Chip industry loses 'boom and bust' tag

The global chip industry - now in its fifth consecutive year of expansion - appears to have shaken off the cycle of boom and bust that characterised its earlier stages, Scott Jewler, chief strategy officer for STATS ChipPAC, told the Semicon Singapore 2006 conference.

He noted there are fewer companies with the technology and financial resources to invest in 300 mm wafer fabs or leading-edge packaging solutions, leading to less 'double booking' of capacity and 'less irrational capital investment'.

But Jewler said more advanced consumer devices and the convergence of technologies would also present challenges. Companies will have little choice but to collaborate as few own the intellectual property needed to produce devices such as mobile phones.

Moreover, integrated design manufacturing processes are growing increasingly complex, he said.

There are also questions about the ability of smaller niche players, historically the source of many of the industry's innovations, to survive in a capital-intensive market.

Jewler predicted IP rights protection and industry standards will become bigger issues over the next three to five years, especially with manufacturing shifting to locations like China.

He also forecasted that by 2015 nanotechnology will dominate the semiconductor market with the emergence of ICs smaller than 45 nm and the use of materials such as nanowires and carbon nanotubes.

He also predicted the emergence of 450 mm wafer fabs, though such a facility would cost up to $10 billion.

Stanley Myers, president and CEO of Semiconductor Equipment and Materials International (SEMI), told the conference that the company expects the market as a whole to expand by up to 10% this year, driven mainly by growing demand for consumer gadgets such as mobile phones and digital audio players.

SEMI is predicting that the global IC equipment market will grow by about $3.12 billion to $36.12 billion this year. The market for chip materials is expected to rise from $31.38 billion to $34.51 billion.

Asia will lead the charge, with growth outpacing the global average. China's semiconductor materials and equipment markets are both expected to expand by over 20% in 2006.