Category Archives: Metrology

Each year, Solid State Technology turns to industry leaders to hear viewpoints on the technological and economic outlook for the upcoming year. Read through these expert opinions on what to expect in 2017.

Driving the industry forward with materials engineering

Raja_Prabu_fullPrabu Raja, vice president and general manager, Patterning and Packaging Group, Applied Materials, Inc.

Over the past few years, the industry has made remarkable progress in bringing 3D chip architectures to volume production. In 2017, we will continue to see exciting technology innovations for scaling 3D NAND devices to 64 layers, ramping the 10nm process node into volume manufacturing and increasing the adoption of highly integrated chip packages.

With the transition to the 3D and sub-10nm era, the semiconductor world is changing from lithography-based scaling to materials-enabled scaling. This shift requires multiple new materials and capabilities in selective processing.

The magnitude and pace of these changes are truly disruptive. For example, with 3D NAND materials innovations for hard mask deposition and hard mask etch are essential. The challenge is to build high aspect ratio vertical structures with uniform profiles from the top to the bottom as more layers are added. Selective removal processes can remove targeted materials in vertical and horizontal structures without damage or residue throughout the stack.

For logic/foundry, the introduction of the 10nm process node in volume manufacturing brings significant growth in the number of patterning steps. This trend will increase even more for 7nm and below designs. Patterning these advanced nodes requires innovative etch capabilities to deliver feature-scale uniformity with low line edge roughness. Selective processes and alternative manufacturing schemes will also be needed as the industry seeks solutions for layer-to-layer vertical alignment. We expect this to result in a two-fold increase in the number of materials to be deposited and removed.

Finally, the industry will continue to adopt new and improved packaging schemes for enabling increased device performance, lower power consumption and to deliver desired form factors. In 2016, we saw the volume adoption of Fan-Out packaging in mobile devices and this trend is expected to grow further in 2017. The high performance computing segment will pursue 2.5D interposer and/or 3D TSV packaging schemes for higher memory bandwidth, lower latency and better power efficiency.

Applied Materials is focused on delivering game-changing selective process technologies and materials innovations to help solve the industry’s toughest challenges.

Pages: 1 2 3 4 5 6 7 8

North America-based manufacturers of semiconductor equipment posted $1.99 billion in orders worldwide in December 2016 (three-month average basis) and a book-to-bill ratio of 1.06, according to the December Equipment Market Data Subscription (EMDS) Book-to-Bill Report published today by SEMI.  A book-to-bill of 1.06 means that $106 worth of orders were received for every $100 of product billed for the month.

SEMI reports that the three-month average of worldwide bookings in December 2016 was $1.99 billion. The bookings figure is 28.3 percent higher than the final November 2016 level of $1.55 billion, and is 47.8 percent higher than the December 2015 order level of $1.34 billion.

The three-month average of worldwide billings in December 2016 was $1.87 billion. The billings figure is 15.7 percent higher than the final November 2016 level of $1.61 billion, and is 38.2 percent higher than the December 2015 billings level of $1.35 billion.

“2016 ended the year with bookings levels approaching $2 billion,” said Denny McGuirk, president and CEO of SEMI. “This combined with a significant increase in billings puts 2016 equipment sales of North American manufacturers well above 2015 levels and well positioned for 2017.”

The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. Billings and bookings figures are in millions of U.S. dollars.

 

Billings
(3-mo. avg)

Bookings
(3-mo. avg)

Book-to-Bill
July 2016

$1,707.9

$1,795.4

1.05
August 2016

$1,709.0

$1,753.4

1.03
September 2016

$1,493.3

$1,567.2

1.05
October 2016

$1,630.4

$1,488.4

0.91
November 2016 (final)

$1,613.3

$1,547.5

0.96
December 2016 (prelim)

$1,865.8

$1,985.4

1.06

Source: SEMI (www.semi.org), January 2017

SEMI will cease publishing the monthly North America Book-to-Bill report this year. The December 2016 report and press release is the last publication.  The decision to discontinue the Book-to-Bill report is based on changes in reporting by some participants where the reporting of orders/bookings into the data collection program is no longer considered a necessary component of their industry analysis.

SEMI will continue to publish a monthly billings report and issue a press release Worldwide Semiconductor Equipment Market Statistics (WWSEMS) report that SEMI prepares in collaboration with the Semiconductor Equipment Association of Japan (SEAJ). The WWSEMS report currently reports billings and bookings data by 24 equipment segments and by seven end market regions. Beginning with the January 2017 WWSEMS, bookings information will only be available for the back-end equipment segments of the industry.

