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Zack63
GoGoGeek
At a recent webcast SEMI said that 2013 equipment spending growth is 0% and ...
Mentor's Rhines sees 'modest growth' in 2013
Sufia Tippu
12/19/2012 2:00 PM EST
Semiconductor cycle
Inventories are relatively low now as managers wait to see what unfolds in 2013. “At least it is not in the range of where it usually is before you are on the verge of going into one of those typical recessions,” the Mentor CEO said. “The other piece of good news is that we have a large amount of capacity at the leading edge. This would ultimately be good for the consumer because it means the pricing will come down for advanced technology in the coming years, which would in turn enable new applications.
Cyclical industry
The semiconductor industry goes through two kinds of cycles. The first reflects macro-economic conditions: If the world economy is growing, the semiconductor industry grows; a shrinking global economy usually results in chip industry contraction. “But the semiconductor has another cycle all its own which is based on capacity,” Rhines said. “So if there is excess capacity, prices fall and we have a price recession. But if there is a shortage of capacity, prices remain stable and we have a period of high margins and good revenue growth.”
The two different cycles don’t usually line up. “They occur at different times depending on capital investment. So I think right now, supply and demand are in pretty good balance but the world economy is a little bit uncertain. If we go forward a year or two, then we maybe the world economy would be better, but I don’t know about supply [and] demand.
“So the semiconductor industry has different ways of being good and bad, and we are in a period where it looks neither really good nor really bad,” Rhines said.
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Inventories are relatively low now as managers wait to see what unfolds in 2013. “At least it is not in the range of where it usually is before you are on the verge of going into one of those typical recessions,” the Mentor CEO said. “The other piece of good news is that we have a large amount of capacity at the leading edge. This would ultimately be good for the consumer because it means the pricing will come down for advanced technology in the coming years, which would in turn enable new applications.
Cyclical industry
The semiconductor industry goes through two kinds of cycles. The first reflects macro-economic conditions: If the world economy is growing, the semiconductor industry grows; a shrinking global economy usually results in chip industry contraction. “But the semiconductor has another cycle all its own which is based on capacity,” Rhines said. “So if there is excess capacity, prices fall and we have a price recession. But if there is a shortage of capacity, prices remain stable and we have a period of high margins and good revenue growth.”
The two different cycles don’t usually line up. “They occur at different times depending on capital investment. So I think right now, supply and demand are in pretty good balance but the world economy is a little bit uncertain. If we go forward a year or two, then we maybe the world economy would be better, but I don’t know about supply [and] demand.
“So the semiconductor industry has different ways of being good and bad, and we are in a period where it looks neither really good nor really bad,” Rhines said.
Related stories:
Top 10 tech blunders of 2012
Top tech gifts to buy your engineer for Christmas
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GoGoGeek
12/19/2012 2:32 PM EST
At a recent webcast SEMI said that 2013 equipment spending growth is 0% and capacity addition has slowed from 6% down to 3% in 2013. They talked about the roller coaster and argued that because of the high revenue expectations the fab spending growth rate has a chance to be also positive. This seems to fit: slower capacity additions and high revenue expectation lead to more equipment spending.
Let's just hope that economy works out as well
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Zack63
1/9/2013 3:57 AM EST
From Article: "2012 industry revenues should approach $300 billion"
What industry is that? Certainly not the EDA industry... Mentor is ~ 1Billion/year company...
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