Purchasing Hotline

Technology news and analysis for purchasing/supply chain management professionals

By -- Purchasing, 3/22/2001

Expect the chip industry to begin recovering in the third quarter. Market researcher IC Insights says that previous downturns in the chip industry have never lasted more than three quarters. The company says a quarterly decline is followed by two more quarterly declines and then recovery takes place. It has happened in every one of five downturns over the past 20 years.

Several industry experts say the current glut of counterfeit parts on the electronics market is the worst in recent memory. New methods of combating counterfeiters include a new service mark from the National Electronics Distributors Association and an online listing of bad parts from the Electronics Resellers Association International. See full story at www.purchasing.com under electronics.

Samsung and Intel have announced a deal in which Samsung will boost production of Rambus DRAM (RDRAM) to be used with Pentium 4 microprocessors. Under the agreement, Samsung will double production of RDRAM in the second half to 20 million units per month. Intel will support capital expenditure investments that will be used to attain additional component test and qualifying capacity needed to boost RDRAM output.

Industry analyst firms are bullish on the power IC market, predicting growth between 11%-22% in the next five years. The growth is fueled by demand for portable, battery-powered devices, which emphasize power management. See full story on page 42.

The semiconductor equipment book-to-bill ratio took another dive in January , according to Semiconductor Equipment and Materials International (semi). The ratio fell to 0.81 from 0.99 in December. The ratio has been falling since last August. A ratio of 0.81 means that for every $100 of equipment shipped, equipment manufacturers received $81 in new orders.

Flash memory sales will grow 26% in 2001, according to Semico Research. In 2000, sales grew a hefty 133%. Flash growth is slowing because of overcapacity and slowing demand due to a weakening economy.

Get your road map to the e-procurement landscape. PURCHASING Magazine has just published the first ever E-Census. It's a 200-page buyers' guide to suppliers of e-procurement software and a listing of where to buy different products on the Web. Detailed functionality tables indicate just who offers what. To get a copy send $79.95 plus $5 for shipping and handling to E-Census, Purchasing Magazine, P.O. Box 497, New Town Branch, Boston, MA 02456. Or call (61)558-4348 and use a credit card.

Toshiba is expecting modest growth in sales for the semiconductor industry. The company says sales should grow just 5% this year. Most of the growth will occur in the second half, but is dependent on the recovery of the U.S. economy.

Over 38% of semiconductor sales will be transacted via e-commerce by 2003, according to Cahners In-Stat Group. The value of e-commerce transactions in the semiconductor industry will jump from $19.6 billion in 2000 to $104.6 billion in 2003. E-commerce transactions will grow from 9.3% of total semiconductor sales in 2000 to 38% in 2003.

Don't expect any special incentives or discounts for DRAM from Micron Technology. The company says it has no plans to offer incentives despite a backlog of parts. The company says most PC OEMs have about six to 10 weeks of inventory.

Taiwan Semiconductor Manufacturing Co. (TSMC) is reducing its investment in new chip making equipment by 30%. The foundry will invest $2.7 billion in new equipment this year. Last year it spent $3.8 billion on capital equipment.

Semiconductor equipment maker Applied Materials says orders for equipment were down sharply in January. As a result, the company is shutting down the company for five days in the first quarter, cutting temporary workers, deferring merit raises, and cutting executives' pay by 10%.

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Microsoft will begin consumer tests of a "smart phone" powered by its "Stinger" operating system. The Stinger is Microsoft's attempt at squeezing the most popular features of a handheld organizer, including a bigger screen and improved datebook functions, into a cellphone-sized package. Microsoft also planned to announce that two new partners, Mitsubishi and Sendo Ltd., will be making Stinger phones.

Times are tough at Intel. The company says it has delayed raises, cut back on hiring, and generally cut spending. The belt tightening is due to a slowing economy and sluggish personal computer sales.

Keep an eye on Shanghai as a potential semiconductor manufacturing center. Despite a global slowdown in the semiconductor industry, Shanghai is hoping to attract $10 billion in investment for semiconductor manufacturing.

Workstation sales increased 7% last year according to market researcher IDC. IDC had forecasted a five-year growth rate of 18%, but has now revised that to 10%. In the fourth quarter, worldwide workstation shipments rose a scant 5% in units and 6% in revenue.

NEC plans to sell up to four factories in Japan to contract manufacturers as part of a restructuring. The company intends to outsource some telecommunications equipment and personal computer manufacturing.

The world market for embedded operating systems and development tools reached over $1.1 billion in 2000. Venture Development Corp. is forecasting the market to grow to over $2.6 billion by 2005, a compound annual growth rate of 18.7%.

Mobile robots are on the attack. According to ActivMedia Research, the market for mobile robots will grow to $963 million in 2001, exploding to more than $17 billion by 2005. Among the industries expected to use robotics are industrial service, medical, agricultural and construction/mining.

The market for semiconductors used in cellular telephone handsets will have a compound annual growth rate (CAGR) of 18% over the next three years. The market will rise from $17 billion in 1999 to $38 billion in 2004, according to market researcher IDC. Handset shipments will have a CAGR of 24% and unit shipments will reach 780 million units in 2004.

NEC will use AMD's Athlon and Duron processors in its PowerMate DT series of commercial desktop computers. The computers will be targeted for European large enterprise and government markets in France, the United Kingdom and the Netherlands.

Intel has unveiled seven new optical-networking chips that let service providers extend their networks without needing to buy costly gear to boost optical signals. Two of the new optical components use a technology called "forward error correction," which fixes errors that corrupt data packets as they travel over long distances.