Top 20 global semicon suppliers of 2010!

I’ve just received this report from iSuppli, which says that the global semiconductor revenue expands by record margin in 2010 — to $304 billion in 2010, up from $229.5 billion in 2009. This represents growth of 32.5 percent for the year! Fantastic!!

This growth is said to be courtesy of a boom in DRAM and NAND sales benefiting memory suppliers. One hopes the semicon industry turns in an equally better performance in 2011. That’d be just great!

In the meantime, I’d like to share with you iSuppli’s preliminary ranking of the Top 20 semiconductor suppliers in 2010.

Top 20 semiconductor suppliers of 2010: Source: iSuppli, USA.

As per iSuppli, Marvell is likely to achieve organic revenue growth of more than 43 percent and jump five places to the No. 18 spot in 2010.

Qualcomm and AMD, and Sony have experienced revenue growth notably less than the overall market. Therefore, they will likely slip three to four positions in the rankings in 2010.

After a number of years of dramatically outperforming the market, Taiwan’s MediaTek fell back to earth in 2010, as it will barely achieve revenue growth at 1.2 percent, the only company among the Top 20 to not achieve a double-digit increase. The company is likely to slip to No. 19 in the rankings, down from No. 16 place in 2009.

Only one company is at risk of dropping out of the list of 20. iSuppli projects that nVidia will retain its ranking at No. 20. However, ROHM Semiconductor is competing for the final slot among the Top 20 and the final outcome should be very close.

I hope to get into a conversation with iSuppli regarding the top 20 semicon suppliers.

Why has the semicon equipment bubble really burst? – II

Here’s the concluding part of my discussion with Dr. Robert Castellano of The Information Network, from New Tripoli, USA.

Repercussions of a deteriorating semiconductor industry
I asked Dr. Castellano regarding the repercussions of a deteriorating semiconductor industry.

He said that the semiconductor equipment industry seems to be in serious trouble. There could possible be little growth in 2011, and the how is that there will be sufficient pushouts in equipment that revenues are moved to 2011 from 2010.

Dr. Castellano said: “We warned two months ago about pushouts, and today, Veeco stated that they “recently experienced rescheduling of tool shipments from the fourth quarter into the first quarter by several customers in Korea and Taiwan.” In other words, pushouts! We will continue to see this more and more.

“Problem is, will the equipment vendors admit it? ASML vehemently denied any customers’ pushouts last quarter, but with tools selling for $35 million each and customers such as Nanya and Inotera announcing losses, there is no way in creation pushouts won’t happen.

“Then, there is the issue of 450mm wafers. The only ones pushing it are the semicons, because they recognized that they could generate twice the number of chips for almost the same capital equipment cost. The equipment industry was dramatically impacted by the 300mm transition, and growth was nearly flat from 2001 to 2009. Not so for the semicons.

“No equipment supplier wants 450mm, it is being pushed by Sematech and Intel, plus a consortium in Europe that feels that perhaps 450mm will knock off competitors and they can make up the vacuum in sales. Only the top 15 equipment suppliers will survive.”

How will pushouts benefit the industry?
On the subject of industry pushouts being highlighted time and again, it is also necessary to see whether and how will these benefit the industry in the long run.

Besides the reasons mentioned above, semiconductor sales are intimately tied to the economy. There is a direct correlation between semiconductor sales and GDP, as well as the PLIs of The Information Network. If the economy is robust, more money is available to purchase electronic items containing semiconductors. The reverse is true, indicative of the present economic climate.

The Information Network has also indicated that firms will announce lower results, and it’d get worse in the following quarter. Why will this happen and which firms could be likely ‘hurt’?

Dr. Castellano said: “This will happen because the crest in the tidal wave was only reached in the past month or so, and it is a long and slippery slope down because it went so high up to begin with.

“The DRAM manufacturers will be hit the hardest. Growth was strongest for them for the first half of the year, where sales grew 135 percent in Q2 2010 compared to Q2 2009.”

Is there a way out? If yes, when?
Finally, when will there be some recovery in the semiconductor equipment sales and why? Surely, as with everything, there has to be a way out!

Dr. Castellano concluded: “We see minimal growth in 2011, again depending on macroeconomic factors. We see two years of downturn in the industry – 2012 and 2013.”

Why has the semicon equipment bubble really burst? – I

Yesterday or early today, I’d mentioned about receiving an interesting report from The Information Network — where it said that the global semiconductor equipment industry bubble has burst!

It made interesting use of an analogy around “The Emperor’s New Clothes,”  a short tale by Hans Christian Andersen and the global semiconductor industry. So, I got in touch with Dr. Robert N. Castellano, president of The Information Network, New Tripoli, USA, to find out more.

Just why did the bubble burst?
I started by asking him why The Information Network has been pointedly indicating that the semicon equipment bubble has burst?

He said: “If we take a look at the SEMI book-to-bill ratio, bookings were down from $1,837 million in July and $1,816 million in August to $1,616 million in September. Keep in mind that these are three-month moving averages. so that September’s numbers were proped  up by stronger July and August bookings.

“Additional data come from our proprietary leading indicators (PLI) that we have developed obver the past 15 years. They point to changes and inflections in the economies of the world and correlate with inflections in semiconductor equipment revenues several months out. We plot SEMI’s announced billings (revenue) instead of bookings, which are anticipatory. Our PLI has been trending downward for the past three months, signalling an inflection in equipment revenues. We will see this happen this quarter.”

Pitfalls of two years of growth combined into one!
The report has also indicated that year 2010 is the same as 2000 — where two years of growth were combined into one. What are the pitfalls from such a development?

Dr. Castellano added that in 2000, equipment revenues skyrocketed, followed by a severe downturn in the following year. In a typical cycle, we see about three years of growth. But not so in 2000. The reason for the large growth was inaccurate market forecasts, when some ‘analysts’ kept hyping shortages in certain ICs, particularly DRAMs. This led IC manufacturers to purchase more equipment and build more fabs to meet the anticipated growth.

Little did they realize that the Dell Computers of the world were also reading the same ‘erroneous’ forecasts and purchasing twice the number of ICs they needed for fear of shortages.

The IC companies, not realizing the customers were double dipping, thought that the phenomenon was real and kept expanding. In 2001, IC manufacturers were left with about $10 billion in excess inventory. The year 2000 coincided with Y2K. Later that year, the Internet bubble also burst. So, growth came from anticipated applications, rather than real demand.