Albany Symposium On Global Semiconductor Issues Expands Perspectives On A Critical World Industry

Market Wire, 20050229

Banerji pointed to the success of leading indicator indices in forecasting cyclic activity while Goodall reviewed the development of a Sematech simulation model for establishing fab build strategies. Anderson covered cyclic activity forecasting, postulating that in the future it may be possible to more accurately predict and even manage cyclic activity. However, stipulating that cyclicality is a "given," other speakers came to somewhat different conclusions.

Some presenters thought that the foundry model could reduce cyclical exposure, reasoning that when less than ten percent of a foundry's capacity is contracted to one firm, diversification in the plant's activities becomes possible, and revenue fluctuations can decline. TSMC's Tom Riedl discussed the foundry model, in some detail.

Globalization was an important focus of the symposium. George Scalise (SIA) pointed out that growth depends not only on innovation but also on gaining access to global markets. He stressed that trade in IT must be encouraged through political efforts such as the International Technology Agreement (1999) and China's forthcoming entrance into the World Trade Organization (WTO). Economics Consul He Weiwen of the New York Consulate General's Office of the PRC discussed the emergence of China as a global trade partner and reemphasized the latter point.

On another aspect of globalization, Bob Helms, new president of International SEMATECH (ISMT), who admittedly risked a more optimistic 1H01 beginning for semiconductor recovery, emphasized that collaboration is critical to the industry's future success. Partnerships that push industry frontiers will grow between ISMT member corporations and universities and suppliers, he said.

Partnerships raise complications of their own. But, according to UAlbany economics professor JoAnne Feeney, who addressed this issue, collaboration in the industry has become the chosen path to successful growth.

In a dinner presentation that addressed partnerships of a different kind, Albany NanoTech Executive Director Alain Kaloyeros discussed the increasing importance of collaboration in the university/industry/government domain as a means for accelerating technology insertion, enhancing regional development, and pursuing workforce training to sustain commercial activity and promote employment. Kaloyeros cited integrated efforts at Albany NanoTech in all three areas.

Donald A. Hicks, an economist from the Univ. of Texas at Dallas, offered a novel nonlinear view of R&D investment strategies among semiconductor companies. Plots of cash investment versus P&E/R&D ratios showed "chaotic"-like behavior in many instances. According to Hicks, such plots reflect pressure-driven management decisions. He expressed concern that the drive to reduce time to market, coupled with dramatic price declines and increased productivity, just may be causing the semiconductor industry to be actually giving away justly earned value.

Greg A. Smith, Chief Investment Strategist for Prudential Financial, examined the boom and bust of the IT "dot coms," the current flow of investment capital, and prospects for the economy. His conclusion, before factoring in "Sept 11" was that: there will be restructuring in manufacturing and service industries in the U.S., with significant productivity gains coming from outsourcing. The road back is there, said Smith. "It just won't be an easy one to follow."