Semiconductor industry expecting a record year

The semiconductor industry has recovered from the slump and is breaking sales records again

The annual Semicon West conference and exhibition has opened in a bullish mood with analysts and industry figures predicting record growth rates for the year.

Stanley Myers, president of industry association SEMI, reported that semiconductor sales went above the pre-recession high of July 2008 for the first time in May.

A basket of eight analyst predictions for the year's sales rose from 14.9 per cent at the start of the year to 28 per cent now, and FAB spending rose 117 per cent in 2009 to support growing demand.

"This year will be a record year for semiconductor sales and unit shipments, something we've never seen before," said Myers. "The industry is clearly back on track."

The PC and mobile phone markets are expected to drive demand, and Gartner has predicted growth in these areas of 22 and 14 per cent respectively this year.

Samsung is also ramping up its flat-screen production significantly, spurring further demand for chips.

Stable prices are also a factor, and the industry's FABs are now working at 93 per cent capacity.

"Talk about falling off a cliff. We really did last year from the peak of July 2008," said Myers.

"We hit bottom by April 2009. The slope of the drop-off only hints at the extreme measures the industry was taking at that time to preserve capital and stay alive, to keep shipping and keep staff on the payroll."

However, Myers warned that the future growth of the industry is not assured. The economy could falter in the short term, and Myers is very concerned at the lack of R&D and test spending in the longer term.

The industry traditionally invests 13 to 15 per cent in this area, but this is now in single figures.

"The semiconductor industry needs funding for innovation," he said. "I'm concerned that we are not investing enough to build new innovative processes."