The semi industry needs to adopt a more cavalier approach in the face of economic strain, with those investing in the future primed to take the spoils from firms continuing to play it safe.
According to Future Horizons boss Malcolm Penn, the semi industry is in reasonably good shape, and the main hindrance is a crippling lack of confidence due to economic problems.
Speaking at IFS2012, Penn said that in terms of fab capacity, average selling price and unit demand, the industry is in good shape. ASPs are flat or trending up while there is no excess capacity at advanced process nodes.
All that is lacking is a more forward looking attitude to ensure that investments are made to allow a return to demand.
“The trouble with economy is no one has any confidence it in it,” Penn said, and the natural reaction is, unfortunately, inaction.
As the G20 and the gaggle of European states struggle to take to any forthright action, there is an endemic lack of confidence in the economy. However, Penn believes that the semi industry is like a “coiled spring” – and the only question is when the market will bounce back.
But bounce back it will, just as it did after the Lehmann collapse, and those that invest now are the ones who are likely to benefit.
“When people are dithering, that is when you can gain advantage – a lot of companies are already doing this,” Penn said.
He highlighted the amount of time it takes to increase capacity: after deciding to increase chip orders, it takes three months before they are finished, while upping capacity takes a year.
This means that semi firms need to be active now, and should be taking action to ensure capacity rather than worrying about the wider narrative that is beyond anyone’s control.