Issue Date: January 10, 2011
Electronic Materials: Growth Will Decelerate After Bumper Year
After a remarkably strong 2010, chemical companies that supply materials to the electronics industry will likely cruise at a gentler speed in 2011.
“Last year was a boom year,” says Daniel Tracy, senior director of industry research and statistics at the trade group Semiconductor Equipment & Materials International. “The expectation is that growth is going to moderate.” The outlook for semiconductor industry growth in 2011 is 5–6%, he says.
Materials suppliers will grow at a more sedate pace after a frantic tempo in 2010. The global semiconductor industry grew 32.5% last year, according to iSuppli, a high-technology market research firm.
For the flat-panel-display industry, 2010 was also a bumper year. From November 2009 to November 2010, sales of thin-film transistor liquid-crystal displays (TFT LCDs) grew 5%, and shipments surged 19%, according to the market reserach firm DisplaySearch. Most flat-panel displays on the market today make use of TFT LCD technology.
Materials suppliers are cashing in on the strong demand. Sumitomo Chemical, for example, achieved a financial turnaround in its electronic materials segment: The business posted a loss of $68 million for the period of April to September 2009, and it recorded a $210 million gain in the same period in 2010. Shin-Etsu Chemical, the world’s largest producer of silicon wafers, more than doubled its wafer earnings to $253 million in the April to September 2010 period.
This year will begin on a high note for the LCD industry. At the end of 2010, prices were holding firm, capacity utilization was high, and inventories were low. As a result, LCD manufacturers will likely invest in capacity expansion early in 2011, which will boost demand for electronic materials.
But some parts of the electronics industry are struggling. In a recent report, iSuppli noted that memory chip prices in December 2010 were half of what they were in June because of soft demand for personal computers. More typical was the automotive market, which was the strongest semiconductor segment, with growth exceeding 41% in 2010, the research firm notes. Semiconductors used in much-hyped smartphones grew 24%.
For the U.S., Tracy says, “the overall recovery in the economy will impact consumer and corporate spending,” which will help semiconductor materials manufacturers in 2011.
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