Chip industry to grow but faces "restructuring" period

Barry Ritholtz says that "big cap tech has not been the place to make money for some time now". One reason he offers is the "rapid commoditization of their products".

At least some industry leaders themselves seem to think so too. From The Korea Times:

Samsung Electronics’ chief of semiconductor business warned of a major shakeup in the flash memory industry in the near future, adding his company will be the eventual winner in the chip war.

Hwang Chang-gyu, one of the memory chip industry’s most influential figures, last week said flash chip makers will go through a major "restructuring" period, and less than five companies will remain when the market finally stabilizes.

A respite may be in store though for memory chip makers. From EETIMES:

Samsung Electronics Co. Ltd. and Hynix Semiconductor Inc. have separately raised their NAND flash-memory prices for the first time this year, according to Bloomberg.

And the chip industry in general may be in for a period of steady growth, helped by Asian emerging economies, according to another EETimes report.

Stanley Myers, president and CEO of the Semiconductor Equipment and Materials International (SEMI), told the Semicon Singapore 2006 conference that SEMI expects the market as a whole to expand by up to 10 percent this year, driven mainly by growing demand for consumer gadgets such as mobile phones and digital audio players...

Philip Koh, research vice president for semiconductors at Gartner here, said it expects the industry to register a compound annual growth rate of 7.9 percent over the next five years, with surging demand for 3G phones and storage devices making up for "saturation" in the PC market.

But emerging Asia is both opportunity and threat, as Scott Jewler, chief strategy officer for STATS ChipPAC, warns:

IP rights protection and industry standards will become "bigger issues over the next three to five years," Jewler predicted, especially with manufacturing shifting to locations like China...

He also advised companies to keep an eye on China-based IDMs, noting that some were already "competing on the leading edge" and that the Chinese industry is seeking to "replace imported chips with local designs."