Expert's Panel

A collection of timely and important topics posed to our panel of experts.

Do you see more consolidation not only in chip makers, but equipment and materials suppliers?

 (ep10121)
1. Answer 1 –The answer can be no-yes-yes or yes-yes-yes. We talk about chip makers being chip companies and then the answer would be no-yes-yes. There will be more chip companies in the future that are smaller and independent, but the majority will be fabless. So if we’re talking about chip makers, the people we think of as fabs, the answer is then yes-yes-yes. There are going to be relatively fewer fabs and each fab is going to be relatively larger and will start more wafers per month. Yes-yes on the equipment and materials suppliers—you see it happening and it is not going to change in the immediate future.
2. Answer 2 –It has finally been happening in silicon over the past several years. If fook the silicon makers a long time to recognize that profit is actually supposed to be a positive number. They have been losing money—it is a terrible business to be in and they are finally consolidating some capacity in order to get a return on their investment.
3. Answer 3 – I take somewhat of an opposite view and I don’t know if I am right or wrong. I don’t think there is going to be much more consolidation of equipment and materials suppliers. The reason is financial—it is a terrible business from that perspective. Look at Applied Materials—they make very little money compared to most industrial companies in the world, and the business is terribly cyclical. You see a lot of larger companies acquiring smaller, entrepreneurial companies and I think that will continue. But merger of larger companies is coming to an end because of financial constraints. I do see, however, more alliances, particularly between materials and equipment companies—that is a real key for future process success.
4. Answer 4 – Don’t you think that some of these package manufacturers, of which there are something like 26—need to go out of business because continuing is just digging them a deeper hole. Some silicon wafer manufacturers will just shut down which means a consolidation of capacity—Mitsubishi/Sumitomo is an example.
5. Answer 5 – What is happening now is that the cost of a fab is approaching the GNP of some countries. There will just be fewer and fewer companies that can put up $3.5-billion for each fab and I think consolidation is going to continue to happen. Go to the website, keyaccess.com, and see how many fabs each month are going up for sale—compare that to the press releases of who many are coming up. The ones coming up are fewer than the ones shutting down and they are enormous. Instead of talking 10,000 wafer starts per month, we’re talking 40-70,000.