Category Archives: Top Story Right

October 29, 2012 – It’s been a familiar refrain: with every new Windows operating system that comes out, OEMs to end-users upgrade their systems to handle the new capabilities, including more memory. But not this time with Windows 8. In a departure from past iterations, Windows 8 will not cause any significant rise in DRAM unit shipments, predicts IHS iSuppli.

The firm is projecting only an 8% increase in global DRAM bit shipments in 4Q12 vs. 3Q12, which includes DRAM for PCs, smartphones, and tablets. That’s a departure from the double-digit percentage increases seen with every other major MS OS release. Windows 3.1’s release in the second quarter of 1992 sparked a 29% increase in DRAM shipments, up from 12% in the prior quarter. Similarly, Windows 95 caused DRAM shipments to surge 23% in 4Q95, vs. the 11%-14% seen in the previous four quarters. Three successive Windows versions in the late 1990s and early 2000s all pushed DRAM shipments up by 40% or more in their respective release quarters.

Windows version Release date % DRAM bit growth Q/Q
3.1 1Q92 29%
95 4Q95 23%
98 3Q98 40%
2000 1Q00 49%
XP 3Q01 41%
Vista 1Q07 24%
7 4Q09 18%
8 4Q12 8%

Historical DRAM bit shipment percentage growth, sequential quarterly change in unit shipments. (Source: WSTS, IHS iSuppli)

Credit (or blame?) Windows 8’s "lean hardware requirements," the firm says. "Starting with Windows 7 and continuing with Windows 8, Microsoft has taken a leaner approach with its operating systems, maintaining the same DRAM requirements as before,” stated Clifford Leimbach, analyst for memory demand forecasting at IHS.

And Windows 8 won’t really make a dent in the increase of PCs shipped in 4Q12 when it’s released, either. "Consumers are continuing to eschew new PC purchases in the fourth quarter, with Windows 8 not expected to change this situation,” he added. (And it’s not only consumers either; Gartner thinks 90% of businesses will still be keeping Windows 8 at arm’s length by 2015.)

It’s one more sign of the sea change in computing away from desktops and toward mobile devices. PC share in the DRAM space dipped below 50% for the first time in 2Q12 of this year, IHS iSuppli calculates, handing the mantle to other devices increasingly gobbling up memory such as smartphones and media. In this new era of diversified computing and applications, a new OS just doesn’t have the hardware oomph it used to. (And that’s not entirely a bad thing — the highs of unit shipment growth won’t be as high, but the lows also will be more muted because of the diluted impact of a disparate application base, the firm notes.)

October 26, 2012 – Communications applications are far and away the leading growth market for ICs over the next five years, and PCs and consumer applications have fallen far back in the pack.

IC Insights projects a 7.4% compound annual growth rate for total IC sales from 2011-2016. That’s largely because of good growth in the communications end market (14.1% CAGR) which will nearly double the entire IC market over the period — and nearly double in size to $160B by 2016. The Asia-Pacific region will see the lion’s share (61%) of this year’s comm IC sales, up from 59% in 2011.

Also ahead of the curve is the automotive IC market (9.0% CAGR), pegged to surge to $28B in 2016, 53% bigger than where it was in 2011. Europe has been the big market in that sector, accounting for 37% of sales in 2012 — but by 2016 the Asia-Pacific market will be nearly equal in size, IC Insights projects.

Another emerging sector is medical/industrial applications, within which is an aging global population requiring home healthcare as well as other industrial applications. Analog ICs will continue to dominate here (45% of total in 2012, and still the largest in 2016). The government/military IC market will reach $2.46B by 2016 but still be a tiny slice of the total market (<1%).

IC market growth forecast by application, 2011-2016 CAGR. (Source: IC Insights)

The two slowest sectors are the ones which have fallen the farthest from grace. Computer IC sales will drop to 34% of the total market in 2012 vs. nearly 42% in 2011. This year’s -9% drop in computer IC sales is due to a -12% decline in memory sales. And consumer ICs will register just 1.9% CAGR from 2011-2016. Japan was "once the stronghold of the consumer electronics business," points out the analyst firm, but in 2012 it will hold less than half the share of the consumer IC market vs. the Asia Pacific region (22% to 50%).

IC Insights had already been predicting that communications will usurp computers as the biggest application for leading-edge ICs. Comm will be the biggest end-use IC app in every major geographic region starting in 2014. Communications accounted for 31% of worldwide IC sales, vs. 41.7% for computers; the analyst firm sees them swapping to 42.2% and 34.0% by 2016.

