SAN JOSE -- Good news and the potential for bad news came from one of the speakers at Wednesday night's annual awards dinner hosted by the Semiconductor Equipment and Materials International (SEMI) trade group here.
Analyst John Pitzer of Credit Suisse First Boston Corp. told chip equipment and materials executives that industry demand for their products will continue to be strong in 2001, but the difficult transition to larger 300-mm wafers will probably dump too many semiconductors on the market. "The transition to volume manufacturing at 300 mm will oversupply the semiconductor market," cautioned Pitzer, during his speech before the SEMI event.
"The longer this transition is delayed, the more positive cycle fundamentals become," he added.
On the good-news side of the outlook, Pitzer predicted strong growth in semiconductor capital spending next year. His forecast shows a 25% growth to $75.1 billion in 2001 from $57 billion in 2000. Spending on 300-mm wafer fabs will also be strong in 2001, according to the forecast from Credit Suisse First Boston. Revenues for 300-mm tools are expected to grow 259% to $6.1 billion in 2001 from $1.7 billion in 2000.
But concerns about a 300-mm ramp in the current boom cycle were not what capital equipment suppliers wanted to hear. Fab gear vendors have invested heavily in 300-mm systems and processes, which were not put to use two years ago when the chip industry suffered one of its worst downturn ever. With the chip-making sector healthy again, demand for 300-mm tools continues to strengthen.
Last month, a panel of semiconductor equipment analysts also cautioned that the 300-mm movement will most likely suffer one more slowdown before it really takes off as a production technology. Most analyst believe the current upswing in fab expansions will be paced by 200-mm (8-inch) wafer frontends.
Dataquest Inc.'s tally of announced 300-mm (12-inch) wafer fabs showed seven production fabs being set up in 2001, followed by 11 more in 2002. The San Jose market research firm believes many of these announced 300-mm fabs will be postponed, but then quickly re-launched when the next upturn occurs in the three or four years (see Aug. 25 story).
Other industry analysts have also worried about the combination of device shrinks and larger 12-inch wafers. Pitzer, who is based in San Francisco, said a strong move to 300-mm fabs in the current boom cycle could be enough to disrupt the delicate supply-and-demand balance.
But on the positive side, Pitzer said he remains extremely bullish about the chip-production equipment market as a whole. He cited strong chip demand in consumer, communications, and other market applications. This is driving worldwide fab equipment spending in the next couple of years. Fab tool purchases are expected to reach $40 billion in 2001 from $30 billion this year, he said.
"I think we will have some short-term disruptions," Pitzer said. "But we believe that the semiconductor and semiconductor capital equipment cycle is entering into the second phase of an extended upturn. I fell extremely bullish about the semiconductor supply cycle."