Semiconductor Devices

When I was in Taiwan, I was told that one can find the cheapest external hard disk there. Space is something which is never enough in today's world. So I went with one of my friends to get a small 2.5" one. I was surprised to find that in a months time the prices 160GB external hard disk has fallen by 30USD, one month before it was priced at 160USD and I bought it at 130USD, including the SATA casing. And so was the case with flash drives. I know that the technology nodes are going down, but thats once in a year, whats the reason for such a huge decline in prices ?

Some facts about the semiconductor industry :

• Profit margins of Toshiba and Samsung, flash device makers, have fallen from 15% to 7% in a period of one year. So in 2007 they were operating at much lower margins so obviously in order to maintain the same or more profit margins then they need to produce more. As a result equipment vendors witnessed thier revenues more than expected.
• Sandisk and Toshiba have built up one of the large ts manufacturing plant in Japan.
• Taiwan, Singapore, Japan have seen huge investments.
• Globalization is taking place at an ever faster pace. That is different companies are sharing their products and technologies, which reduces the cycle time between R&D and product roll out. As a result we have seen across the last few years that every year on an average the technology node goes down. I remember when I first joined this industry, production was for 90nm, after one year all the major players had shifted to 65nm. And soon 45 nm will the the fag.

In semiconductor industry, product manufacturers have to rely heavily on demand forecasts, because it takes 2-3 months to roll out a product. Small errors in demand forecasts can lead to huge inventory buildups and the simple theory of demand and supply can lead to huge price discounts.

Intriguingly what will happen if this trend goes on ?