Category Archives: Metrology

The pure-play foundry market is forecast to grow to an all-time high of $12.2 billion in 4Q15, following several quarters in which sales remained between $11.3 and $11.8 billion, based on IC Insights’ updated foundry forecast presented in the August Update to The McClean Report 2015 (Figure 1). IC Insights defines a pure-play foundry as a company that does not offer a significant amount of IC products of its own design, but instead focuses on producing ICs for other companies (e.g., TSMC, GlobalFoundries, UMC, SMIC, etc.).

Fig 1

Fig 1

The quarterly pure-play IC foundry market has recently displayed a seasonal pattern in which the best growth rate takes place in the second quarter of the year and a sales downturn occurs in the fourth quarter.  Given that about 98 percent of pure-play foundries’ sales are to IDMs and fabless companies that will re-sell the devices they purchase from the foundry, it makes sense that the pure-play foundries’ strongest seasonal quarter (second quarter) is one quarter earlier than the total IC industry’s strongest seasonal quarter (third quarter).

However, as shown in the figure, 2015 is not expected to display the typical pure-play foundry quarterly revenue pattern.  Although 1Q15 registered its usual weakness, 2Q15 showed a sequential decline, rather than an increase. In 2012, 2013, and 2014, second quarter pure-play foundry revenue showed strong double-digit growth.  In 2Q15, results were decidedly atypical with a 2 percent decline in pure-play foundry sales. The primary reason behind the 2Q15 sales decline was the 5 percent 2Q15/1Q15 revenue decline by foundry giant TSMC.  TSMC’s 5 percent sequential decline was equivalent to a $366 million drop in its revenue.

For 4Q15, IC Insights forecasts that the quarterly pure-play foundry market will show a higher than normal growth rate of 4 percent.  With most of the inventory adjustments that held back growth in the first half of the year expected to be completed by the end of 3Q15, 4Q15 is forecast to register enough growth to boost the quarterly pure-play foundry market to over $12.0 billion for the first time.

By Pete Singer, Editor-in-Chief

Austria-based ams AG, formerly known as Austriamicrosystem, announced plans to locate a new 360,000 ft2 fab in upstate New York at the Nano Utica site in Marcy, NY. The fab will be used to manufacture analog devices on 200/300mm wafers. Total buildout at the site, including support buildings and office space, will be close to 600,000ft2.

An artist’s rendering of a semiconductor fab at the Marcy site.

An artist’s rendering of a semiconductor fab at the Marcy site.

This will be the first fab going into the 428 acre Marcy site, which is large enough to accommodate three fabs and an R&D or packaging facility.

Construction of the ams fab is scheduled to begin in spring 2016, with first wafer ramp in the last quarter of 2017.

In what might become the new business model for fabs, the building itself will be publicly owned and leased to ams, which will assume operating costs and most of the costs of the capital equipment. Capital purchases, operating expenses and other investments in the facility over the first 20 years are estimated at more than $2 billion. ams will create and retain more than 700 full time jobs and anticipates the creation of at least 500 additional support jobs from contractors, subcontractors, suppliers, and partners necessary to establish the full ecosystem necessary to enable advanced manufacturing operations.

Fort Schuyler Management (FSMC) will handle the construction, with the goal of turning the fab over to ams in Q2 2017. A key part of N.Y. Governor Andrew Cuomo’s START-UP NY initiative, FSMC is a State University of New York (SUNY Polytechnic Institute) affiliated, private, not-for-profit, 501c(3) corporation that facilitates research and economic development opportunities in support of New York’s emerging nanotechnology and semiconductor clusters.

“If jobs are being created, everything else will take care of itself,” Cuomo said.

Mohawk Valley EDGE President Steve DiMeo said site work has already started. “We’re putting roads in, storm drainage, utilities and we just approved the change order for clearing the land where ams will be located. We’ll be doing some additional site development this fall, and work closely with Fort Schuyler so that they will be in a position to begin construction the early part of next year.”

In a related announcement, GE Global Research said it will expand its New York global operations to the Mohawk Valley, serving as the anchor tenant of the Computer Chip Commercialization Center (QUAD C) on the campus of SUNY Polytechnic Institute’s Colleges of Nanoscale Science and Engineering in Utica. Nearly 500 jobs are expected to be created in the Mohawk Valley in the next five years from SUNY Poly, GE and affiliated corporations and another 350 in the subsequent five years.