SEMI continues to track semiconductor industry fab investments in detail on a company-by-company and fab-by-fab basis in its World Fab Forecast and SEMI FabView databases. These powerful tools provide access to spending forecasts, capacity ramp, technology transitions, and other information for over 1,000 fabs worldwide.  For an overview of available SEMI market data, please visit www.semi.org/en/MarketInfo.

More than two dozen acquisition agreements were announced by semiconductor companies worldwide in 2016 with a combined value of $98.5 billion compared to the record-high $103.3 billion in purchases struck in 2015, when over 30 deals were reached, according to a summary and analysis in IC Insights’ new 2017 McClean Report.  The dollar value of merger and acquisition agreements in 2015 and 2016 were both about eight times greater than the $12.6 billion annual average of M&A announcements in the five previous years (2010-2014), says the new report, which becomes available in January 2017. Nearly half of the 15 largest semiconductor acquisitions in history were announced in the 2015 2016 period, according to a ranking of M&A transactions over $2 billion in the 2017 McClean Report (Figure 1). A total of 27 semiconductor acquisition agreements have had dollar values of $2 billion or more since 1999.

Figure 1

Figure 1

IC Insights’ ranking and acquisition data cover semiconductor suppliers, wafer foundries, and businesses licensing intellectual property (IP) for integrated circuit designs, but excludes transactions for fab equipment and material companies, chip packaging and testing operations, and design automation firms. Overall, seven of the industry’s $2 billion-plus semiconductor acquisitions occurred in 2015 and five took place in 2016, with three each being announced in 2014, 2011, and 2006, two in 2012, and one each in 2013, 2009, 2000, and 1999.

Semiconductor M&A greatly accelerated in 2015 and continued to be high in 2016 as companies turned to acquisitions to offset slow growth in major end-use applications (such as smartphones, personal computers, and tablets). In the last two years, acquisitions have been driven by companies aiming to expand into huge new markets, especially the Internet of Things, wearable electronics, and highly intelligent embedded systems, such as automated driver-assist features in cars and autonomous vehicles in the future. China’s goal of boosting its domestic semiconductor industry has added fuel to the M&A movement.

While Chinese moves to buy foreign semiconductor suppliers and assets grabbed a great deal of attention and scrutiny by governments wanting to protect national security and industries, U.S. businesses acquiring other companies, product lines, technologies, and assets accounted for 52% of the 2015-2016 M&A value, or about $104.5 billion (Figure 2). Asia-Pacific companies were second among those making semiconductor acquisitions with 23% of the $201.5 billion two-year total, or $46.4 billion. Within the Asia-Pacific region, China represented 4% of the total, or $8.3 billion.

Figure 2

Figure 2

Figure 2 also shows a breakdown the 2015-2016 acquisition agreements by semiconductor business types with the purchase of IDMs or parts of those companies being nearly 39% of the two-year total and takeovers of fabless chip suppliers, their product lines, and/or assets representing 45%. Acquisitions of semiconductor-design intellectual property suppliers and IP assets accounted for nearly 16% of the 2015-2016 M&A value while purchase agreements for wafer-foundry businesses and assets represented just 0.2% of the total.

The global market for power semiconductors used in cars and light passenger vehicles will grow by more in $3 billion USD in the next six years, according to new analysis released today by IHS Markit(Nasdaq: INFO).

In the report, entitled “Power Semiconductors in Automotive – 2017”, forecasts the total market for power semiconductors (discretes, power modules and power ICs) to increase from $5.5 billion in 2016 to more than $8.5 billion in 2022.  Revenue will grow at an annual rate of 7.5 percent from 2015 to 2022, the report predicts.

“Increasing electrification in vehicles generally – and in hybrid and electric vehicles specifically – is energizing the market for power semiconductors in vehicles”, said Richard Eden, senior analyst, power semiconductors for IHS Markit. “Staying connected via smartphones and tablets is the modern way of life and to this end, today’s car drivers are opting for Bluetooth, cellular technologies and other telematics functions. All these features require power semiconductors to distribute and control power through vehicles.”

Also contributing to the rise of power semiconductors, the report notes, is the automotive industry’s mission to offer self-driving, ‘green’ and connected cars in the next decade. According to IHS Markit, intermediate safety milestones such as automatic emergency braking (AEB) and platooning are necessary to realize a road system that will accommodate self-driving cars. Other factors in the trend toward more power semiconductors: the need for more fuel-efficient systems, a higher proportion of electric vehicles, and more electronic content per vehicle as required for improved vehicle emission levels.

