"We would characterize the mood (at ESC) as less than excited, but upbeat," said Doug Freedman, an analyst with American Technology Research Inc. (Greenwich, Conn.)

"There does not appear to be a rush to introduce new products, a condition that only occurs when end markets and competition heats up," Freedman said in a report. "It seems that we are in a period of stable end market share, which we would characterize as healthy but not conducive to robust semiconductor revenue growth."

One chip maker at ESC was slightly more pessimistic about the prospects for 2005. "It's going to be closer to flat growth for the semiconductor industry this year," said Richard Tobias, vice president of the ASIC and foundry business unit at Toshiba Corp.'s U.S. arm, Toshiba America Electronic Components Inc. (Irvine, Calif.).

"This is going to be a difficult year," Tobias said during an interview at ESC.

Indeed, after a somewhat strong year in 2004, semiconductor vendors are now seeing historically weak sales patterns in the early part of 2005, especially for DSPs, flash memories, logic, among other products. FPGAs, microprocessors and other product markets are seeing stronger-than-expected growth thus far.

For system LSI devices, unit shipments are expected to increase, but average selling prices (ASPs) are going to fall, Tobias said. But the ASIC and foundry businesses "are growing significantly," he said. "In the United States, the ASIC and foundry businesses are extremely good."

Indeed, amid a lull in the overall silicon foundry business, Toshiba is seeing strong growth in the arena, thanks in part to a recent and major deal with Xilinx Inc. Last November, Toshiba and Xilinx made official a foundry relationship under which the Japanese company will manufacture field programmable gate array (FPGA) products for the U.S. fabless design house.

Not all is going well in the foundry business. "Based on reports from close to a dozen Taiwanese foundries and chipmakers, the most recent February data for Taiwanese wafer starts indicated a 2 percent month-over-month decline verses flattish expectations almost a month ago," Avinash Kant, an analyst with investment banking firm Adams Harkness Inc. (Boston).

"While March is expected to be up month-over-month, due to weakness in January and February, current expectations call for Q1 to be down 3 percent quarter-over-quarter vs. earlier expectations of up slightly," Kant said in a report. "While Q2 forecasts have come down some now (from up 13-to-14 percent last month to up 9-to-10 percent), Taiwanese chipmakers are still counting on a meaningful ramp in Q2 wafer starts."

By: DocMemory
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