These public-private partnerships represent the launch of the next phase of the Governor’s Nano Utica initiative, which now exceeds more than 4,000 projected jobs over the next ten years. Designed to replicate the dramatic success of SUNY Poly’s Nanotech Megaplex in Albany, NANO Utica further cements New York’s international recognition as the preeminent hub for 21st century nanotechnology innovation, education, and economic development.

“This is a transformative moment that will make a difference in peoples’ lives in the Mohawk Valley for generations to come,” said Governor Cuomo. “Over the past few years, we have worked to reverse the negative and invest in Upstate NY – and today we’re taking another huge step forward. With GE and ams joining the Nano Utica initiative, we’re seeing the region’s economy gathering momentum unlike ever before. The Mohawk Valley is beginning an economic revolution around nanotechnology, and I am excited to see the region take off and thrive, both today and in the years ahead.”

Dr. Alain Kaloyeros, President and Chief Executive Officer of SUNY Polytechnic Institute, said, “Today’s announcement by Governor Andrew Cuomo represents a major expansion for Quad-C and the Nano Utica initiative and is a tremendous victory for the Mohawk Valley and the entire State of New York. World renowned partners such as GE Global Research and AMS raise the level of prestige for the entire region and accelerate the development of this international hub for technology and innovation. Governor Cuomo’s pioneering economic development model, coupled with SUNY Poly CNSE’s world class expertise and resources, continues to generate historic investment and job creation throughout the state. We welcome GE and AMS and their leadership teams and look forward to their partnership in the continued growth of Nano Utica.”

ams Chief Operating Officer Dr. Thomas Stockmeier said, “Building a new wafer fab will help us achieve our growth plans and meet the increasing demand for our advanced manufacturing nodes. Our decision to locate the facility in New York was motivated by the highly-skilled workforce, the proximity to esteemed education and research institutions, and the favorable business environment provided by Governor Cuomo and all the public and private partners we are working with on this important project.”

Additionally, ams will collaborate with FSMC and SUNY Poly on a joint development program to support complimentary research, commercialization and workforce training opportunities at SUNY Poly facilities throughout New York State.

SEMI today announced the second annual SEMI South America Semiconductor Strategy Summit (SA SSS) at the Sheraton Rio on November 10-12 in Rio De Janeiro, Brazil.   Unitec Semiconductor, ABI SEMI, and the Brazil Development Bank BNDES are making the event possible.  With the continued globalization of the microelectronics industry, and localization of manufacturing capabilities within growing electronic markets, the South American market presents new opportunities for both electronics manufacturing and supply chain companies.  Investors and analysts, equipment and materials suppliers, researchers, IC developers, and others ready to explore emerging opportunities in South America should attend. The unique delegation-style summit will provide an exceptional opportunity to meet face-to-face with representatives and executives from local companies, government officials, industry experts, economic development specialists, and analysts.

Device manufacturers, including Unitec Blue in Argentina, and Unitec Semiconductor and CEITEC in Brazil, are making new investments in front- and back-end manufacturing.  In 2012, Unitec Semiconductor S.A. announced an investment of US$400 million to build the most modern semiconductor factory in the Southern Hemisphere.  Located in Ribeirao Neves, the facility produces customized chips used in industrial and medical applications. Other leaders in the Latin American semiconductor industry include CEITEC S.A., which has operated a design center and a foundry since 2012, and HT Micron, a joint-venture between South Korean Hana Micron and Brazilian Parit Participações.  In addition, the Brazilian Government recently created a tax incentive program, called PADIS, to provide fiscal incentives for companies that pledge to invest in R&D and in the national development of the sector in the country.

“SEMI is pleased to organize this pioneering event to help build the successful growth of the South America semiconductor industry,” said Karen Savala, president of SEMI Americas. “SEMI is helping our members explore new opportunities with the latest information from corporate stakeholders and government officials. This event brings together global and regional industry leaders ─ fostering the connections and relationships that lead to business and market growth.”