(Source: IC Insights)

In fact, telecom apps are already the biggest growth areas for ICs, notes IC Insights. In 2012 the top three growth areas are all telecom, and thanks to application-specific processors used in smartphones and tablet computers. Also note that NAND flash continues to grow, though at much slower rates due to a surge in capacity (and vendors) and subsequently lower pricing pressures. Auto is a top market in 2012 as ell, thanks to needed functions such as self-parking systems, stability control, and collision avoidance.


Top growing IC markets (in revenue growth), 2010-2012F. (Source: IC Insights)

Note that the lines are blurring with every new generation of technology — what counts as a consumer device, or a business application, or communications usage. "It is getting more difficult to keep nice matter-of-fact demarcations between the products," acknowledges IC Insights president Bill McClean. "We are classifying by type of product and not really who is the end user." That puts smartphones in the "communications" category because it’s a type of cellphone, whatever else they are capable of doing and are used for. Consumer gear, then, means systems including TVs, stereo equipment, iPods, etc., he explains. Tablets are a form of PCs so they are included as computers, though some market watchers (particularly for early versions) ranked them as personal media devices.

October 23, 2012 – The semiconductor manufacturing sector continues to spin its wheels in an attempt to find traction amid lingering economic uncertainty. Another example: wafer demand is slowly pulling back onto a growth track, and will set new records in terms of shipments in the coming two years, according to data from SEMI.

Total wafer shipments declined -3% in 2011 after a record surge in 2010, and are expected to stay flat in 2012, according to SEMI’s latest tally. But shipments should swing back into mid-single-digit growth in 2013 and 2014 and surpass 2010’s levels.

"In spite of heightened economic uncertainty, silicon shipments for the first half of 2012 were very promising," stated Denny McGuirk, president and CEO of SEMI. "We expect 2012 silicon shipments to remain essentially flat when compared to 2011 and increase in 2013 and 2014."

Total electronic-grade silicon slices in millions of sq. in. shipped by the wafer
manufacturers to the end-users. Includes virgin test wafers and epitaxial
silicon wafers; does not include non-polished wafers. Shipments are for
semiconductor applications only and do not include solar applications.
(Source: SEMI)

A closer look at wafer demand, courtesy of Semico Research, shows a clearer picture of wafer demand, and the swings for demand of different silicon types. Total wafer demand is increasing at around 11% CAGR over the next five years, but the splits by technology show that wafers for MPUs only make up 3% of total industry wafers — while wafers processed into chips for wireless end use have grown tenfold in the past decade. (Other segments have eroded, like DSPs, as capabilities are integrated into the system-on-chip.)

Silicon shipments vs. wafer demand. (Source: Semico Research, SEMI)

The biggest driver in wafer demand, clearly, is anything tied to mobile devices, and the big winner is NAND flash memory. Demand for NAND wafers tripled from 2005-2010; even with NAND manufacturers increasing density with multilevel cell architectures, NAND wafers have increased their share of total wafer demand from 4% in 2005 to nearly 18% now, according to Semico, and 51 million NAND wafers will ship by 2016. NAND wafer demand in 2011 peaked at 32Gb/45nm, while 2012 NAND demand will peak at 64Gb/22nm. The more mobile devices proliferate with increasing functionality, the stronger the appetite for NAND per system — and as more mobile/remote functionality is pushed into "the cloud" NAND will be making inroads into servers, too, thanks to its better power usage and faster access speeds, Semico notes.

All these different variances in demand funnel down to one very stressed position these days in the semiconductor world. While engineers and visionaries are figuring out how to keep Moore’s Law going with new architectures and materials, purchasing managers are on the hot seat to navigate the variances in wafer usage and inventories. "Product ramps, semiconductor sales, and technology transitions are getting more and more difficult to plan," explains Joanne Itow, managing director at Semico Research. "A purchasing manager’s job is tough in these volatile times."

October 18, 2012 – Worldwide flat-panel display (FPD) revenues will reach a record $120 billion in 2012, up 8% from a challenging year in 2011, and the recovery is entirely on the backs of TFT-LCDs and AMOLED displays, according to NPD DisplaySearch.

TFT-LCD displays still make up the vast share of all display sales (~90%), and so the overall market tracks in-step with this segment, rebounding from a -5% decline in 2011 to an 8% rise in 2012. Note, though, that of all the other display technology slices, AMOLEDs have by far the best growth trajectory — two years ago it was fourth in total market share (1%) behind plasma, passive matrix, and roughly tied with CRT; now it’s the second-most-popular display technology with a 5.4% share and the gap is widening. Credit surging manufacturing capacity and expansion of market players, DisplaySearch says. The only other segment to see any growth is liquid crystal on silicon (LCOS) used for microdisplays. Also note the sharp rise and sharper plummet of active-matrix electrophoretic displays (AMEPD), used in monochrome e-reader devices, which are giving up ground to TFT-LCD tablet PCs.