Powertrain category to lead the way

In studying the automotive electronics market, IHS Markit categorizes five domains on a vehicle: Body and Convenience, Chassis and Safety, Infotainment, Powertrain and Advanced Driver Assistance Systems (ADAS). Of these, Powertrain accounted for 47 percent of the total market for automotive power semiconductors in 2015, the report indicated.

Anticipated growth in sales of hybrid and electric vehicles in the next few years will spur power semiconductor sales to climb by CAGR 9.6 percent from 2015 to 2022 across all vehicles, taking Powertrain’s market share up to 54 percent of the total market, according to the report.  Discrete IGBT power transistors account for most of Powertrain power semiconductor revenue, but increased integration of discretes into modules will cause IGBT power module sales to increase at a much faster rate.

According to the IHS Markit report, the Chassis and Safety category represents the second most-valuable automotive domain for power semiconductors, accounting for 24 percent of the total market in 2015. In contrast with Powertrain, the use of power semiconductors in Chassis and Safety will only grow with CAGR of 3.1 percent from 2015 to 2022, the report says. The biggest user of power devices in this domain are applications such as electric power steering, anti-lock braking system and electronic stability control, airbags and tire pressure monitoring, which are already relatively well-established in vehicles.

The domains of Body and Convenience and Infotainment only accounted for 14 percent and 11 percent of the total automotive power semiconductor market in 2015, respectively. Both categories are expected to grow with a CAGR of around 4 to 5 percent from 2015 to 2022, the report predicts. At present, the smallest domain is ADAS, with only 5 percent of the total market in 2015. However, ADAS is forecast to see the fastest growth of all of the five domains, growing with a CAGR of 16 percent from 2015 to 2022. ADAS will see a rapid increase in the number of sensors, cameras and interconnectivity systems in cars, and all will need power semiconductors in their power control circuitry.

A closer look at value

Discrete power semiconductors, the report points out, provide the highest average value per car. This is not surprising as they have the lowest average sales price and are used in even the simplest, cheapest automotive electronic systems like engine, transmission control units, electrified oil pumps and power systems.

Power ICs provide slightly less average value per car. They are more expensive and newer, so are more prevalent in high-end vehicles and more modern car designs, which contain more features, like ADAS, for example. Power modules have the smallest average value per car because their use is restricted to larger, high-end vehicles and to hybrid and electric vehicles only.

Fire, rain, and M&A 


January 19, 2017

By SEMI staff

The expert panel, “The Future of M&A in the Semiconductor Industry,” was a hot topic at SEMI’s Industry Strategy Symposium (ISS) conference on January 11.  So hot, it seems, that midway through the panel discussion, a fire alarm triggered and the whole group stepped outside for a quick breather.  Fortunately, this came at a break in the almost nonstop rain – that felt as though the Ritz Carlton might wash off the bluffs of Half Moon Bay.

fire rain

The rain couldn’t put a damper on the mood, though.  Forecasters throughout the conference revised upwards their 2016 results and 2017 forecasts (http://www.semi.org/en/semi-iss-2017-uncovers-new-growth-forecast-upgrades-1) and Diane Bryant, EVP and GM of Intel’s Data Center Group sparked the audience with an amazing keynote that made clear this is the best time ever to be in the semiconductor manufacturing supply chain.

But, how that industry might look in the future was the business of the M&A panel moderated by Robert Maire of Semiconductor Advisors with experts:

  • Patrick Ho, senior research analyst, Semiconductor Capital Equipment at Stifel Nicolaus
  • John Ippolito, VP Corporate Development at MKS Instruments
  • Israel Niv, former CEO of DCG Systems
  • Tom St. Dennis, chairman of the Board of FormFactor.

Will the huge deals of 2015 and 2016 continue?

Setting up the panel, Maire observed that 2015 and 2016 were huge in transaction size (over $100 billion announced in 2015), but while the values of the deals have jumped, the number of deals has remained fairly consistent over the past several years. Also, China has more significantly moved into the M&A market in 2015, in the range $4 to $5 billion.

It appears that M&A will continue, but not at the same pace as 2015 and 2016 due to increasing political, regulatory, and industry pushback.  In the equipment space, while big deals such as Advantest and Verigy were possible in 2011, the current climate has seen big deals falter including Applied Materials and Tokyo Electron; Lam Research and KLA-Tencor; and Aixtron and Fujian Grand Chip.

