Semiconductor equipment industry in free fall

[c1ue]

Friend of mine works as a mid level technical manager in one of the leading semiconductor equipment makers.

First round of layoffs was in November.

2nd round was in February.

3rd round is coming up.

Looks to be 40% overall reduction in workforce in 6 months.

If there are green shoots, they will have to push up through the glassy crust from the nuke.

[babbittd]

Thanks for passing this one on.

My friend helps to run a family business that is largely dependent one of the leading semiconductor equipment makers. Their layoffs and shift reductions have followed a similar pattern.

[lakedaemonian]

My father, my brother, and myself worked in the semicon equipment sector.

My Dad, my cousin, and I worked for one of the biggies.

My Dad since literally day 1.

My brother since the 80's.

My cousin since approx 2000.

I worked part-time getting through school and my 1st & 3rd fulltime salaried job after graduating Uni.

I was laid off once......and once poached back into the industry before I realized the clock was ticking until the next layoff.....and followed my own path.

My brother got laid off heaps of times.

My Dad would have worked until he dropped, but was given a retirement buyout offer he simply couldn't refuse....he was an oldschool guy who knew pretty much everyone worth knowing in the industry from the 60's through and until a few years ago.

My cousin will probably lose his job this year.

It was a great industry to work in, with some fantastic people, and we actually had to MAKE stuff, manufacturing flexibility was ingrained in everyone's DNA due to the highly volatile and cyclical nature of the business.

Almost all production was moved to Singapore, then quickly to China in the last decade....so yet something else really cool no longer made in the US

They are currently dealing with a sales haircut of well over half.

Semicon equipment forward ordering, straight from the sales/mfg production planners, would be a useful intelligence indicator.

[karim0028]

Can you guys give an example of a semiconductor equipment? BC i work in the semi-conductor industry, but have no idea what you mean by "equipment".....

At my company a "biggie" we are still holding on, had some plant/fab closures in asia and some layoffs in the manufacturing group, but management is still saying we are fine, i highly doubt it though... I get the feeling that its the calm before the storm... But the weird part is we still have 5 job openings in my group.. Our division is a growth division (or so we are told)....

They did the same thing in 2000, when they laid off like 15-30K employees... Everything is always fine but when the math doesnt add up it just dont add up....

[Rajiv]

Semiconductor equipment (http://www.semi.org/en/index.htm) - Wet benches, sputters, photolitho machines, wafer inspection equipment etc. etc. etc

[lakedaemonian]

Packaging, consumables, wedge bonders, wire bonders

[c1ue]

As I had noted before: the fundamentals behind new semiconductor processes as well as overall semiconductor silicon area shipments is going through a secular change.

Previous 3 year cycles are now becoming 5 to 7 year cycles, possibly even longer.

More importantly the increasing cost of new processes is forcing the design industry to consolidate - a small company or startup has only 1 chance, if that of being able to put out a product at a leading process geometry. Of course it is still theoretically possible for a company to put out a product which is superior despite a significantly inferior base process performance, but then the next generation will have the same challenge. And the small company/startup only has to hiccup once.

This in turn means lower profits all around: Lower utilization rates due to low granularity in customers. Margins are squeezed all along the supply chain. etc etc.

[metalman]

thanks again, c1ue.