Worldwide FPD revenues by technology, 2010-2012. (Source: NPD DisplaySearch)

2011 was a tough year for displays due to price erosion in TFT-LCD panels, particularly for TV applications, DisplaySearch notes. The rebound in 2012 has many factors behind it: bigger average sizes and shipments of LCD TVs, higher prices for high-resolution mobile displays, strong unit growth for tablet PCs, expansion of AMOLED shipments and applications, thinner and lighter ultraslim notebook PC panels, the emergence of 4k × 2k LCD TVs, and demand for a number of applications including games, car navigation systems, and digital signage.

"While the industry faces challenges in traditional applications such as plasma TVs and mainstream sizes of LCD TVs and desktop monitors, the addition of new features and lower prices are driving growth of applications such as tablet PCs and smartphones," explained David Hsieh, VP at NPD DisplaySearch.

The outlook for the FPD industry isn’t entirely cloud-free: there’s a lot of saturation in several major markets, Hsieh noted. Nevertheless, the supply chain is figuring out how to "increase the value proposition" of FPDs by emphasizing their technology improvements: higher resolution for mobile devices, bigger screens, thinner and lighter versions for mobile PCs, improved wide-viewing angle, and desirable functionalities like touchscreen. "We expect 2013 to be a good year for the FPD industry, with revenue increasing, as TFT LCD prices recover and AMOLED demand grows," Hsieh said.

October 17, 2012 – In another move to spur EUV lithography development, ASML Holding HV (NADSAQ: ASML) has agreed to acquire lithography light source provider Cymer Inc. (NASDAQ: CYMI) for €1.95B (US $2.5B) in cash and stock, calling the deal "the natural evolution" of their year-long cooperation in developing EUV technology.

Combining Cymer’s EUV light sources with ASML’s tool-building expertise will more tightly integrate development work, reducing risk, simplifying the supply chain, and accelerating the introduction of EUV litho technology, according to the two companies, who call this "a natural next step" from their R&D collaboration. Cymer also has an established business for dry deep-ultraviolet (DUV) systems that it sells to other scanner systems providers; ASML says this unit will "remain a significant and growing engine of sales and profit and will be well positioned to support and balance customer needs for EUV and immersion multiple patterning." ASML pledges to keep Cymer’s commercial operations as an independent division based in the US.

"We believe that this transaction will improve our capabilities to bring new technologies to our customers" while also benefiting shareholders, said ASML president/CEO Eric Meurice. "We expect the merger to make EUV technology development significantly more efficient and simplify the supply chain and integration flow of the EUV modules." He also emphasized benefits in Cymer’s growing business for immersion lithography systems and established customer base for dry deep-ultraviolet (DUV) systems.

"We are very encouraged that ASML’s resources will enable the combined company to continue to develop and successfully commercialize EUV on an accelerated time frame," echoed Cymer chairman/CEO Bob Akins.

Details of the deal are $20.00 cash for each Cymer share, plus a fixed ratio of 1.1502 of ASML ordinary shares; that price translates to nearly $80/share for CYMI, a 61% premium over the past 30-day average and 52% over the past 90 days. (As has become commonplace with M&A activity, law firms are already angling for better terms.) Most of that premium has been erased; CYMI stock is up roughly 50% at midday trading. (ASML shares are down about 6%.) The deal, approved by both companies’ boards but awaiting approval from Cymer’s shareholders and US and international regulators, is expected to close in 1H13, and be accretive to ASML’s earnings in the second year after closing.

What it means: Accelerating EUV by consolidating leaders

Many believe EUV lithography is the next key process step in semiconductor manufacturing approaching and surpassing the 2Xnm nodes, as conventional optical lithography reaches its limits and must rely on additional and costly steps (e.g. multipatterning) to work. Thanks to ASML and top chipmakers who have pledged multiple billions of dollars in part to push EUV development up to production capabilities, EUV appears to be a matter of if and not when.

Unfortunately, EUV’s promise has been known for years, and its progression toward volume-manufacturability has repeatedly lagged behind expectations. Source power has been the main culprit, still many factors below what is required to achieve cost-effective throughputs for most chipmaking applications. ASML and Cymer say they have proven "a sustained 30W source exposure power potential" which would translate into 18 WPH in ASML’s NXE:3300B system. Targets for 2014 and volume production remain 105W and 69 WPH, according to the companies. Around 50-70 wafers/hour could be acceptable for some applications, while others need well in excess of 100 WPH to make economic sense, likely starting with DRAM manufacturers and next probably foundries.