However, Maire observed that the motivations for M&A continue; for instance, Intel needs to offset a declining PC market and ramp IoT, VR, and Cloud activity and will likely consider M&A as part of its approach.  Similarly, opportunities for equipment companies to increase scale and size exist for process control companies and in the back-end segment where further consolidation appears necessary.

China becomes a player

China’s ambitions in M&A may have been complicated by recent events, but with a $150 billion investment fund there are likely more opportunities ahead.  China has stated the intent to move from producing just 10 percent of its IC consumption to 70 percent in ten years and catching up technologically by 2030.  While some see concerns given China’s investment and later pricing collapses in FPD, PV, and LED, others see China’s efforts to increase its indigenous production of ICs as similar to what has happened as the industry spread from U.S. and Europe to Japan, Taiwan, and Korea.

The panel responded to questions from Maire, questions submitted from the audience, and live audience questions.  Ho noted that big deals in semiconductor equipment appear, for the time being, to be difficult or over.  However, there is still low-hanging fruit and smaller deals.  There is a need to focus on scale and size because customers (IC manufacturers) are bigger and fewer.  For example, Form Factor’s combination with Cascade brought size and scale and enabled Form Factor to be more competitive.

The future for semiconductor equipment consolidation

Several questions revolved around where M&A would happen in the semiconductor equipment space.  There was general consensus that M&A of any of the “big five” (not named, but likely ASML, Applied Materials, Lam Research, Tokyo Electron, and KLA-Tencor) were off the table in the short term due to both regulatory pressure and industry pushback given fears of overly strong supplier power.  Niv thought there were opportunities for consolidation in the metrology and process control space.  Ippolito thought there might be further consolidation opportunities in motion control.  St. Dennis thought there were opportunities throughout the whole supply chain.  He pointed out that the benefits of acquiring a good company were significant, including great talent (difficult and time consuming to develop organically), synergies in not just SG&A, but in technology and field organizations.

The role of private equity was raised.  Ippolito noted that the private market and private equity have roles to play in consolidation opportunities, noting the success of Atlas Copco with Edwards Vacuum and Oerlikon Leybold as an example.

Several questions focused on China.  Niv pointed out the industry needs to think about China similar to how they thought about Japan when Japan was emerging as an IC manufacturing power.  Partnering with Japanese companies was an effective strategy for many and brought long-term success in that market.  Ippolito thought that very large China deals might be off the table for a while, but smaller deals would likely go through.  He noted that $150 billion (the China investment fund) is a lot of money and that tends to find a way forward.

Size matters

The panel seemed to agree size matters.  Niv observed that deals have to be the right size to be digestible with a deal of 10 percent size ratios being easier than other ratios.  Niv noted that one cannot realistically aspire to be acquired by Applied Materials at a revenue of only $20 to $30 million.  For this size, he advised that you are better off getting there by first being an aggregator.  Ho expanded on this by noting that small cap equipment companies can’t attract the attention of the “big five.”  $200 million of revenue only gives the “big five” about a penny of accretion.  For MKS Instruments, the deal with Newport was positive because it added almost $1 in accretion and is an example of a better match in size.

It was a testament to the keen interest in the M&A panel that after the fire alarm evacuation, virtually everyone returned and the audience was nearly immediately again fully engaged in trying to understand what stamp M&A will next leave upon future of the industry.  If we learned anything in 2016, it is that surprises will happen (so it seems, fire alarms will ring when you least expect them).  And, predicting rain, like predicting which deals will go through in a fundamentally new geopolitical environment, will be a guessing game.  However, there’s no doubt that M&A will continue and the opportunities ahead of us will rewrite our industry map.

For information on SEMI, visit www.semi.org and follow SEMI on LinkedIn and Twitter. For the SEMI event calendar, visit www.semi.org/en/events.

This week, Future Market Insights (FMI) releases its latest report on the semiconductor assembly and testing services market. The global market for semiconductor assembly and testing services (SATS) will continue to be primarily driven by the surging demand for high-end packaging solutions. The global semiconductor assembly and testing services market will possibly reach a value of US$ 24.72 Bn by 2016 end. The market will gain continued traction communication vertical. Asia Pacific will remain the most attractive market for semiconductor assembly and testing services.

