The year of 'gloomy' welcomed the chip market

Semiconductor companies are waiting to wait until 2008 - the year is expected to be the boom of the chip market. But first, they have to survive through 2007 full of thorns.

As usual, the opening of the new year in January will see the market of swollen chips. From computer chips, digital cameras to mobile phones and other popular electronic devices, they all wobble in the afternoon market. Often it takes up to two quarters, the demand for new chips starts to heat again to prepare for a new "crazy" year-end shopping season.

But the history of semiconductor industry has been noted, there are always unusual factors that break that rhythmic cycle. This year, there are two distinctive factors: demand for flash memory chips and Windows Vista operating system.

In the case of flash, even though the supply does not meet demand, the price is still not rising fast enough for the manufacturer to be satisfied. Then again to Vista. This is not the first time that a new Windows operating system is expected to save the stagnant PC industry. But with Vista, what was that expectation that made people hold their breaths, waiting so fast?

Farewell hard drive?

NAND flash memory chips are making the PC chip market reel.Source: ST.com

Currently, there are between 12-17 semiconductor factories or under construction, or have shifted to producing flash memory chips called NAND. This type of chip is widely used in digital cameras and portable music players like the Apple iPod.

" More and more companies are jumping into the flash, " IC Insights expert Brian Matas said. " Even the old companies that specialize in manufacturing DRAM memory chips for PCs now switch to flash production ."

The PC industry itself has a higher demand for NAND. In an effort to shorten the boot time and limit the loss of data on notebooks when the hard drive is badly damaged, many computer firms began designing laptops using flash chips. Many people even thought of a day not far away, when they could completely replace the hard drive.

" I'm not sure if the market is ready for that prospect, the more uncertain is whether the revenue from flash is enough to offset production costs ," Matas shrugged.

Bracing market share

But no one can deny that flash business is the hot spot of today's chip market. The best example is the joint venture between Intel and Micron Technology to produce flash memory chips. And then Europe's STMicroelectronics shook hands with South Korea's Hynix Semiconductor.

NAND's revenue is growing strongly at a rate of 13% in 2006, reaching about 21 billion USD. According to Matas, the course of 2007 will not be much different from 2006, when demand for NAND continues to increase by 27%.

"The number of new factories, coming into operation next year will make the market output significantly increase. Companies will have to lower prices and save production costs in order to be competitive ."

Also in 2007, the battle for market share between Intel and rival AMD was fierce and more intense than ever. After spending a while on AMD, Intel is gradually tightening its market, especially when its market share begins to decline. Intel's market share in the PC market has dropped from 81% (August) to 76% (December), mainly due to the impact of Dell losing market share to HP.

Meanwhile, the number of Dell notebooks using AMD processors increased from zero in August to 11% in December, while the growth rate for Dell desktops was 21%.

Late to bother wireless

Source: virtual-museum At this point, Intel has a product and performance advantage, "but the situation will start to change next year," said Joe Osha, an analyst at Merrill Lynch. Intel's market share will stabilize in the first half of 2007, but computer manufacturers will continue to favor AMD chips because of very competitive prices.

Meanwhile, the wireless chip market is expected to be extremely bleak and desolate by the time of 2007. Texas Instruments, the market leader in mobile chips, is now forced to lower its profit forecast and revenue in this quarter. Worse, TI thinks revenue will continue to slip further in the next 12 months. One of the many reasons, according to Osha, is that the amount of chips left is too large.

Some of the lesser-known chip firms like Xilinx and Altera also added gloomy black streaks to the picture of the first half of the new year. "The wireless market loses us to think of a higher revenue decline than previously forecast, at least 5-7%," Altera said. The company specializes in chip arrays, programmable for use in wireless network devices.

Restless waiting for 2008

While the situation of 2007 cannot be more dramatic for many firms, what makes 2008 so glorious and desirable?

At the time, all the "blunders", pros and cons, and even the flaw in Windows Vista were announced. Businesses and users will probably be more excited about buying new computers or life for their old machines.

The PC market, inevitably, will need more memory than ever before to keep up with the requirements of the new operating system. " The minimum memory capacity to run Vista is 750 MB, but the best is 1GB or more, " Matas said.

In addition, 2008 was the year of the US presidential election and the Olympics in China. " Every year in the election, we see the chip market boom. And China, we think they want to show the world how modern and advanced their technology is during the Olympics. Beijing ". Certainly many domino effects will take place, Osha agrees.

Trong Cam