Functionality, popularity, and the economy are altering the cell phone landscape. We see a divergence in the mobile phone market – a movement away from Feature Phones to Smartphones on the high end and plain voice phones on the low end, particularly in third-world countries.

As a result, the market for Feature Phones will decrease from 59.4% of cell phones in 2008 to 33.6% in 2013, as shown in the chart below.

I pointed out on March 10, 2009 in Seeking Alpha that ARM (ARMH) processors, not Intel’s (INTC) Atom, will benefit from the current technology-economic cycle. I noted that while Intel’s Atom dominates the market in 2009, a movement is underway that will enable the ARM processor to gain a 55% market share in 2012, according to our analysis in a report “Intel Versus ARM in Mobile Devices and Netbooks/Smartbooks: Insight Into Critical Issues and Market Analyses.”

Today marks the 24th anniversary of the day I started The Information Network, and I can't think of a more appropriate place to discuss the semiconductor equipment space than Seeking Alpha. I started analyzing semiconductor equipment, then spread out to cover semiconductors, storage, LCDs, solar, and nanomaterials, and have written blogs on these topics on Seeking Alpha before.

Several signs are pointing to a recovery, but the most telling are our leading indicators, a compilation of economic data from two dozen countries that we have adjusted over the past 24 years to accurately predict inflection points in the semiconductor equipment market.

Falling panel prices, low fab utilization, and continued worldwide economic concerns will cause fab expansions to be delayed, driving down forecast 2009 spending by 21%.

Although LCD manufacturers have announced capex reductions of about 50% for 2009 in response to the global economic crisis, capex is a moving target subject to change throughout the year. For example, in anticipation of a banner year in 2008, initial capex forecasts made in early 2008 called for an 86% increase. In fact, capex ended up growing only 13%.

Excuse me if I yawn at the announcement that MEMS microphone manufacturer Akustica Inc. has been acquired by Robert Bosch North America and will become part of its MEMS division, Bosch Sensortec GmbH (Reutlingen, Germany).

Hard disk drive (HDD) manufacturers are repositioning themselves in this Great Recession, which will impact market share leadership in 2009.

We pointed out in a Seeking Alpha article of February 18, 2009 that Toshiba (TOSBF.PK) would move into first place in 2.5-inch hard drive with purchase of Fujitsu’s (FJTSY.PK) business. Now, two quarters later Western Digital (WDC) could move into first place in the overall HDD business for calendar year 2009 on a unit basis.

Intel’s (INTC) Atom will hold more than an 80% share of the 23.5-million netbooks sold in 2009. However, the ARM processor will gain a 55% market share of the 96.0 million netbooks sold in 2012, according to The Information Network (www.theinformationnet.com).

For the first time since 2001, no high-tech equipment market will be immune to the great recession.

SEMI (Semiconductor Equipment and Materials International) reported last week that North America-based manufacturers of semiconductor equipment shipped about $391.9 worth of equipment in May 2009, about 1% more than April 2009, but 72% less than May 2008.

The Semiconductor Equipment Association of Japan (SEAJ) also reported last week that Japan-based manufacturers of semiconductor equipment registered billings in May 2009 of 39.2 billion yen ($409.7 million). The billings figure is 3.2 percent down from April 2009 and 68.7 percent down the May 2008 billings level.

On November 18, 2008, I wrote an article on Seeking Alpha entitled “Six Reasons for Cloudy Skies on the Solar Energy Industry”. All six issues presented cast a partial eclipse of the solar market. Subsequently, a week later I forecast that the solar market would drop from 40% growth to 25% growth in 2009. At that time thoughts of a downturn in the luminous market were considered a heresy and several of my readers’ comments to the article reflected the attitude of the time – up, up, up!

Q2 2009 smartphone orders, up nearly15% sequentially, will lift the silicon MEMs microphone market from its worst year since they became commercially available, according to our report “Silicon Microphones and Speakers: Technology, Market Analysis, and End-Application."

