Feeds

Chip biz slowdown to stretch through Q1 '05

Possibly longer, say foundry chiefs

  • alert
  • submit to reddit

Bridging the IT gap between rising business demands and ageing tools

The chip business' current slowdown will last well into Q1 2005 and possibly beyond that, foundry chiefs have warned. However, they believe the industry will pick up again once as customers' inventory correction schemes come to fruition during that period.

Certainly, a number of foundry executives interviewed by Silicon Strategies last week at the Fabless Semiconductor Association Expo in San Jose, claim the downturn is not a severe one, though it's undoubtedly long-lasting.

"There is quite an inventory correction taking place right now," said Thomas Hartung, VP of marketing and sales at X-Fab Semiconductor Foundries. "But our customers are not saying that they are going into a recession. In Q1 2005, they are saying: 'We need to order again'."

"We see a slowdown now, but it's not severe," said Doron Simon, president of Tower Semiconductor's US wing. "The demand is not as high as anticipated, but it's not a catastrophe. I don't see the end markets collapsing."

The inventory correction follows the high chip-purchasing levels seen during the first half of the year. As chip buyers have cut orders in order to reduce stockpiles of semiconductors, so too have chip designers, their foundry partners and firms now make their own chips.

The problem first emerged late Q2/early Q3 and has been dampening chip industry sales growth ever since. The Semiconductor Industry Association (SIA), for one, reckons sales will come back through Q4, pushing growth levels up again to the point where its forecast for 2004's sales - $216bn, up 28 per cent on 2003's figure - will become a reality.

Next year is expected to see a much lower growth rate than 2004 - 4.2 per cent, according to the SIA - through market analysts have been reducing their expectations of late, largely on the back of the industry-wide inventory correction.

Indeed, with even the bullish SIA anticipating a slowdown in 2006 - down just under one percentage point on 2005 - next year may offer less of a window for growth than previously thought. ®

Related stories

Analyst lifts 2004 chip capex forecast...
World chip sales flat in August
IDC ups '04 PC sales forecast
Slowing H2 chip sales to hit 2005's growth - report
Global chip sales slow on inventory build-up
Intel Q3 sales to barely meet guidance - report
SIA: 2004 will be chip biz's best yet

Application security programs and practises

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.