Increased demand for outsourced SATS or OSAT services will be a remarkable trend favoring the growth of the global SATS market. With the rapidly thriving consumer electronics industry, the demand for connectivity and mobility is also on the rise, which is foreseen to be an important booster to the demand for connected devices, eventually fostering the semiconductor assembly and testing services market. Rising adoption of multimedia technology devices is identified to be another factor bolstering the demand for SATS. A number of SATS providers offer value added services, such as in-house testing and high-end packaging, which will remain an important driver to the market growth. Several integrated design manufacturers are increasingly prioritising semiconductor assembly and testing services as a time-efficient alternative.

Moreover, rising demand for automotive safety systems is expected to be a strong factor providing impetus to the SATS market. Due to higher costs associated with larger wafer fabrication factory, manufacturers are largely inclined toward outsourcing semiconductor assembly and testing services to third party providers. Leading fabless companies will continue to outsource everything, including testing, assembly, and packaging of semiconductor. This will favour the market growth. Rising adoption of automotive electronics and promising emergence of next-generation electronic vehicles are likely to boost the market growth further.

However, high capital costs related to high-end packaging solution provision, volatility of prices in the market, and uncertainty in exchange rates will continue to pose a negative impact on the global SATS market growth.

By service, assembly and packaging segment will continue to be dominant over the testing segment, prominently driven by the rising demand for consumer electronics and advanced packaging solutions.

On the basis of packaging solution, the copper wire and gold wire bonding segment is expected to retain the leading segment position with over 53% market value share, accounting for the revenues of around US$ 13.24 Bn in 2016. However, the growth of this segment is likely to witness sluggish growth post-2016. The flip chip segment is foreseen to exhibit a robust growth rate, contributing around 18% share to the entire market revenues in 2016. This segment will witness an impressive Y-o-Y growth of 8.6% in 2017 over 2016.

Based on application, communication segment is projected to remain dominant, whereas consumer electronics application segment is likely to register a stellar growth rate in terms of Y-o-Y.

By regional analysis, the global semiconductor assembly and testing services market is segmented into four key markets viz. North America, Europe, Asia Pacific, and Middle East and Africa. APAC will remain the dominant market with over 84% market value share in 2016 but is anticipated to witness a consistent Y-o-Y decline post-2016. On the other side, North America is likely to see a consistent gain in the Y-o-Y growth post-2016. This region will account for over 31% share of the market in 2016, in terms of revenues.

Some of the key companies operating in the global marketplace for semiconductor assembly and testing services (SATS), include Amkor Technologies Inc., ASE Group, Silicon Precision Industries Co. Ltd., STATS ChipPAC Ltd. (JCET), Psi Technologies Inc. (IMI), Powertech Technology Inc., Global Foundries, CORWIL Technology corporation, and Chipbond Technology Corporation.

Long-term Outlook: By 2021 end, the global semiconductor assembly and testing services (SATS) market is expected to account for US$ 39.05 Bn in terms of revenues.

Worldwide semiconductor capital spending is projected to increase 2.9 percent in 2017, to $69.9 billion, according to Gartner, Inc. This is down from 5.1 percent growth in 2016 (see Table 1).

“The stronger growth in 2016 was fueled by Increased spending in late 2016 which can be attributed to a NAND flash shortage which was more severe in late 2016 and will persist though most of 2017. This is due to a better-than-expected market for smartphones, which is driving an upgrade of NAND spending in our latest forecast,” said David Christensen, senior research analyst at Gartner. “NAND spending increased by $3.1 billion in 2016 and several related wafer fab equipment segments showed stronger growth than our previous forecast. The thermal, track and implant segments in 2017 are expected to increase 2.5 percent, 5.6 percent and 8.4 percent, respectively.

Compared with early 2016, the semiconductor outlook has improved, particularly in memory, due to stronger pricing and a better-than-expected market for smartphones. An earlier-than-anticipated recovery in memory should lead to growth in 2017 and be slightly enhanced by changes in key applications.

