Chris Edwards: June 2006 Archives

Earlier today I was talking to someone about the build-to-order economy of the modern electronics industry, in a "how much easier things were ten years ago, before the 2001 crash" refrain. Then I ran across this while looking at some other notes:

“One lesson I have learned in my 26-year tenure in the semiconductor business is that no-one can predict the short-term fluctuations in our industry. “I called one of our division general managers on the last day of November at 3pm and asked him how his month was going. ‘I don’t know,’ he replied. ‘The month is only half over.’” – Robert S. Throop, chairman and CEO of Anthem Electronics, writing in the Manager’s Casebook section of Microelectronics News, 11th January, 1986.

Anthem was one of the main electronics components distributors in the US at the time. The company later merged with Arrow Electronics.

With much thinner margins than the foundries who actually produce finished wafers full of chips, the companies who package parts have been carefully avoiding spending money on additional capacity. That is pointing to a shortage in supply of packages, claim some producers.

According to Silicon Strategies, the packaging subcontractors are gearing up for a strong second half. But, because of the current shortages, which stand in contrast to the falloff in demand for wafer processing, some companies have started to bring packaging work back inhouse.

Statistics abound in the world of chipmaking. Some of the most useful are those prepared by Semiconductor International Capacity Statistics (SICAS), a body set up by the biggest chipmakers to track how much of the world's production capacity is being used. With its copious graphs and tables, the SICAS quarterly report provides a window into the volatile world of silicon production.

The latest figures, for the first quarter of 2006, show that the current boom in the sector differs from previous upswings in some interesting ways. They tend to indicate that the market is not overheating and that the current growth spurt has some way to go. However, they also provide support for those who believe that the latest round of upgrades to the sales estimates for 2006 were misplaced.