Gartner Report

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Recession?

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Gartner Report

  1. 1. 2009: Recession or Depression? Mark Stromberg Gartner Speaker Name, Company Name/Logo - Slide 1
  2. 2. Key Issues Addressed • What is the outlook for 2009 and 2010? • When will the economic pain end? How bad will this get? • What are the stages of recovery from the current semiconductor down cycle? • How will manufacturing providers be affected? • What are the long-term implications of the current crises for the semiconductor industry and the macro economy? Speaker Name, Company Name/Logo Stromberg, Gartner Mark - Slide 2
  3. 3. Growth Forecast for Supply Chain Revenue Growth (%) 2008 2009 2010 Global Real GDP +2.5 +0.2 +2.5 U.S. Real GDP +1.3 -2.5 +2.2 Elec. Equipment1 +1.8 -3.2 +4.2 Semiconductor2 -4.4 -16.3 +14.6 Foundry +2.8 -24.1 +25.1 SATS -2.4 -18.6 +11.8 Capital Spending -27.3 -34.1 +13.9 Equip. Spending -30.6 -31.7 +17.7 WFE Equipment -30.9 -33.1 +16.3 P&A Equipment -28.6 -30.7 +26.0 AT Equipment -30.0 -19.8 +18.9 Silicon -5.3 -22.4 +15.1 1 Production revenue 2 Including solar Speaker Name, Company Name/Logo Stromberg, Gartner Mark - Slide 3
  4. 4. Global Economic Environment for 2009 • The U.S. recession will be one of the deepest—if not the deepest—of the postwar period. (vs. 1982) • The downturn will be the worst in Europe over the last couple of decades and the worst in Japan since 1998. • Growth in emerging markets will decelerate dramatically. • The U.S. Federal Reserve and other central banks will keep easing monetary policy. (At what point does this become inflationary?) • More fiscal stimulus will go into the pipeline. • Commodity prices will remain at depressed levels for much of year. • Inflationary fears are currently replaced by concerns about deflation. • Global imbalances will improve markedly. • Can the US dollar maintain it’s dominance with this level of fiscal and monetary stimulus? Speaker Name, Company Name/Logo Stromberg, Gartner Mark - Slide 4
  5. 5. All Eyes Are on the US for a Recovery: Quarterly US GDP Forecast US Real GDP Growth (Annual Rate) • Return to GDP expansion 5% is forecast in 3Q 09, most likely forecast scenario 3% • Downside risk remains 1% for longer recession • Remaining G7 country -1% recovery follows US with -3% time delay • A lagging Europe could Most Likely -5% Downside hamper a global Upside -7% recovery. 07 08 08 09 09 10 10 3Q 1Q 3Q 1Q 3Q 1Q 3Q Source: Global Insight Speaker Name, Company Name/Logo Stromberg, Gartner Mark - Slide 5
  6. 6. Signs of Recovery Economy & Finance Semiconductor Industry • Enterprise IT spending returns • Reduced volatility in financial • Consumer spending rises market, sustained rise in equity • PCB Book to bill • Easing of commercial and • Contract electronics consumer credit standards manufacturer orders rise • Bottoming of housing market • Distributor orders rise • Rise in consumer confidence • Inventory normalization • Semi materials orders improve • Pick up in retail sales (autos) • Increase in semiconductor • Rise in ISM Manufacturing Index prices • Layoffs slow, unemployment • Increase in SATS orders claims slow • Increase in foundry outlook • Firming in commodity prices • Economic forecasts become more balanced, positive Speaker Name, Company Name/Logo Stromberg, Gartner Mark - Slide 6
  7. 7. Dataquest Semiconductor Lead Index: Macroeconomic Issues Impact Semis In 2009 Dataquest Index vs. Device Forecast Dataquest Index Predictions for 2009 Semiconductor Revenue Growth Semiconductor Revenue Growth 15% 30% 10% 20% 5% 10% 0% -5% 0% -10% -10% -15% -20% w 07 08 08 08 08 No 4Q 1Q 2Q 3Q 4Q 2003 2005 2007 2009 DQ Indicator Semiconductor Growth Speaker Name, Company Name/Logo Stromberg, Gartner Mark - Slide 7
  8. 8. Semiconductor Forecast: Slashing Market Outlook as Economy Weakens Mid-cycle Semiconductor Forecast Update 1Q08 2Q08 3Q08 4Q08 2008  Preliminary semiconductor market share results show 4.4% decline in 2008 Revenue 67.5 69.0 71.4 54.0 261.9 ($B)  4Q08 revenues have ‘collapsed’ Q/Q Growth -5.1% 2.2% 3.5% -24% -4.4%  Last six weeks have seen vendors reduce guidance for 1Q09 1Q09 2Q09 3Q09 4Q09 2009 Causing Gartner to re-calibrate its device Revenue 51.7 51.4 55.4 60.8 219.2 forecast. Key assumptions for our mid-cycle ($B) Semiconductor Forecast Update are: Q/Q Growth -4.3% -0.6% 7.8% 9.9% -16%  PC unit growth in 2009 will be negative 5%, down from plus 5.1% in our 4Q08 forecast  First revenue decline since the quot;dot-comquot; crash of 2001  Cell phone unit growth will be negative 10%, down from plus 2.9% in our 4Q08 forecast  Only fifth revenue decline in the last 25 years  Total consumer unit growth will be negative (others were 1985, 1996, 1998 and 2001) 15%, down from negative 1.8% in our 4Q08  2009 will be the first time that semiconductor forecast industry has seen two consecutive years of revenue decline Speaker Name, Company Name/Logo Stromberg, Gartner Mark - Slide 8