Photronics (Nasdaq: PLAB) has moved from 71 cents on March 25 to an interday high of $3.30 on May 28. In a May 21 upgrade by Merrill Lynch after Photronics reported its F2Q09:

“Merrill notes that although interest expense is increasing in the near term, revenue growth is starting to pick up again and expense cuts already in place increase cash available to service debt. In addition, the total debt level in F3Q drops $30mn when the new lease on the Nanofab takes affect. As PLAB’s financial flexibility increases, valuation multiples should climb toward ongoing concern peer levels. Half the peer P/TBV average would be 0.7x. At that level, PLAB would trade for $4, firm's new PO up from $2.”

Mainland China’s cross-straits investment in Taiwan will help the island country survive the global crisis and at the same time help fix its own IC market, according to the report “Mainland China’s Semiconductor and Equipment Markets,” recently published by The Information Network, a New Tripoli, PA-based market research company.

On May 4 I wrote in Part I for Seeking Alpha how solar manufacturers can differentiate their products, particularly during the economic slowdown. I discussed increasing efficiency. For example, a local company (contact me for details) has developed a coating for amorphous and polycrystalline cells that can improve efficiency between 8 and 12% using non-vacuum techniques so that the cost is in the cents per watt range. Tunable refractive indices make these materials excellent candidates for improving both thermal conductivity and absorption bandwidths. When these unique, novel coatings are coupled with nano-enhanced polymeric coatings, significantly improved durability and extended product life can be anticipated. UV resistance, resistance to optical crazing, and the effect of adverse weather and temperature conditions is also predicted. Films can be coated on any surface.

The other strategy for gaining share, which was mentioned in Part 1 and is discussed here, is to improve reliability:

The solar cell manufacturing industry has become a “me too” business. Solar companies manufacturing polycrystalline panels buy the same polysilicon and wafers from less than a dozen material suppliers. Companies buying an amorphous silicon thin film process line from Applied Materials (AMAT) or Oerlikon (OERLF.PK) are making the same films as other customers from these equipment vendors.

Certainly there are new avenues of manufacturing, such as CdTe from First Solar (Nasdaq:FSLR), CIGS from half a dozen manufacturers, multi-junction cells from companies such as Uni-Solar, and building integrated photovoltaics (BIPV) from an increasing number of manufacturers. These technologies differentiate these companies’ products, but the proportion of wattage manufactured, while growing, is small compared to the majority of solar panels sold using traditional methods of production, i.e., a thin film on a glass substrate.

The trend towards advanced 193nm DUV lithography tools purchases by semiconductor manufacturers is affecting the product mix of photoresists consumed as well as market shares of photoresist suppliers, according to the report “The Global Market for Equipment and Materials for IC Manufacturing,” recently published by The Information Network.

The planned transition to 450mm diameter silicon wafers for semiconductor production will be disastrous for the equipment industry, according to the report 300mm/Copper/Low-K Convergence: Timing, Trends, Issues, Market Analysis, recently published by The Information Network.

MEMC (NYSE: WFR) recently announced planned layoffs of 200 employees and a speeding up of 450mm diameter wafer R&D. MEMC joins a litany of wafer suppliers and semiconductor manufacturers pushing for the transition. The strategy would enable semiconductor manufacturers to reduce costs because 2.25 times more chips can be made on a 450mm wafer compared to a 300mm wafer.

Intel’s (INTC) misjudgment of the low margins of the Atom in its netbook processor has hurt the company for the second successive quarter, according to the report “Netbook-Mobile Internet Device Convergence: Strategic Issues and Markets,” recently published by The Information Network.

Despite a sluggish forecast for the overall high-tech industry in the near term, alternative energies technologies are expected to grow at a 40% annual rate through 2012, and semiconductors used in these applications will see a comparable growth, according to a report Semiconductors for Alternative Energy Technologies: Opportunities and Markets, recently published by The Information Network.

Netbook manufacturers are bastardizing the netbook market with bells and whistles that are blurring the lines between a netbook and a notebook.