There will be a fight for wafers next year as the chip industry moves to a period of severe capacity shortage, and the reason for the dire situation is the lack of 'chip-savvy' CEOs, says
CEOs will eventually get the message, but by then it will be too late. "The penny will drop, but too late to invest in new capacity", says
Capex, as a ratio of sales, has fallen to the lowest level the industry has ever seen. The reason is that the industry is being run by CFOs for one thing - profit.
"For God's sake bring back some chip-savvy CEOs into this business who appreciate that revenues and profits don't come from massaging the balance sheet, but by doing the job right", says Penn, "MOS capacity is only growing by one per cent per quarter, and needs to be growing by three per cent per quarter. They should be spending on new capacity now. The mismatch will be huge in the second half of next year."
The anomaly of today's semiconductor industry is that capacity utilization at the foundries is very high, while capex is very low.
"The foundry industry's saying: 'I've got too little capacity, so I'm stopping investing in new capacity'", said
Asked why? Penn replied: "Because the industry is fed up with selling capacity too cheap."
When Corning Glass owned Signetics in the early 1970s, they (perhaps especially the CFO types) were unhappy about the return on investment. One story goes that when Signetics wanted to buy a new epitaxial reactor (used for bipolar chip production), a Corning executive asked how much it would be used 5 or 10 or 20 years from now. The reply that it would have been donated to a university, or scrapped, horrified him; the pie-plate press installed 50 years ago was still turning out pie plates...
Probably why they sold Signetics to Philips...