July 30, 2008 – After several years of 40%-50% growth, the market for silicon-on-insulator (SOI) watched sales sink to nearly flat growth in 2007, and despite a projected spike over the next two years annual growth will barely be 10% by 2012, according to data from VLSI Research.

SOI sales rose just 6% in 2007 to $645M after a 36% CAGR for the past three years, and represented only about 1.4% of total silicon demand in terms of area, though that’s 3× more than it was in 2002. Demand for SOI comes primarily from consumer device end-markets, which can be hard to predict, particularly in times like these when external factors are negatively influencing consumer purchasing trends (e.g. slow US economy and high gas prices).

The real growth driver in SOI is a major transition to a new process note, VLSI notes, since it can create less complicated isolation structures on a circuit, and thus enable more high-end devices. Look for growth to build up over the next couple of years again, peaking at ~30% in 2010, due to acceleration of the 45nm transition both by existing SOI users and new customers. CAGR through 2012 is projected at 11%, with a $1.1B market by that year.

Soitec dominates the market with a two-thirds market share; No.2 Shin-Etsu Handotai actually licenses Soitec’s Smart Cut technology for producing its own thin SOI wafers, the research firm noted.

Cross-section views of a back-illuminated CMOS imager fabricated on SOI. Click here for the full-size image. (Source: Sarnoff)