NEW YORK (
are among the companies that will suffer from a deteriorating business climate for the semiconductor industry.
Along with fellow DRAM manufacturers
, Micron will suffer from slowing sales of electronic gadgets and personal computers. In the CPU sector, the slowdown in PC sales will affect
We base our predictions for the semiconductor industry on our proprietary global leading indicators, which have turned down. As you can in the chart below, our indicators have demonstrated a clear correlation with semiconductor equipment sales and reveal that a correction in the front-end equipment market is imminent.
The hypergrowth that we observed through the first half of the year can't be sustained because the poor macroeconomic climate can't support 100%-plus year-over-year equipment growth. Pushouts of front-end equipment will dramatically affect the lithography sector, which has been riding a wave of strong purchases, primarily from Samsung.
As sales drop in electronic gadgets, the most pronounced affect will be in the DRAM sector, where sales grew 135% in the second quarter compared with the same period a year before.
Although the overall front-end market will suffer pushouts, the lithography sector will be affected the most, where sales of $35 million immersion DUV tools have flooded the market recently.
is the largest supplier of immersion DUV lithography tools.
2010 is becoming very reminiscent of 2000, where poor inventory control, fear of integrated-circuit shortages and concern over long waiting times for leading-edge equipment spelled disaster. We ended 2000 with $10 billion in excess IC capacity and a shattered equipment industry that didn't fully recovere until this year.
I've noted repeatedly that forecasts for the semiconductor and equipment industries seem to get bigger with each monthly announcement, and the fragile economies of the Western world do not warrant such growth.
Equipment for niche markets and applications such as advanced packaging from
will not be affected by the pushouts, as these products have not seen the explosive growth of mainstream ICs.
For more information about our forecasts and our proprietary leading indicators, please see our recent report, "The Global Market for Equipment and Materials for IC Manufacturing," at
-- Written by Robert Castellano in New Tripoli, Pa.
Robert N. Castellano, Ph.D, is President of The Information Network, a leading consulting and market-research firm for the semiconductor, LCD, HDD and solar industries. Castellano is internationally recognized as one of the leading experts in these areas. He has nearly 25 years of expertise as an industry analyst. Castellano has provided insight on emerging technologies to many business and technical publications, including Business 2.0, BusinessWeek, The Economist, Forbes, Investor's Business Daily, Los Angeles Times Magazine, The New York Times, USA Today and The Wall Street Journal. He is a frequent speaker at conferences and corporate events. He has over 10 years' experience in the field of wafer fabrication at AT&T Bell Laboratories and Stanford University before founding The Information Network in 1985. He has been editor of the peer-reviewed Journal of Active and Passive Electronic Devices since 1985. He is author of the book "Technology Trends in VLSI Manufacturing," published by Gordon and Breach. His book "Solar Cell Processing" was published in 2009 by Old City Publishing. He received his Ph.D. in solid state chemistry from Oxford University.