Trying times in semiconductor ATE market
S. Vidyasankar, Industry Analyst, Frost & Sullivan www.frost.com -- Test & Measurement World, 6/1/2008 2:00:00 AM
The semiconductor industry is subject to cyclical fluctuations that are driven by factors such as technical innovations, consumer trends, and economic conditions. There is speculation in the $5 billion semiconductor automatic test equipment (ATE) industry that the market is headed for a down cycle and poised for a slowdown. Yet, there are signs of optimism.
 Slip in revenues indicate that the semiconductor ATE market is witnessing a slowdown and what can be considered the beginning of a down cycle. |
Admittedly, 2007 was not a great year for the semiconductor ATE market, as reflected in the annual earnings of some of the big names in the industry. Teradyne’s Semiconductor Test Division’s revenues decreased nearly 20% over 2006 revenues, while Advantest’s overall revenues slipped by almost 7%, and Verigy’s revenues declined by 2.2%. Research indicates that the low demand for system-on-chip (SOC) test systems and severe pricing pressure in the flash memory market are the two major factors that led to the market slowdown during 2007.
Overall, the market is expected to continue to witness a slowdown with diminishing demand for SOC testers. The memory ATE segment, however, is expected to witness growth, as the growing use of flash memory in consumer-electronic products is expected to continue to drive the need for flash memory test systems. In fact, Verigy saw a jump in demand for its memory testers in 2007, with revenues reaching $282 million, an increase of nearly 38.2% over 2006.
While the growth of flash memory remains almost certain, the severe pricing pressure in the flash memory market cannot be ignored. Prices have historically declined approximately 40% per year, putting pressure on ATE vendors to lower prices in turn. This will lead to increased ATE system shipments at the cost of profitability. A few participants believe that the declining flash prices will lead to increased consumption of flash memory, thereby expanding the market revenues.
One way some companies seem to be dealing with the downward trend is through the acquisition of other test companies. Verigy recently acquired Inovys, a maker of design debug, failure-analysis, and yield-acceleration equipment for semiconductor devices, and Teradyne has acquired Nextest Systems, a manufacturer of flash memory and SOC testers.
At Frost & Sullivan, we anticipate additional consolidation in the market, especially during this downward cycle, which is forecast to continue until 2011. Yet, consolidation is not the only solution for dealing with the difficult times ahead. Semiconductor manufacturing continues to concentrate in Asia, and many companies could keep an eye there during the down cycle. Asia Pacific is calling.
No related content found.
- 0 rated items found.
Datasheets.com Electronic Parts & Inventory Search
185 million searchable parts
- Part Number
- Description
- Inventory
- Products
- Manufacturers
View All Webcasts
