and breakthrough solutions. I am still an optimist on solar, but let's cut down on the hype.
4. DRAM blues
Look out for a rebound in demand, but here comes another round of consolidation. My surprise prediction is that South Korea's Hynix Semiconductor Inc. will become U.S.-based company in 2010. Recently, Hynix' shareholders put their stake on the block. The only bidder was a shaky Korean firm, which has since withdrawn its bid.
Hynix' shareholders have put its stake up for sale again. I don't see any bidders coming from Korea. So, Hynix could end up like MagnaChip Semiconductor Ltd., the logic spin-off of Hynix. Last year, MagnaChip fell into bankruptcy. Last year, a U.S.-based investment firm, Avenue Capital Management II L.P., acquired a majority stake in MagnaChip. All told, MagnaChip is a U.S. company now. I see a similar scenario with Hynix, that is, the company being acquired by a U.S. investment firm. Perhaps Avenue Capital could also buy Hynix.
In Taiwan, the island's DRAM vendors are still hanging on. That's a miracle in itself. But in 2010, I predict Powerchip Semiconductor Inc. will fold. Look for Elpida Memory Inc. to buy them. Speaking of Elpida, the Japanese DRAM house is in danger of becoming the next Qimonda. In other words, it could go under--if we see another bad year in DRAMs. Elpida has skipped a node to play catch-up with its rivals. Its diversification strategy, including moves into the foundry and LCD driver market, is still in question.
Back to Taiwan. Taiwan's ProMOS Technologies Inc. will continue to limp along. ProMOS is already looking for niche DRAM markets. Nanya Technology Corp. appears to be a contender, thanks to help from its technology partner, Micron Technology Inc.
5. Micron's fate
Speaking of Micron, this is a make or break year for CEO Steve Appleton. Micron recently reported its first profit in three years. Its performance has not been stellar to say the least. And one quarter does not make it a success.
So if Micron falls back into the red, look for Micron to merge with Numonyx BV. At one time, rumors swirled that Micron and Numonyx were set to merge. The chatter has quieted. Perhaps a deal was once put on the table. Then, Micron resisted.
In 2010, I see Intel putting pressure on Micron to merge with Numonyx -- if Micron goes back into the red. A backroom hostile merger? Intel has been known to engineer such moves. Micron and Numonyx have plenty in common with Intel. Micron has a joint NAND venture with Intel. Numonyx was formed from the former flash groups from Intel and STMicroelectronics Inc.