SEMI chief sees sustainable growth in China

SEMI chief sees sustainable growth in China
By Mike Clendenin, EE Times
March 11, 2003 (11:13 a.m. EST)
URL: http://www.eetimes.com/story/OEG20030311S0017

SHANGHAI, China — The chief executive of Semiconductor Equipment and Materials International said Tuesday (March 11) that in a world full of stagnant growth, China stands out as an exception and should for the foreseeable future.

“China is truly the bright spot in our industry right now,” said Stanley Myers, chief executive and president of SEMI, during the opening of Semicon China. “While it is an emerging market, it has demonstrated very impressive growth and strong potential for continued development. As China grows it will increasingly influence the global semiconductor industry and, very importantly, it will be influenced by that global community,” he said.

Last year, consumers and businesses in the Asia Pacific region (excluding Japan) snapped up 22 million PCs, which are by far the largest users of semiconductors. China accounted for 43 percent of the Asian Pacific PC market, Myers said.

Currently, China is already the second la rgest IC market in Asia. As its consumption of mobile phones increases — it now has a total of 212 million subscribers — the country's standing as a major consumer of ICs in the coming years will also grow. By 2005, IC demand in China is expected to reach $27 billion, according to Gartner Dataquest, which would be about $20 billion short of estimates for local IC production capacity.

Even though China's equipment sales should double this year, to about $2.4 billion, that is still less than Samsung Electronics or Intel Corp. spend by themselves in a year. Hence, even China's potential is overshadowed by the gloomy global picture.

The demand for chips here is rising, as it is in some other key markets, but average selling prices are falling. “Overall, IC units were up 14 percent in 2002; however, revenue was only up 2 percent,” Myers said, “resulting in a challenging revenue picture.”

Global manufacturing capacity is still rising, albeit slightly, while utilization is stabilizing, at be st. In the fourth quarter, capacity grew 1 percent even as utilization dropped. Capacity for leading edge chips, 0.25-micron or lower, increased about 8 percent and utilization in this area declined slightly, according to SEMI.

Myers said industry growth forecasts for semiconductors range from 9 percent to 25 percent in 2003, translating into an increase of 10 percent to 15 percent for the materials and equipment sector.

“The big question is: Are we under-spending as an industry or still correcting for over-spending in the year 2000?” he said. “Several groups anticipate the industry will need 30 to 40 300mm fabs in the next several years,” he said. If this is the case, “we are under spending.”

Despite continued uncertainty regarding the timing and strength of an upturn, Myers said there are some positive signs for the optimistic, including utilization rate stabilization and the expansion of leading edge capacity.

“There is one thing we are very, very confident of and that is the recovery is imminent,” he said. “We are seeing reduced inventories and average selling prices are stabilizing to some extent. While a strong recovery may not take hold maybe for the next quarters, we do see double-digit growth for the next two years.”