At the Future Horizons Semiconductor Industry Forecast on January 20th Malcolm Penn was in one of his classic ebullient modes. His message was “It is time to prepare for one of the strongest (and longest) upswings in chip industry history.”
Firstly, the context: this time last year Penn predicted semi sales would grow by 8%, with the most pessimistic case being only 4% and the most optimistic 14%. In fact, with December still to be finalised, it looks like 9.9% for the year.
For 2015 his target is 8.5% growth, with sales of $364.183 billion ($1 billion day). However if we do see a recovery things will be very different. Penn’s analysis of the last three upturns showed that the first four quarters of an upturn typically experience growth of around 30%.
However there is not only no spare manufacturing capacity at advanced nodes, TSMC sold out last year, but there is little capacity being built. And even if you start building today, it will be a least a year before you have chips. There is also virtually no inventory being held, all the way from wafers to finished goods. This means that growth will come from price increases as customers compete for the limited supply of chips. The owners of the advanced fabs, mainly TSMC, will be doing well financially.
So while I have been bewailing the lack of excitement in 2014, in one area, if Penn is right, 2015 could become very exciting.