  9. 9. DRAM Forecast: Supply Side Downturn to Demand Side Downturn • Bad News • DRAM industry has been in a supply side driven downturn for the last 18 months • Losses during 2007 and 2008 will be $12 billion and many vendors are have financial problems and negative cash flows (much worse than 2001 downturn) • Recently some vendors have reacted with fab closures, production cutbacks and expansion delays • Pricing is still at or below cash cost for many vendors • Now the industry faces a demand side downturn due to economic environment • Good News • It is so bad, that it can not continue like this for much longer bad • Vendors will HAVE to scale back supply growth further, or weaker players will be forced into bankruptcy – either way supply must be restrained • Significant pricing upside once supply/demand correct itself Speaker Name, Company Name/Logo Stromberg, Gartner Mark - Slide 9
  10. 10. Inventory Problems Brewing for 2009 Inventory Index 1.8 1.6 1.4 1.2 1 0.8 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q Legend: Less than 0.95 — Moderate to severe shortages 0.95 to 1.10 — Normal inventory levels 1.10 to less than 1.20 — Moderately inflated Greater than 1.20 — Severe excess inventory Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 10
  11. 11. Waves of Recovery in Device Application Sectors IF US GDP growth returns in 3Q 09 ... Inventory 2009 2010 2011 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 4Q08 1Q09 Data Processing Comms - Wired Comms - Wireless Consumer Automotive Legend: Bottom First Growth Sustainable Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 11
  12. 12. Wafer Fab Utilization Ratio of Silicon Consumed to Fab Capacity 100% Leading Edge 90% 80% 70% 60% 50% 40% 10 10 0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 Q1/ Q3/ Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 12
  13. 13. Foundry Capacity Utilization Ratio of Silicon Consumed Supply/Demand Trends to Fab Capacity •Utilization rate fell to ~60% in 4Q08 & is 100% expected to plunge to 47% in Q109 as demand weakens further 90% •While orders cut are across the board,12- 80% inch fabs are hit the hardest with some utilization rate falling below 30% 70% •Overall leading edge utilization rate dropped from >90% in 3Q08 to 54% in 60% 4Q08 & is expected to bottom to <40% by 1Q09. 50% •Capacity is expected to increase 40% moderately by mid-to-high percentage in 2009 & 2010 30% •Wafer shipment is estimated to plummet 0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q1 3Q1 23% in 2009 before posting a 28% recovery growth in 2010 Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 13
  14. 14. Foundry Service Market: Quarterly Revenue Scenarios Quarterly Revenue ($Billion) Annual Growth (%) 8 30% 20% 7 10% 6 0% -10% 5 -20% -30% 4 2008 2009 2010 3 Alternative 1 Most Likely Alternative 2 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 14
  15. 15. Capital Spending: Declining Further in 2009 Billions of Dollars • Memory bubble bursts 70 • Production cuts and capacity 60 delays drive reductions 50 • Smaller companies focusing 40 on technology advances, not capacity 30 • All segments responding to 20 grim economic news 10 • New capacity projects 0 delayed 2003 2005 2007 2009 2011 2013 Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 15
  16. 16. Capital Spending by Device Type $M CapEx 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Logic/Mixed Signal Memory Other Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 16