The conference will provide overviews of the current industry environment in South America, address the challenges and opportunities for supply chain companies in the region, and explore the next steps in building the region’s microelectronics industry infrastructure. Panel discussions include: Smart Cards and Banking Technologies, Life Science Technologies, Smart Cities, and Challenges and Next Steps.

Registration, agenda, and sponsorship information is available online at www.semi.org/southamerica.

Startups and small electronics companies spent $78.3 billion on semiconductors in 2014, representing 23 percent of the total market, compelling semiconductor companies to revisit their sales strategy to focus on the large number of smaller organizations than relying on big deals from large customers, research firm Gartner said.

Gartner estimates that there are more than 165,000 companies that buy semiconductor chips around the world: The top 10 spend nearly 40 percent of the total semiconductor revenue; the top 11 to 100 spend about 30 percent; and the remainder spend 30 percent.

Despite the top 10 accounting for such a large percentage of the market, some of the largest customers have decreased orders in the past five years, challenging the semiconductor vendors that mainly supplied to them.

While Samsung and Apple have significantly increased orders in the same period due to success in the smartphone market, semiconductor vendors are concerned about the risk of relying on large customers such as these.

“The industry has seen some fairly significant disruption in recent years, which has highlighted the risks associated with semiconductor vendors putting all of their focus on a limited number of large customers, when small companies offer highly profitable and stable growth,” said Masatsune Yamaji, Principal Research Analyst at Gartner. “To overcome the risk, some semiconductor vendors have tried to increase their business with small customers, while others are also realizing that they should adjust their strategies to do this.”

China is the fastest-growing among the major small-customer regions, with spending by these organizations on semiconductors growing from US$7.5 billion in 2007 to US$14.9 billion in 2014; growth in the smartphone and media tablet markets has been strong. In the Americas, EMEA and Japan, revenue from each customer is small, but the total market size of small customers is big due to the large number of such customers.

Gartner maintains that the number of customers will significantly increase after 2017, due to future growth of the electronics market and the increase in the number of Internet of Things solutions. It is anticipated that the maker movement, which creates and markets products that are recreated and assembled using unused, discarded or broken products from computer-related devices, will drive the foundation of startups and growth of small customers.

According to Gartner, big deals are not confined to large organizations, with many successful vendors having success in the small-customer market by leveraging distributors. Limited sales resources can be compensated for by aligning with good sales partners. Strong adherence to direct sales restricts the opportunities with small customers, especially among general-purpose semiconductor vendors. In fact, semiconductor distributors earn a large part of their revenue from general-purpose semiconductors.

“Semiconductor vendors should focus more on the high-tier customers and outsource sales activities with small customers to distributors,” said Yamaji. “Distributors can bring various products to market at the same time, so this outsourcing will reduce the load, not just for semiconductor vendors, but also for customers. Some distributors offer end-of-life product delivery services, so vendors should partner with these distributors to help small customers avoid having to order excessive loads.”

Gartner recommends that vendors need to evaluate how much revenue can be expected, compared with the large customers. The importance of the small customers for each vendor differs by its product type and its target sales region, so vendors need to have their own unique goals in the small-customer market.

“Before jumping in, semiconductor vendors also need to be aware of the risks associated with the small-company market, which is prone to shrinking when the macro economy weakens,” said Yamaji. “Revenue can also shrink even faster than large customers in many cases, so it is important to be aware of risk levels regarding any revenue decline. Vendors can reduce the risks by diversifying their customer base, which can spread the liability to allow for lost orders.”

North America-based manufacturers of semiconductor equipment posted $1.59 billion in orders worldwide in July 2015 (three-month average basis) and a book-to-bill ratio of 1.02, according to the July EMDS Book-to-Bill Report published today by SEMI.  A book-to-bill of 1.02 means that $102 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 July 2015 was $1.59 billion. The bookings figure is 5.1 percent higher than the final June 2015 level of $1.52 billion, and is 12.5 percent higher than the July 2014 order level of $1.42 billion.

The three-month average of worldwide billings in July 2015 was $1.56 billion. The billings figure is 0.3 percent higher than the final June 2015 level of $1.55 billion, and is 18.2 percent higher than the July 2014 billings level of $1.32 billion.