Table 1: Worldwide Semiconductor Capital Spending and Equipment Spending Forecast, 2015-2020 (Millions of Dollars)

2016

2017

2018

2019

2020

Semiconductor Capital Spending ($M)

 67,994.0

 69,936.6

 73,613.5

 78,355.6

 75,799.3

Growth (%)

5.1

2.9

5.3

6.4

-3.3

Wafer-Level Manufacturing Equipment ($M)

35,864.4

38,005.4

38,488.7

41,779.7

39,827.0

Growth (%)

7.9

6.0

1.3

8.6

-4.7

Wafer Fab Equipment ($M)

 34,033.2

 35,978.6

 36,241.1

 39,272.8

 37,250.4

Growth (%)

8.1

5.7

0.7

8.4

-5.1

Wafer-Level Packaging and Assembly Equipment ($M)

1,831.2

2,026.8

2,247.6

2,506.9

2,567.7

Growth (%)

3.9

10.7

10.9

11.5

2.8

Source: Gartner (January 2017)

Foundries continue to outgrow the overall semiconductor market with mobile processors from Apple, Qualcomm, MediaTek and HiSilicon as the demand driver on leading-node wafers. In particular, fast 4G migration and more-powerful processors have resulted in larger die sizes than previous-generation application processors, requiring more 28 nanometer (nm), 16/14 nm and 10 nm wafers from foundries. Nonleading technology will continue to be strong from the integrated display driver controllers and fingerprint ID chips and active-matrix organic light-emitting diode (AMOLED) display driver integrated circuits (ICs).

This research is produced by Gartner’s Semiconductor Manufacturing program. This research program, which is part of the overall semiconductor research group, provides a comprehensive view of the entire semiconductor industry, from manufacturing to device and application market trends. Gartner clients can see more in “Forecast Analysis: Semiconductor Capital Spending and Manufacturing Equipment, Worldwide, 4Q16 Update.”

The pure-play foundry market is forecast to play an increasingly stronger role in the worldwide IC market during the next five years, according to IC Insights’ new 2017 McClean Report, which becomes available later this month.  The 20th anniversary edition of The McClean Report forecasts that the 2016-2021 pure-play IC foundry market will increase by a compound annual growth rate (CAGR) of 7.6%; growing from $50.0 billion in 2016 to $72.1 billion in 2021.

IC foundries have two main customers—fabless IC companies (e.g., Qualcomm, Nvidia, Xilinx, AMD, etc.) and IDMs (e.g., ON, ST, TI, Toshiba, etc.).  The success of fabless IC companies as well as the movement to more outsourcing by existing IDMs has fueled strong growth in IC foundry sales since 1998.  Moreover, an increasing number of mid-size companies are ditching their fabs in favor of the fabless business model.  A few examples include Fujitsu, IDT, LSI Corp. (now part of Avago), Avago (now Broadcom Ltd.), and AMD, which have all become fabless IC suppliers over the past few years.

Figure 1 shows the ranking of the top 10 pure-play foundries in 2016.  In 2016, the “Big 4” pure-play foundries (i.e., TSMC, GlobalFoundries, UMC, and SMIC) held an imposing 85% share of the total worldwide pure-play IC foundry market.  As shown, TSMC held a 59% marketshare in 2016, the same as in 2015, and its sales increased by $2.9 billion last year, more than double the $1.4 billion increase it logged in 2015.  GlobalFoundries, UMC, and SMIC’s combined share was 26% in 2016, the same as in 2015.

The three top-10 pure-play foundry companies that displayed the highest growth rates in 2016 were X Fab (54%), which specializes in analog, mixed-signal, and high-voltage devices and acquired pure-play foundry Altis in 3Q16 to move into the top 10 for the first time, China-based SMIC (31%), and analog and mixed-signal specialist foundry TowerJazz (30%).  In contrast to X-Fab’s 2016 growth spurt, TowerJazz and SMIC have been on a very strong growth curve over the past few years.  TowerJazz went from $505 million in sales in 2013 to $1,249 million in 2016 (a 35% CAGR) while SMIC more than doubled its revenue from 2011 ($1,220 million) to 2016 ($2,921 million) and registered a 19% CAGR over this five-year period.

Seven of the top 10 pure-play foundries listed in Figure 1 are based in the Asia-Pacific region.  Europe-headquartered specialty foundry X-Fab, Israel-based TowerJazz, and U.S.-headquartered GlobalFoundries are the only non-Asia-Pacific companies in the top 10 group.

Figure 1

Figure 1

Further trends and analysis relating to the IC market are covered in the 400-plus page 2017 edition of The McClean Report.

SEMI’s Industry Strategy Symposium (ISS) opened yesterday with a theme focused on new industry forces and new markets.  The annual three-day conference of C-level executives gives the year’s first strategic outlook of the global electronics manufacturing industry. Today’s keynote, economic trends, and market perspectives highlighted market and technology opportunities and marked the rising tide for 2017 investments in the semiconductor manufacturing supply chain. While Day 1 brought both insight and optimism to the more than 200 attendees, deeper discussions on technology, applications, regional opportunities, and an expert panel on mergers and acquisitions will be presented on Day 2 and Day 3 of SEMI’s business leader annual kick-off event.

