SEC/N Thoughts

The new year traditionally is a time for individuals to go out on a limb and predict what they think is going to happen. The big question this year in the semiconductor industry is, simply, when is the recovery going to begin? Some say that it is already underway in the chip business. Others are being more cautious, hedging their bets to later in the first and second quarters of this year. As for the OEMs, it doesn't look like there's much encouragement there until at least late this year, at the earliest.

Now, if at this point you were expecting me to provide you with my fearless forecast, forget it. When it comes to the recovery of chip and new equipment manufacturing, my crystal ball fogs over as fast as anyone else's. But I am willing to go out on a limb when it comes to the asset recovery/used equipment business — and feel free to quote me. This will be an outstanding year for the business of recovering the value of underutilized assets, coupled with the worldwide recognition and acceptance of the used-equipment marketplace.

Here's why. It's hard to believe that there could be a company out there whose downsizing in the past couple years hasn't created surplus assets, including facilities, equipment, furniture, materials and most everything else. Someone once said that one man's trash is another man's gold, and you'd better believe that the corporate finance folks are recognizing the need to increase cash flow and secure a better return on investment, if they haven't already.

Recovery in the chip manufacturing business always starts with the availability of very little capital and an escalated state of conservatism on the part of my same finance friends. The smorgasbord of surplus equipment that currently exists in the semiconductor industry is going to be too hard for ramping companies to pass up, regardless of the desires of manufacturing engineers who are always into bright, shiny and new. With the skyrocketing costs associated with the latest technologies, chip manufacturers will need to depend on refurbished equipment for their more mature fabs. And, like it or not, OEMs will need to accept the secondary market for their equipment as both legitimate and a growing part of their future business plans.

And in case the light hasn't gone on yet for the OEMs, the recovery for the ones that are already in the refurbishment business is just around the corner, not nine months or a year away.