Another day, another proposed bail-out. Interesting to hear the European arm of SEMI, the US-based trade body for the semiconductor materials and manufacturing equipment industry, calling on the EU to put money to supporting the European chip industry.
The chip industry is, of course, the customer of SEMI’s members. And SEMI’s members are hurting.
In 2007, the market for semiconductor manufacturing equipment and materials was worth $54 billion.
This year, says iSuppli, it will be worth $42 billion and, next year, it will be worth $35 billion.
So a 21 per cent fall this year will be followed by an 18 per cent fall next. To go from $54 billion to $35billion in two years is traumatic.
Meanwhile, the European semiconductor device manufacturers are suffering. The European share of the global semiconductor market has declined, from 21 per cent in 2001 to 16 per cent in 2007, says SEMI, while European semiconductor manufacturing contracted by almost 25 per cent between 2005 and 2007.
Qimonda, the DRAM company in which Infineon has an 80 per cent stake, is almost bankrupt, while Infineon faces a requirement to repay euros 1 billion worth of bonds next year or face a re-financing of the debt, which could see Infineon taken over, or broken up, or both.
NXP has been closing and downsizing factories across Europe since it was bought by Wall Street’s KKR. Following the takeover, NXP led the retreat from Crolles 2, heralding the end of Europe’s independence in basic chip R&D. The company is bleeding cash.
ST, the strongest of Europe’s Big Three, is seeing its share price down around 5 euros.
In asking the EU for cash, SEMI argues: ‘The equipment / materials producers and the semiconductor device manufacturers together today contribute some €29 billion directly to the EU economy and provide around 215,000 direct jobs, which rises to halve a million jobs when indirect jobs are counted.’
Should the EU put up the cash? Well it is, of course, supporting a heap of programmes from Eureka to Esprit including ENIAC and CATRENE.
By doing so is the EU propping up dinosaurs? Or is it seeding success for a next-decade European microelectronics industry?