‘Cautious optimism’ is an overused phrase, writes Andy Gothard, but according to most of the speakers at the recent Silicon South West seminar in Bristol, what we have in the semiconductor industry today is too much of its polar opposite: ‘reckless pessimism’.

“This industry’s single biggest enemy is itself,” said Malcolm Penn, CEO of Future Horizons. “We’ve only started to scratch the surface of what we can achieve, but everyone talks it down. Is 5% ‘bad’ growth? It’s time to talk this industry back up. Growth in unit demand has been 11% over the last 40 years because we are doing a fantastic job of creating new markets.”

While admitting that the current environment is challenging, Penn pointed out that such challenges are nothing new. “The market is dynamic, and the dynamics are horrid,” he said. “But it’s been doing it for 50 years. These dynamics are part of the fabric.”

Penn warns that the effects of this collective lack of self-esteem are more than just psychological. Although he believes that 2012 will be a year of strong recovery in the chip market, he also expects a wafer shortage caused by underinvestment in global fab capacity going back three years to the Lehman Brothers crisis and before.

“We are entering a period when you will not be able to buy wafers at any cost – a ‘fab tight’ era. People are underinvesting in capacity deliberately. 2012’s shortages are inevitable,” he says. The danger is that production lines may be halted for want of key chips, as Nissan’s and Toyota’s were in April and May this year after the Japanese earthquake.

There is also the risk of basing decisions on short term events rather than looking at the long term requirements of the industry. “The delay between decision making and fruition is frustrating,” he said. “We are micromanaging on a minute-by-minute basis in a situation where the decision cycle is three to four years.”

Despite the dangers, he remains upbeat. “The recovery dynamics will strengthen,” he says. “The call to action is ‘Just do it!’”

Future Horizons is holding its 2012 industry forecast in London on Thursday Jan 19th. “With 2012 starting off still clouded in economic uncertainty, clearly this year will be as equally challenging as last year,” said Penn “We are ready to meet this challenge and where we will be analysing in our normal forensic laser sharp detail all of the industry fundamentals and their potential impact on the business.”

http://www.futurehorizons.com/page/13/ifs-industry-forecast

Comments are closed.