Opening keynoter Gary Patton, CTO and senior VP of worldwide R&D at GLOBALFOUNDRIES, presented a wide-ranging overview of industry growth and opportunities. Referencing Thomas Friedman’s three disruptive trends:  globalization, climate change, and Moore’s Law, Patton showed 2016’s global semiconductor merger and acquisition activity exceeding a staggering $130 billion and China’s rapidly growing IC production which is forecast to reach more than 20 percent of global output in 2020.

Patton identified five areas of semiconductor growth: IoT (Internet of Things), Automotive, 5G (mobile network), AR & VR (Augmented & Virtual Reality), and Artificial Intelligence.  From 2016 to 2025, Patton forecasted that semiconductor IoT content will grow from $15 billion to $62 billion, Automotive will grow from $32 billion to $51 billion, 5G will grow from $0 to $20 billion, AR/VR will grow from $4 billion to $131 billion, and Artificial Intelligence will grow from $5 billion to $50 billion.

For these different growth areas, Patton and GLOBALFOUNDRIES see a variety of solutions, what they’re calling “the right technology for the right application.”  This includes FinFET, FD-SOI, and different technology nodes selected for specific applications.  DTCO (Design-Technology Co-Optimization), and collaboration with not just suppliers, but sub-suppliers, raw materials and components manufacturers were key tools for success with Patton calling for greater cooperation in working within SEMI’s Semiconductor Components, Instruments, and Subsystems (SCIS) Special Interest Group.

In the Economic Trends session, presenters took on macroeconomic trends and detailed industry-specific forecasts:

  • Paul Thomas, Economic Stories, long-time former chief economist at Intel, drilled down on the topic of innovation, productivity, and economic stagnation.  Thomas presented data that showed productivity growth rates are not showing the expected benefits of digitization (computers, etc.).  He discussed possible causes for the discrepancies and gave food for thought on the gaps between perceived and measured productivity gains due to digital innovations.
  • Jim Hines, Gartner, provided a recently upgraded semiconductor and electronics market.  With recent improvements in chip prices, increasing semiconductor content, and inventory replenishment 2016 IC revenue was upgraded from 0.9 percent to 1.5 percent for 2016.  2016 is now forecast to come in at $340 billion.  2017 forecasts were adjusted from 5.5 percent to 7.7 percent.  Areas for strong growth are seen to be non-optical sensors (NOS), memory, opto-electronics and automotive growth (driven by connected vehicles, automated driving, and powertrain electrification).
  • G. Dan Hutcheson, VLSI Research, forecasted semiconductor equipment revenue at $54 billion, up 10 percent in 2016 and an outlook for $58 billion, up 8 percent, in 2017. Hutcheson showed data that the industry bottomed in April 2016 and in July 2016 demand pressure shifted the industry into an upturn.  Shortages in semiconductor supply will continue to drive growth in 2017.  Cloud computing and automotive are hot spots with smartphones in China, PC replacement cycles, DRAM pricing and Flash for SSD providing further positive support.
  • Michael Corbett, Linx Consulting provided an overview of the dynamics for wafer fab materials in the semiconductor industry. Corbett noted that the market for semiconductor materials was $18.5 billion in 2015 with the top 50 suppliers accounting for $17.2 billion or 93 percent of the materials sold.  M&A has been active in materials with recent combination of Dow & DuPont (proposed), Linde and Praxair, and Air Liquide and Airgas.  Corbett identified key trends impacting WFM suppliers including a consolidating customer base while at the same time the industry finds new entrants from China.
  • Matt Gertken, BCA Research provided a more academic geopolitical outlook for 2017.  Looking through the lenses of multipolarity, mercantilism, and dirigisme, Gertken provided context for the changes in progressive and protectionist forces over time.  Showing that globalization increased almost monotonically from 1950 through 2010, it appears to have hit a trade globalization peak where globalization plateaued and, in part, set the stage for Brexit and the unexpected Trump win and related more protectionist sentiment.

The afternoon session focused on Market Perspectives, including consumer, artificial intelligence (AI), Internet of Things (IoT), and automotive.