  17. 17. Capex Details: Memory Leads Decline Total Capex ($ Billion) 2007 2008 2009 Logic (incl. Mixed Signal) $ 23,264 $ 19,438 $ 14,354 • 2009 Memory spending Memory $ 35,791 $ 22,412 $ 12,674 DRAM $ 21,794 $ 12,286 $ 6,553 down 65% from 2007 NAND Flash $ 11,776 $ 8,450 $ 5,183 Other MMRY $ 2,220 $ 1,677 $ 938 • DRAM down 70% Other Devices $ 4,263 $ 4,206 $ 3,328 IDM $ 52,615 $ 37,861 $ 24,689 • NAND down 56% Foundry $ 7,237 $ 4,993 $ 3,162 SATS $ 3,466 $ 3,202 $ 2,505 • 2009 Logic/mixed signal Total Capex $ 63,319 $ 46,056 $ 30,356 down 38% from 2007 Capex Growth (%) 2007 2008 2009 Logic (incl. Mixed Signal) -14.8% -16.4% -26.2% • 2009 Foundry and SATs Memory 27.7% -37.4% -43.4% spending down 47% from DRAM 33.5% -43.6% -46.7% NAND Flash 19.5% -27.6% -39.6% 2007 Other MMRY -26.3% -24.5% -44.1% Other Devices -9.7% -1.4% -20.9% IDM 7.7% -28.0% -34.8% Foundry -2.9% -31.0% -36.7% SATS -7.6% -7.6% -21.8% Total Capex 5.4% -27.3% -34.1% Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 17
  18. 18. 2009 Top 20 Capex Plans 2009 Rank Company 2008 2009 Change (%) 1 Samsung 6,550.0 4,500.0 -31.3 2 Intel 5,000.0 4,150.0 -17.0 3 Toshiba 3,608.2 2,654.7 -26.4 4 TSMC Group 1,790.0 1,425.0 -20.4 5 Micron Technology 1,675.0 900.0 -46.3 6 Hynix 2,400.0 800.0 -66.7 7 Advanced Micro Devices 600.0 750.0 25.0 8 Sony 1,081.5 742.6 -31.3 9 Sandisk 1,700.0 700.0 -58.8 10 STMicroelectronics 950.0 500.0 -47.4 11 Panasonic (was Matsushita) 658.7 482.2 -26.8 12 NEC 589.9 482.2 -18.3 13 Renesas 589.9 482.2 -18.3 13 Texas Instruments 800.0 400.0 -50.0 15 IBM Microelectronics 525.0 400.0 -23.8 16 Rohm 344.1 393.5 14.4 17 Chartered Group 630.0 375.0 -40.5 18 Rexchip 600.0 350.0 -41.7 18 Tech Singapore 793.0 330.4 -58.3 20 Nanya Technology 650.0 326.1 -49.8 Top 20 Companies Total* 31,535.4 21,144.0 -33.0 Total Worldwide Capital Spending 46,055.9 30,356.1 -34.1 Top Company (Percentage) 68.5 69.7 Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 18
  19. 19. Wafer Fab Equipment Quarterly Revenue Scenarios Quarterly Revenue ($Billion) Annual Growth (%) 40% 9 30% 20% 8 10% 0% 7 -10% -20% 6 -30% -40% 5 -50% 2008 2009 2010 4 3 Alternative 1 Most Likely Alternative 2 1q08 3q08 1q09 3q09 1q10 3q10 Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 19
  20. 20. WFE for 2009 and Beyond • How many vendors can actually afford advanced wafer process tooling? • How quickly will volume production requests return foundry service providers? • Will there be additional consolidation requirements for device makers and their vendors? Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 20
  21. 21. Dataquest P&A Utilization Index Factory Utilization 100% Leading Edge 90% 80% 70% 60% 50% 40% 30% 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 0 00 00 01 01 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q0 3Q0 1Q1 3Q1 Q1/ Q3/ Q1/ Q3/ Note: Leading edge is defined as BGA, CSP, flip chip, 3-D and SiP. Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 21
  22. 22. SATS Market: Quarterly Revenue Forecast Scenarios Quarterly Revenue (Billions of Dollars) Annual Growth (%) 7 25% 15% 6 5% -5% 5 -15% -25% 4 -35% 2008 2009 2010 3 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 Alternative 1 Most Likely Alternative 2 Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 22
  23. 23. Back-End Equipment Market: Quarterly Revenue Forecast Scenarios Quarterly Revenue (Billions of Dollars) Annual Growth (%) 40% 2.5 30% 20% 2.0 10% 0% -10% 1.5 -20% -30% 1.0 -40% 2008 2009 2010 0.5 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 Alternative 1 Most Likely Alternative 2 Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 23
  24. 24. Package Unit Forecast (Millions of units) 2005 2006 2007 2008 2009 2010 Plastic DIP 8,080 8,789 8,961 8,894 7,626 7,962 QFP 14,979 15,320 15,565 15,502 13,420 14,399 Ceramic Chip Carrier 384 407 499 532 429 460 SO 50,327 57,612 60,986 58,844 48,613 52,765 TSOP 9,577 9,801 9,719 8,921 6,984 7,025 Total SOIC 59,904 67,413 70,705 67,765 55,597 59,790 Ceramic BGA 79 62 56 47 34 35 Plastic BGA 6,373 7,173 7,874 8,128 6,786 7,609 Bare Chip 10,767 13,947 17,465 18,624 16,433 19,201 Leadless-Leadframe 6,928 10,446 13,888 18,937 19,171 24,665 FBGA 6,813 9,430 13,617 16,120 15,885 20,138 Others 1,325 1,612 1,773 1,954 1,557 1,851 Total 115,631 134,600 150,404 156,500 136,938 156,109 Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 24
  25. 25. BEE for 2009 and Beyond • How soon will SATS companies recover? Will we bottom in Q109, letting the utilization picture firm? • When will TSV processes really go into volume production for memory and logic? • If the recession continues, much more consolidation will be required. This will include service and equipment providers. Speaker Name, Company Name/Logo -Stromberg, Gartner Mark Slide 25

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