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REAR
VIEW MIRROR
"2003¡Va pretty good year after all"
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In January 2003, the
analyst consensus for semiconductor industry growth was 16%. Through
to August, this forecast seemed wildly optimistic and many analysts
reduced their forecasts bringing the consensus to 10%. The industry
was glum. With hindsight, the market took off in July and rocketed
to record sequential growth rates through October before cooling
to a seasonal norm in December. In the end, 2003 was 18% higher
than 2002 (16% for ICs) and seemed to have momentum to carry it
further in 2004.
Even IC ASPs began a recovery with three-month moving average price
staying above the twelve-month moving average for the first time
in two-and-a-half years. Logic IC ASPs (ex MPU) were even stronger.
The turn-around was sustained by record-level sales of computers
to businesses in fourth quarter of last year, with year-on-year
sales growth at its highest level since 1996. And communication
equipment shipments, though still well below the peak in 2000, staged
a steady recovery throughout 2003.
All-in-all, a pretty good year.
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CRYSTAL
BALL
"Go with the Mo"
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The
global PMIs - leading indicators of manufacturing and economic strength
- are signaling continued global expansion in the months ahead. Historically
they also signal strong IC demand.
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Industry
analysts have close consensus - 2004 will be a great year for chips.
Their forecast (in February) is for 23.5% growth with higher probability
of upside than downside.
Looking out to 2005, however, the consensus breaks down. The 2004
forecast spread is about $30B, the 2005 spread is over $75B¢wtwo analysts
forecast a downturn in 2005, while the rest forecast a downturn in
2006.
In the end, it's too soon to tell. Economic forecasts are for slower
global growth in 2005, but no recession. The timing of a downturn
will depend on the onset of irrational exuberance¢wvastly accelerating
capital equipment expenditures, double ordering, and excess inventory.
We know it happens. Maybe this time, the industry will be more sensitive
to the signals¢wbut don't count on it.
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ADVANTAGE
FOUNDRY (read TSMC)
"The market will be strong¢wmy new
product has to be ready!"
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Before
spending energy worrying about the broad demand environment, foundry
customers have to create winning new products. But as they move to
leverage the performance and cost benefits of advanced process technologies,
they face increasing design implementation challenges which, roughly,
can translate into higher cost and longer time to volume production.
TSMC has silicon-proven reference flows in place to help customers
reduce their chip implementation time and raise silicon success rate.
The reference flows, together with silicon-qualified libraries and
IP help sharpen a customer's competitive edge. |
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