After two years of scraping through a recession, the semiconductor industry may be facing more orders than it can handle.
"My major concern now," says William Davidow, director of marketing for Intel Corp., "is how angry will our customer base be if we can't meet demand."
Buoyed by the surging personal computer industry and burgeoning high-technology companies, semiconductor executives meeting at Rosen Research's Semiconductor Forum in San Diego this week agreed that the industry is fast recovering from its doldrums and is poised to run at full capacity.
"Orders are up sharply in all categories," says James R. Fiebiger, vice president of Motorola's semiconductor products sector. "Prices are firming or going up, inventories are low and distributor bookings are significantly up."
The industry, which makes computer and memory chips, expects to see worldwide sales of roughly $10 billion by the end of this year--up nearly 14 percent from 1982. The consensus now is that demand will boost sales by more than 20 percent next year. That raises serious questions about the industry's production capacity.
If demand meets expectations, said Charles Sporck, president of National Semiconductor Inc., "1984 could be a major shortage period."
Indeed, representatives of major video games companies expressed concern that the industry might not be able to produce enough game cartridges to meet their market needs for the Christmas sales season.
The problem is expected to be particularly acute in the VLSI (very large scale integrated circuits) technologies, where tens of thousands of circuits are packed onto a single chip.
However, said Jerry R. Crowley, president of Oki Semiconductor Inc., an American subsidiary of a Japanese electronics company, new production capacity should be coming on line late next year to help ease any shortfalls.
There is also the belief that the Japanese companies are positioning to meet the increased demand.
But American semiconductor executives at the conference expressed confidence that they will be very powerful in the fast-growing "custom chip" marketplace.
American companies are working to create the design tools necessary to devise very complex chips that are specially tailored to meet customer requirements--for example, a computer chip that can deal with an unusual computer language.
"We're clearly in a period of an enormous amount of design," said William Corrigan, president of LSI Logic. "The explosion of VLSI demand has begun."
One industry study asserts that custom chips will become fully one-half of the $40 billion world semiconductor market by 1991.