“Year-to-date, the bookings and billings reported in the SEMI North American equipment book-to-bill report indicate a solid year for the industry,” said SEMI president and CEO Denny McGuirk. “The outlook for the remainder of the year is somewhat clouded, but we see investments in 3D NAND and advanced packaging as drivers.”

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
February 2015 

$1,280.1

$1,313.7

1.03
March 2015 

$1,265.6

$1,392.7

1.10
April 2015 

$1,515.3

$1,573.7

1.04
May 2015 

$1,557.3

$1,546.2

0.99
June 2015 (final)

$1,554.9

$1,517.4

0.98
July 2015 (prelim)

$1,559.3

$1,594.3

1.02

Source: SEMI (www.semi.org), August 2015

By Taylor Sholler, SEMI

With trade policy dominating headlines in recent weeks, all eyes were on Maui in the waning days of August as trade ministers from twelve nations convened for perhaps the final time to finalize the Trans-Pacific Partnership (TPP).  Such a pact between Pacific Rim economies would account for 40 percent of the world’s GDP.  However, last-minute hurdles on dairy, autos, and drug provisions proved to be the negotiators’ undoing and ministers left Hawaii with the promise of at least one more round of exhaustive deliberations in the fall.

Such is the pathway for a multilateral agreement like the TPP.  By all accounts, significant progress has been made but getting 12 countries to concur on a high-standard agreement to reduce both tariffs and non-tariff barriers has been arduous to say the least.  The business community remains optimistic nonetheless and will continue to support TPP conclusion— key for the U.S. SEM industries which export 80% of their products— later this year.

Conversely, a sector-specific trade agreement is a bit more straightforward and industry welcomed news just a week earlier that an agreement-in-principle was reached on the expansion of the Information Technology Agreement (ITA).  Originally agreed to in 1996, the ITA fosters free trade in tech and has sorely needed an update to account for the vast progress made through industrial innovation.  While this effort was not without its own obstacles, World Trade Organization (WTO) members came to an agreement in Geneva on July 24th to cut tariffs on more than 200 ICT products after more than three years of negotiations.

This deal between more than 50 nations is seen a major victory for the global economy and the semiconductor equipment and materials industries in particular. SEM-related items account of more than a dozen of the products on the expansion list, including machines and apparatus to manufacture boules, wafers, semiconductor devices and flat panel displays among other products of interest to SEMI members.

WTO trade ministers will now take the list back to their respective capitals for domestic consultations.  By November 1st, participating members must submit a draft schedule detailing their plans for national implementation.  The process should culminate during the WTO’s 10th Ministerial Conference in Nairobi in December 2015, with tariff elimination slated to begin July 2016.

The expanded agreement represents 97 percent of world trade in information technology products—an estimated $1.3 billion annual market.  However, the deal also contains a commitment to work to tackle non-tariff barriers in the IT sector, and to keep the list of products covered under review to determine whether further expansion may be needed to reflect future technological developments.

In what was already been a successful year for trade liberalization, negotiators should soon celebrate implementation of the largest WTO-driven tariff elimination deal in 19 years.  The process has breathed fresh life into the promise of sectoral trade pacts driven by market demand and targeted negotiations.  SEMI has worked closely with ITA negotiators throughout the process to ensure the inclusion of SEM items in the expanded list and this is something we hope to replicate in other market opening accords like the Environmental Goods Agreement as well.

The semiconductor supply chain is comprised of the most innovation and technologically advanced products in the world and trade agreements like the ITA play an exceedingly helpful role in the advancement of our industry.  WTO Director-General Roberto Azevedo and trade negotiators around the world should be commended for their persistence on this important expansion effort. SEMI will continue to support the great work happening in Geneva and elsewhere to remove barriers to trade and improve business operations for our members.

For a complete list of items included in the expanded ITA, please visit:  https://ustr.gov/sites/default/files/ITA-expansion-product-list-2015.pdf

For those with trade-specific questions or concerns, SEMI maintains a dedicated international policy staff, led by Jonathan Davis, Global Vice President of Advocacy ([email protected]).

