Gloom was unconfined in the semiconductor sector yesterday as Texas Instruments Inc said it does not expect its core business to recover from extremely low prices for memory chips for several months at least, Cypress Semiconductor Corp said that third quarter results were likely to come under pressure and could fall short of second-quarter levels, […]
Gloom was unconfined in the semiconductor sector yesterday as Texas Instruments Inc said it does not expect its core business to recover from extremely low prices for memory chips for several months at least, Cypress Semiconductor Corp said that third quarter results were likely to come under pressure and could fall short of second-quarter levels, and Rockwell International Corp said its Semiconductor Systems business will delay by about 12 months the production start-up of its new chip facility under construction in Colorado Springs, saying it could get all the parts it needed for now at silicon foundries at favorable prices. Earlier, Motorola Inc said it had laid off 145 people at its semiconductor facilities in Austin, Texas, marking its first lay-off in more than a decade. The 145 were all hired on March 1 or later, and were given redundancy pay and an 18-month extension on health insurance benefits. And shares in Philips Electronics NV plunged to 12 month lows as a spillover from the US bloodbath. And for good measure, trade officials from the US and Japan ended four days of talks yesterday on the US’s semiconductor market access dispute with Japan without agreement and said they were a long way from finding a solution to what outsiders can’t see as a problem any more. All of which made the semiconductor sector a very unhappy place to be yesterday – yet companies such as Hyundai Electronics Industries Co are still prospecting for sites to build new memory chip plan ts that will cost well over $1,000m to construct and equip. Something doesn’t seem to add up – and of course it doesn’t. The setback in the semiconductor industry is no more than a short-duration pause in the relentless growth in demand, and will so on be forgotten by all but historians of the industry. How can we be so confident? To take just one example, there is a determination to get digital television off the ground in Europe and in the US such that systems will be built and services will be launched – yet hardly a single digital television set has been built yet. These things are going to have to have copious amounts of memory in them for features such as freeze-frame and replay, and most won’t have disk drives in them, so the memory will have to be semiconductor. In the meantime, once the corporate user gets off the fence and decides finally between Windows NT and Windows95 as the upgrade path for those armies of Windows 3.11 users, 16Mb is going to be the absolute minimum on each desktop, few people experienced with NT want less than 32Mb – and some even talk of 96Mb. Enjoy the bad times in the semiconductor industry – and the bargain prices for memory upgrades they bring while you can: they won’t be there very long!