Fabless semiconductor companies will need 45 percent more processed silicon from their wafer foundries in 1998, followed by another 30 percent increase in 1999, according to the results of a new survey released in San Jose, Calif., Tuesday by a trade group.
The survey, conducted by the Fabless Semiconductor Association, also says respondents expect more than 60 percent of their wafers to be processed with 0.35-micron and below technologies by 1999.
Despite continuing price pressure and slumping orders in the market, the report indicates fabless chip companies are enjoying a growth rate higher than the overall semiconductor industry, said Jodi Shelton, executive director of the group. "Fabless companies are often involved in pioneering new markets," she said.
This is particularly visible in today's communications and graphics markets, where several notable companies are posting growth rates this year of well over 100 percent. These include Broadcom, 3Dfx Interactive, and Genesis Microchip, according to industry observers.
Measuring silicon usage in 6-inch wafer equivalents, the survey shows fabless chip companies expect to buy 2.549 million CMOS-processed wafers from foundries this year compared with 1.760 million in 1997. In 1999, fabless chip companies said they expected to use 3.302 million wafers, based on the survey's results.
Last year, the semiconductor association's annual survey shows respondents were a little over optimistic about their silicon needs. Wafer demand grew 21 percent instead of the projected 39 percent increase, based on a follow-up poll of the 1997 respondents.
Semiconductor analyst Mark Edelstone of Morgan Stanley Dean Witter said 1998 could mark the end of a three-year slump for chip makers. During the past three years, overcapacity has caused chip prices to fall, especially in the dynamic RAM segment. As a result, fabless companies have enjoyed easier price negotiations with their silicon foundries, he said.