The Semiconductor Industry Association (SIA) announced former Defense Secretary Leon Panetta will deliver the keynote address at the upcoming SIA Award Dinner, taking place on Thursday, Dec. 3 in San Jose, Calif. Mr. Panetta, who has also served as CIA director, White House chief of staff, director of the Office of Management and Budget (OMB), and as a member of Congress, will offer insight on how the strength of U.S. technology, and a vibrant U.S. semiconductor industry in particular, are critical to our country’s standing in the world and to our economy and national security.

“Leon Panetta is one of America’s most respected leaders and experts on foreign policy,” said John Neuffer, president and CEO, Semiconductor Industry Association. “The semiconductor industry is a global industry with global challenges. We must ensure smart government policies are in place here at home so our industry can remain strong, and we must work closely with counterparts overseas to ensure we can play on a level playing field in the global markets. Given Mr. Panetta’s extensive and diverse experiences on the domestic and international stages, we very much look forward to his keen perspectives on these matters as we welcome him as the keynote presenter at this year’s SIA Award Dinner.”

Mr. Panetta has dedicated much of his life to public service. He served as the 23rd defense secretary from July 2011 to February 2013. Before joining the Department of Defense, Mr. Panetta served as the director of the CIA from February 2009 to June 2011. Previously, he spent 10 years co-directing with his wife, Sylvia, the Leon & Sylvia Panetta Institute for Public Policy, based at California State University, Monterey Bay. The Institute is a nonpartisan, not-for-profit center that seeks to instill the virtues and values of public service in young men and women.

From July 1994 to January 1997, Mr. Panetta served as chief of staff to President Bill Clinton. Prior to that, he was director of OMB, a position that built on his years of work on the House Budget Committee. Mr. Panetta represented California’s 16th (now 17th) congressional district from 1977 to 1993, rising to House Budget Committee chairman during his final four years in Congress. He holds a Bachelor of Arts degree in political science and a law degree, both from Santa Clara University.

The SIA Award Dinner also will feature the presentation of the semiconductor industry’s highest honor, the Robert N. Noyce Award.

ON Semiconductor Corporation today announced that Alan Campbell has joined its Board of Directors.

“Alan Campbell is an outstanding addition to our Board of Directors,” said Dan McCranie, chairman of ON Semiconductor’s Board of Directors. “He brings significant industry knowledge, coupled with his extensive financial background at Freescale Semiconductor. Mr. Campbell will be a valuable addition to the Board, as we continue to grow our business through strategic acquisitions and organic growth, while aligning the company toward our vision of becoming the premier supplier of energy efficient system solutions worldwide.”

Mr. Campbell brings more than 30 years of global industry experience to the Board of ON Semiconductor. He served as the Chief Financial Officer (CFO) at Freescale Semiconductor from May 2004 to June 2014. During his tenure at Freescale, Mr. Campbell guided Freescale through its initial public offering (IPO) in 2004, a leveraged buyout in 2006 and a second public offering of shares in 2011. Prior to serving as CFO, Mr. Campbell served as Senior Vice President and Director of Finance of the Semiconductor Product Sector (SPS) division of Motorola, Inc. from February 2000 to May 2004. He also serves as a director of Dialog Semiconductor.

ON Semiconductor is a leading of semiconductor-based solutions.

IC Insights will release its August Update to the 2015 McClean Report later this month.  The August Update will include an in-depth analysis of the IC foundry market and a look at the top 25 1H15 semiconductor suppliers’ sales results and their outlooks for 3Q15 (the top 20 1H15 semiconductor suppliers are covered in this research bulletin).

The top-20 worldwide semiconductor (IC and O S D—optoelectronic, sensor, and discrete) sales ranking for 1H15 is depicted in Figure 1.  As shown, it took just over $2.2 billion in sales just to make it into the 1H15 top-20 ranking and eight of the top 20 companies had 1H15 sales of at least $5.0 billion. The ranking includes seven suppliers headquartered in the U.S., four in Japan, three in Taiwan, three in Europe, two in South Korea, and one in Singapore.  The top-20 supplier list includes three pure-play foundries (TSMC, GlobalFoundries, and UMC) and four fabless companies.

IC Insights includes foundries in the top 20 semiconductor supplier ranking since it has always viewed the ranking as a top supplier list, not a marketshare ranking, and realizes that in some cases the semiconductor sales are double counted.