  • Shawn DuBravac, Consumer Tech Association, gave a summary of CES 2017 which just ended the day before.  DuBravac found three unifying trends at this year’s event:  voice, AI, and connections and computations.  It is anticipated that we are entering the era of faceless computing. The next computer interface is voice – with vocal computing replacing the traditional GUIs for robots and other emerging computing devices.
  • Prasad Sabada, Google, in his presentation on “Cloud and Moore: Disruptors for Semiconductors,” discussed two inflection points.  Tectonics shift #1:  Cloud. Tectonic Shift #2:  No more Moore’s Law.  Sabada sees the industry entering an era of accelerators – application specific devices that may leapfrog up to three Moore’s Law node generations.  Sabada called upon the semiconductor manufacturing industry for the need for speed (launch changes at the speed of software), the need for balanced system integration (innovation across the system), and the need for open innovation and collaboration.
  • Dario Gill, IBM Research, focused on “the new frontiers” of computing.  Gill talked about “Beautiful Ideas.”  He presented two:  Artificial intelligence, a beautiful idea with consensus; and Quantum Computing a beautiful idea (currently) without consensus.  He went on to show the value of artificial intelligence and the complicated and extraordinary potential for Quantum Computing.
  • Mark Bünger, Lux Research, believes the industry needs to rethink sensors, networks, and autonomy in automotive. Bünger forecast that autonomy could proceed much faster than diffusion of other car features because of its massive potential for improving utilization. It is not without disruption, though, as carmakers are worried about “losing the dashboard.”  Bünger provided several visceral examples of autonomous driving scenarios to make the case for AI moving to the IoT edge – and not relying on the Cloud.
  • Andrew Macleod, Mentor Graphics, discussed how automotive electronics are “a non-linear system of systems.”  Macleod pointed out that there have been three waves of recent progress in automotive electronics.  The first wave was globalization in 1984 when VW (and others) moved into the China market and pioneered automotive R&D decentralization and regional customization.  In the second wave came automotive drive electrification with the Toyota Prius in 1997.  The third wave was digitalization and the democratization of automotive.  The car is now becoming a consumer device and needs new design tools to manage the enormous amount of electronics complexity and permutations.

Days 2 and 3 at ISS will delve deeper into the industry ─ technology, manufacturing, public policy, and global forces, including China’s new focus on semiconductor manufacturing ─ with presentations from: AMEC, Applied Materials, Cadence Design Systems, imec, JSR, McKinsey & Company, Shanghai Huali Microelectronics (HLMC), IC Knowledge, International Business Strategies, Nikon, SanDisk, and SEMI. The Tuesday morning keynote is presented by Diane M. Bryant of Intel. Diego Olego of Philips Healthcare will offer the closing keynote on Wednesday, immediately before the ISS Panel on “The Future of M&A in the Semiconductor Industry,” with panelists from DCG Systems, FormFactor, MKS Instruments, and Stifel Nicolaus; moderated by Robert Maire, Semiconductor Advisors.

The SEMI Industry Strategy Symposium (ISS) examines global economic, technology, market, business and geo-political developments influencing the global electronics manufacturing industry along with their implications for your strategic business decisions. For more than 35 years, ISS has been the premier semiconductor conference for senior executives to acquire the latest trend data, technology highlights and industry perspective to support business decisions, customer strategies and the pursuit of greater profitability.

The Semiconductor Industry Association (SIA) today announced worldwide sales of semiconductors reached $31.0 billion for the month of November 2016, an increase of 7.4 percent compared to the November 2015 total of $28.9 billion and 2.0 percent more than the October 2016 total of 30.4 billion. November marked the market’s largest year-to-year growth since January 2015. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.

“Global semiconductor sales continued to pick up steam in November, increasing at the highest rate in almost two years and nearly pulling even with the year-to-date total from the same point in 2015,” said John Neuffer, president and CEO, Semiconductor Industry Association. “The Chinese market continues to stand out, growing nearly 16 percent year-to-year to lead all regional markets. As 2016 draws to a close, the global semiconductor market appears likely to roughly match annual sales from 2015 and is well-positioned for a solid start to 2017.”

Month-to-month sales increased modestly across all regions: the Americas (3.3 percent), China (2.7 percent), Europe (2.5 percent), Asia Pacific/All Other (0.7 percent), and Japan (0.4 percent). Year-to-year sales increased in China (15.8 percent), Japan (8.2 percent), Asia Pacific/All Other (4.8 percent), and the Americas (3.2 percent), but fell slightly in Europe (-1.6 percent).