Estimated 40% of IC makers will disappear, says Gartner

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Estimated 40% of IC makers will disappear, says Gartner SAN FRANCISCO The semiconductor industry has turned into an inflated market with hundreds of vendors competing in an overcrowded arena. This will result in as many as 40 percent of today's semiconductor vendors folding over the next decade, Gartner Inc. forecast on Monday (Sept. 13). During the Gartner Dataquest Semiconductor Industry Summit here, the market researcher identified five megatrends that will lead to significant changes in the industry. These trends include increasing device integration, the increasing scale and size of manufacturing, the shift from business to consumer markets, the increasing role of service providers, and new and disruptive technologies. "Increasing costs and complexity of design, increased system content and greater flexibility means fewer vendors will have the capability to supply chips in the future," said Jim Tully, vice president and chief of research for Gartner's emerging technologies and semiconductor group, in a statement. "The number of semiconductor vendors has risen steadily from about 120 vendors in the mid-1980s, to roughly 550 in 2003. Within 10 years, the industry will experience significant consolidation." Increasing device integration is the first and most fundamental of the megatrends. Another trend relates to the growing importance of consumer markets. By 2013, more than 50 percent of chip sales will be for equipment markets targeted at consumers. One of the challenges for chip vendors is that the consumer market can be unpredictable, according to Gartner. Still another trend concerns the increasing costs and increasing scale of semiconductor manufacturing. Fabrication plants are becoming too expensive for most existing companies. "To survive, large and costly fabs will need to achieve significant economies of scale, and they will require high volumes of chip production, preferably standard chips that can be produced in a standardized environment with large batch sizes. These standard chips will then be customized after manufacture for specific applications," Tully said. "This will result in fewer chip manufacturers in the future, but it won't result in higher chip prices because the industry is capital-intensive and is highly competitive, he said. Copyright 2005 © CMP Media LLC
By Mark LaPedus, Courtesy of Silicon Strategies
Sep 13 2004 (16:39 PM)
URL: http://www.embedded.com/showArticle.jhtml?articleID=47204677

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