It should be noted that not all foundry sales should be excluded when attempting to create marketshare data. For example, although Samsung had a large amount of foundry sales in 1H15, some of its foundry sales were to Apple and other electronic system suppliers.  Since the electronic system suppliers do not resell these devices, counting these foundry sales as Samsung IC sales does not introduce double counting.  Overall, the top-20 list in Figure 1 is provided as a guideline to identify which companies are the leading semiconductor suppliers, whether they are IDMs, fabless companies, or foundries.

semi sales 2q15 fig 1

In total, the top 20 semiconductor companies’ sales increased by only 1% in 2Q15/1Q15, the same growth rate as the total worldwide semiconductor industry.  Although the top-20 semiconductor companies registered a 1% sequential increase in 2Q15, there was a 23-point spread between Samsung, the fastest growing company on the list (10 percent growth), and Qualcomm, the worst performing supplier (13 percent decline) in the ranking.  Moreover, given Qualcomm’s currently dismal guidance for 3Q15, the company is on pace to post a semiconductor sales decline of 20 percent in calendar year 2015.

Samsung’s excellent growth rate in 2Q15 put the company closer to catching Intel and becoming the world’s leading semiconductor supplier.  In 2014, Intel’s semiconductor sales were 36 percent greater than Samsung’s.  In 2Q15, the delta dropped by a whopping 20 percentage points to only 16 percent.  However, with Intel providing guidance for a 3Q15/2Q15 sales increase of 8 percent and Samsung facing a lackluster DRAM market (primarily due to pricing pressures), additional gains toward the number one position may be difficult for Samsung to achieve in the near future.

There were two new entrants into the top 20 ranking in 1H15—Japan-based Sharp and Taiwan-based pure-play foundry UMC, which replaced U.S.-based Nvidia and AMD.  AMD had a particularly rough 2Q15 and saw its sales drop 35 percent year-over-year.  In fact, in 2Q15, the company’s sales fell below $1.0 billion for the first time since 3Q03, almost 12 years ago.  It currently appears that AMD’s 2013 restructuring and new strategy programs to focus on non-PC end-use segments have yet to pay off (in addition to its sales decline, AMD lost $361 million in 1H15 after losing $403 million in 2014).

IC Insights has recently lowered its 2015 worldwide semiconductor market forecast from 5 percent to 2 percent.  As was shown in Figure 1, the top 20 semiconductor suppliers in total had $128.3 billion in sales in 1H15.  This figure was just under 50 percent of the top 20 companies’ full year 2014 sales of $259.1 billion.  With only modest growth expected in the second half of this year for the worldwide semiconductor market, the top 20 semiconductor suppliers’ combined sales in 2015 are expected to be only about 1-2 percent greater than in 2014.

Figure 2 shows how the 1H15 top 20 ranking would have looked if the Avago/Broadcom and NXP/Freescale mergers were in place.  As shown, Avago/Broadcom would have been ranked 7th and NXP/Freescale would have moved into the 10th spot.  IC Insights believes that additional acquisitions and mergers over the next few years are likely to continue to shake up the future top 20 semiconductor company rankings.

semi sales 2q15 fig 2

SunEdison Semiconductor Limited, a supplier of semiconductor wafers to the global semiconductor device industry, today announced that it has initiated a plan to consolidate its manufacturing footprint to better match demands of the industry. The consolidation will consist of closing its Ipoh, Malaysia wafering plant by the end of 2016, and relocating the associated capacity to other plant sites. This action will affect approximately 650 employees at the Ipoh facility. The company does not expect its total capacity to change. By late 2016, with the closure of the Ipoh plant, the company’s global footprint will be consolidated from eight to seven plants.

The Ipoh plant produces 200mm semiconductor wafers. SunEdison Semiconductor will work closely with customers to complete the qualifications required and/or build adequate supply to support their needs. During the transition, SunEdison Semiconductor expects to continue to deliver products and service without disruption to their customers. Employees affected by the closure are being offered customary severance and benefits packages.

The company estimates that approximately $4 million to $6 million of severance expense will be incurred as a result of this action, of which approximately $2 million to $4 million is expected to be incurred in the third quarter of 2015 with the balance incurred over the next 12 to 16 months.

Related news: 

IC manufacturers close or repurpose 83 wafer fabs from 2009-2014