No semicon recovery before mid 2010: Europartners

February 11, 2009

Connecting with new friends from all over the world is one of the best things that I have experienced while writing a semicon and electronics blog. One such gentleman is Ingo Guertler from Europartners Consultants. He is based in Munich, Germany — a city I have frequented several times.

Guertler has been part of my LinkedIn network as well. He has spent 30 years in leading positions in the electronic components market, mostly with semiconductors, at General Instrument, QT Optoelectronics and Vishay. Since 2005, he has been the senior partner at Europartners Consultants, a network of independent consultants, mostly located in Europe.

Beside individual projects, Europartners analyze the worldwide distribution market for electronic components each year and publish the results in its Worldwide Distribution Report.

Additionally, the company also organizes a two-day conference in Paris every two years, with high-level speakers out of the electronic component industry, discussing actual topics with top managers from component manufacturer and distributors.

This year, the headline will cover the world economy crisis, its effect on the electronics industry, and how companies can successful manage the crisis.

Naturally, our conversation revolved around the global semiconductor market, the memory market turmoil, and how European companies view the Indian semiconductor industry.

Semicon to decline 20 percent in 2009
Ingo Guertler expects a decrease in the global semiconductors market of approximately a minimum of 20 percent. Europartners does not see a recovery before the middle of 2010.

Guertler said: “Maybe, there can be a light recovery in the second quarter 2010 in some regions. Everything will depend on how fast the funds of the governments to the industry will draw. We have to specifically watch, the American and Chinese markets.”

Regarding the memory market, he added that everybody had expected that Vista will stimulate the markets. However, that did not happen. “For the time being, the industry has no direct killer application for memories available or in the design stage. I expect a further price erosion on memories, especially on DRAMs,” he cautioned.

Europe’s interest in Indian semicon
Again, it was natural for me to query Ingo on how European companies view the Indian semiconductor industry.

According to him, for the time being, collaboration between the European and Indian companies is limited in the most cases, or on a one-way service base, using the excellent skills and resources of the Indian software companies and engineers that also includes EDA. “I don’t think that will change in the near future,” he added.

Guertler said: “Personally, I see India as a new market challenge in the next 10 years or more for the European companies, because the local demand will grow faster in India, than we today see in China. Also, I believe and have seen it already, that a lot of companies will likely shift their production bases from China to India the next time, simply because of lower costs, availability of good, graduate engineers and a more Western orientated politics of the Indian government.”

However there is one handicap for the Indian continent! That is: the current infrastructure and the political situation between India and Pakistan.

According to Guertler, India has to set up huge investment programs to invite more investors in the country. Very importantly, is there any feeling that overseas companies’ interest in India is slowing down?

“Definitely not, as far as the European companies are concerned. If India meets the industry’s requirements, I believe their preference will be for India in comparison to China,” he said.

That indeed, is great to hear! The Indian interest is very much intact, in Europe and elsewhere. Now, it is time for India to get some work started on semiconductor product development companies.

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