The first half of 2008 is over and with it, an eventful and oftentimes turbulent six months in the IC industry have come to a close.
Some of the highlights of the last half a year included the following:
* Several joint ventures were formed, especially among memory suppliers (eg, Micron-Nanya, Intel-ST, etc,) who were forced to take drastic measures to survive the cutthroat pricing environment that continued to characterise the DRAM and Flash memory markets in 1H08.
* Reduced (or further reduced) capex budgets for 2008, which IC Insights believes will lead to 2008 having one of the smallest capital-spending-as-a-percent-of-sales ratios seen in many years.
* Capacity utilisation rate was strong, averaging approximately 90% in 1H08, with utilisation at 300 mm wafer fabs particularly strong at 96%.
* First-quarter earnings reports among many (mostly non-memory) IC suppliers were surprisingly favourable with several companies reporting strong bookings for 2Q08.
* Samsung, Intel, and TSMC announced that they would combine their efforts and influence to develop a path to 450 mm wafers, with the goal of having a pilot production line running by the end of 2012.
* In the battle for ultra-mobile platforms, Intel introduced its Atom processor series. Intel's primary and aggressive competitors in this field are processor cores from ARM and Nvidia.
* Price per barrel of oil soared above $135. IC Insights forecasts average price per barrel of oil for 2008 will be $126. The impact of the huge price spike will work its way through all facets of global economies in 2H08 and beyond.
What can the IC industry expect in the second half of 2008? IC Insights is keeping its eyes on several issues, including:
* Economy - economic growth in most Asia-Pacific economies will be equal to or slightly down in 2008 compared to 2007. Nevertheless, economic growth in Asia-Pacific remains strong and will offset weak economic growth in the US, Europe and Japan. Worldwide GDP is forecast to grow 3,2%, slightly below the 25-year average of 3,6%.
* System growth - Seasonal growth in cellphones and PCs is likely to drive strong unit growth in these two applications in 2H08. IC Insights forecasts cellphone shipments to grow 13% and PC shipments 11% in 2008. Microsoft's decision to ship only the Vista OS in new PCs and to end shipments of Windows XP-based systems should help boost DRAM unit and bit volume growth. Also, shipments of digital TVs are forecast to increase in 2H08. The mandatory switch from analog to digital TV in the US in 1Q09 is expected to create a surge in DTV sales during the holiday season.
* IC ASPs - with capex budgets being trimmed at the same time that the global wafer fab capacity utilisation is running 90% or more, it is highly likely that IC average selling prices will begin to increase as IC suppliers work to restore some level of profitability to their businesses.
* IC market, unit growth - though some segments of the IC industry are performing well in 2008 (portions of the analog and special purpose logic markets, 32-bit MCUs, etc,), other segments, particularly the DRAM and Flash memory markets, remain weak and volatile.
For more information visit www.icinsights.com
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