Mannerisms

Recently the CEO of analysts iSuppli said that, at 450 companies, the semiconductor industry had 'too many' companies.

This is one of the reasons the private equity people have got interested. They think they can act as acquirers and consolidators.

The idea that the industry is consolidating is a curious misconception when the top ten have regularly lost collective market share for the last twenty years.

The reason being that new companies, with new ideas and new technologies have always come into the industry.

And the new, small companies have consistently outgrown the big companies in both revenues and percentage profits.

So it's a nonsense to talk about a consolidating industry, a mature industry or an industry which would benefit from mergers. Mergers have hardly ever worked in the semiconductor industry.

People point to the slow-down in the industry's rate of growth from 15 per cent CAGR to 7/8 per cent as a sign of maturity. But it's hardly helpful. The industry is not a monolithic whole, it is spotty.

Some companies, like the analogue companies, make 70 per cent margins; other companies, in specialist areas, grow at 70 per cent a year. Some companies make losses. Many shrink.

It's always been the same. Some people make a load of money in the industry; some people lose a load of money. It's being in the right place, at the right time with the right technology which counts and that is often the skill of the smaller, newer companies..

There's always something new coming out of the semiconductor industry.

Anyone who thinks that large companies run by accountants and MBAs is the way ahead for the semiconductor industry must be barmy.