Semi industry has its head in the sand

Malcolm Penn, the CEO of Future Horizons, gave his view on the directions of the semiconductor industry.

And, like the price of a 450 millimetre fab, it’s not pretty, not pretty at all.

Penn said: “This industry is built on uncertainty.  You have to believe that tomorrow has got to be better. We’ve lost the ability to take risks. Risk is a natural part of life.”

He said that recessions don’t destroy demand, they just push it out. He said that his greatest concern is short termism in this business.

“If you don’t like innovation, go make Heinz Tomato Ketchup,” he said. “After 144 years all Heinz did was turn the bottle over, make it squeezable and put real tomatoes in it.”

While the chip market fell by 35 percent after the 2008 economic collapse but bounced back after a year, he said. “It really was a very fast recovery from a very artificial situation.”

Last year a large proportion of fabs were shut and right now there’s very tight capacity. “If you have no capacity and no wafers. If you have no sales, you have no business. We don’t often go undercapacity but when we do, it’s a killer, he said. It takes two years to ramp a fab up if you start building it today. “There’s not a single fab being built today, that’s terrible,” he said. And sales of chip equipment are well down too.

The analyst has put its forecast up for 2010 by 31 percent, he said. Future Horizons’ web site is here.