News & Analysis
EE Times' predictions for 2006
EET.com staff
1/6/2006 11:10 AM EST
Industry forecasters seem to have different opinions about the overall outlook for the semiconductor and IC-equipment markets in 2006 and beyond. On Thursday (Jan. 5), VLSI Research Inc. projected a somewhat rosy picture.
To help sort out the confusion, EE Times presents its own chip forecasts — and other predictions — for 2006. Our fearless forecasters include editors Spencer Chin, Peter Clarke, Mark LaPedus, George Leopold, Dylan McGrath and John Walko.
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Spencer Chin
IC forecast for 2006: 4-to-7 percent growth
“Despite what all the market analysts say about robust growth, there's still uncertainty in the electronics industry. Companies that sell to the portable/consumer electronics market should continue to do OK, but competition will be fierce as it seems lots of suppliers are ramping up activity in this arena. Companies will continue to consolidate and shed operations; they will go to foundry/manufacturing-lite strategies.”
More predictions from Chin:
Uncertainty for flat-panel displays. “Even though flat-panel display makers continue building new fabs to handle larger glass sizes for flat-panel TVs, the scaling to larger sheets of glass may slow down a bit as companies run into yield issues and perhaps stretch the capabilities of existing production/test equipment.
The plasma display market went through consolidation in 2005. Could see more competition in 2006, as LCD makers ramp up availability of 40-in. and larger screens. LCD and plasma-panel prices could fall a bit more in first half. OLED and flexible display activity will continue ramping up, but production and cost issues will still keep these products out of mainstream for another year. See no ‘breakthroughs’ yet.”
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Peter Clarke
IC forecast for 2006: 10 percent growth
“Consumer electronics will drive the growth in the first half. Another inventory correction will hit in the second half. Depending when will govern the size of the annual growth.”
More predictions from Clarke:
Philips Semiconductors, STMicroelectronics Inc. to merge. “Companies will merge unless there's something in the books that makes it a ‘no-no.’ The European Commission wants it and the two companies have been practicing some form of a complementary alliance for awhile that should ease the fit.
Question is whether Freescale can be persuaded in at the same time and multinational vested interests can be protected in the management structure. Company CEO Carlo Bozotti is not yet a proven success at STMicroelectronics and this may make shareholders nervous about putting their eggs in his basket.”
Infineon sell off of semiconductors looks to be a white elephant. “Infineon should have been able to sell its manufacturing arm and memory business to Micron — the fact that Infineon is talking about an IPO looks odd and ill-starred. Could prompt calls of ‘Bring back Schumacher,’ although not from the supervisory board.”
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Mark LaPedus
IC forecast for 2006: minus 5 to 0 percent
“Last year, I predicted zero growth. This year, most analysts have narrowed their forecasts to plus 6-to-8 percent growth. However, I am still the bear in the bunch and refuse to pump up the market. Chip capacity is at an all-time high, but there’s ho-hum demand for ICs. The initial excitement for 3G-enabled handsets, iPods, and newfangled devices has worn off. Product innovation is back to being boring.”
More predictions from LaPedus
“Sorry to say, but I see a bad year for semi equipment — again. Look for minus 5-to-10 growth for both capital spending and the equipment industry. Chip makers will still need fabs, but obviously, they require fewer 300-mm plants than the older 200-mm facilities.
It’s mega-merger time for semiconductor equipment makers. “Could this be the year that Novellus and Lam finally merge? It’s possible. Look for Applied Materials to fill in more holes in its portfolio. I see Applied making a big play in metrology/inspection to take on KLA-Tencor. Here’s a wild guess: Applied acquires Rudolph (which bought August). Maybe Applied and Canon will form a big JV in lithography.
I see more consolidation in ATE. Agilent’s ATE unit will get bought before it goes IPO. Look for a Teradyne-Agilent ATE merger. Maybe an LTX-Agilent ATE merger makes more sense.