In its statements, ASML said it will continue to deliver and service DUV and EUV sources for all customers "on an arm’s length basis," and that its litho systems "will continue to interface with light sources from all manufacturers." Indeed, Cymer and its laser-produced plasma (LPP) technology are not the only EUV source developer in the game. Ushio/Xtreme reported at the recent EUV Symposium some notable performance improvements with its laser-assisted plasma (LDP) source, which is installed on an ASML EUV tool at imec — but it still is not demonstrating sustained high power, duty cycles, or continuous mode operation. Gigaphoton, meanwhile, is making progress with its own EUV source, but remains well behind the other two.

One has to wonder, then, with ASML literally buying into Cymer — the two far-and-away leaders in their respective EUV technology development — what this says about the readiness and future expectations for these other EUV source technologies.

What the analysts are saying

Given EUV’s plodding progress toward volume production readiness — it was supposed to be ready several nodes ago, and might still end up several nodes away from full adoption — ASML’s continued efforts to consolidate EUV technology development efforts is not only smart, it might be keenly necessary to getting the technology off the ground. "Cymer’s light source is critical to EUV success and given recent slippage of key metrics, we think it makes sense for the technology to move in-house at ASML," notes Barclays analyst CJ Muse. "With ASML now having both R&D and equity investments from TSM/SEC/INTC, and CYMI pulling back from its stated EUV targets, it makes sense that there is more urgency for ASML to get EUV right."

Muse notes that regulatory issues might not be so much a problem as in typical M&A, since ASML has built an arguable monopoly position in EUV systems and Cymer was progressing toward that in the light source area, so "customers will push this deal to get done with regulators." He also doesn’t see any other bidders swooping in for a play, which would both delay and raise the price.

Deutsche Bank’s Vishal Shah points out the timing of the M&A is perhaps significant given the overall caution and concern about "cyclical headwinds" (i.e. persistent market sluggishness and lack of visibility). This might be why ASML structured the Cymer deal as a stock/cash transaction and not an all-cash deal, he says.

And although any M&A action causes the market to look around at the next potential target(s), Shah concludes that this is very specific to litho and EUV, and shouldn’t be interpreted more broadly into other semiconductor capital equipment trends — though, as always, "some smaller semicap companies could be viewed as next M&A targets," he supposes.

by Mark Danna, VP of business development, Owens Design

Continuing a series of columns for SST, Mark Danna from Owens Design highlights common mistakes that can cause an outsourced partnership to fail and detail a methodology for approaching an outsourcing agreement that can minimize the risk and costs involved and help ensure a successful partnership.

October 12, 2012 – One of the toughest things about getting started on a tool development design and build project is that in most cases the overall requirements for tool functionality and performance have not been focused yet. Nevertheless, the group tasked with tool development responsibility is told to get moving on the project because "we are already late." In fact, from the point of view of most of those involved, the picture of what is needed is still kind of fuzzy and none of the critical details are well-defined.

It is, however, possible to launch the project, get it off the ground, and make progress while still clarifying tool specifications and requirements. A disciplined phased approach to the program can resolve many of these open issues (technical, commercial and market-related) in the first phase of any project.

For example, at the start of most tool development projects there usually is a gap between desired tool functionality and target tool cost. The engineers want to design the tool to meet all potential market requirements and perform at the highest level. The marketing group wants a tool that meets a specific set of market requirements and can be produced at the lowest cost possible. Very early in the program a functional/cost trade-off analysis needs to be done — and well understood — by both parties before tool specifications and performance can be agreed upon and finalized. One of the most critical parts of finalizing the tool specification is to really understand how the functionality of the tool will be validated at the end of the program. Without an agreed-upon functionality test, tool performance cannot be validated and the specification is meaningless.

Unfortunately, not all tool functionality can be nailed down in the first phase of the tool development project. For some projects, it is standard procedure for final tool production launch to begin before the overall tool characterization has been completed. During this process, if overall tool functionality changes significantly, tool specification changes are the inevitable result and most likely will affect overall tool design. Going into this phase with a tool design that can accommodate a wide range of design parameters can minimize the risk of a total design restart. The trade-off, of course, is that this increase in functionality will most likely lead to an increase in overall tool cost. By thinking about these potential issues early on, it may be possible to minimize the impact of design-related change by having the ability to easily change the design to meet the tool requirements once overall tool functionality has been solidified.

A lack of clarity early on in design requirement can exist whether the project is handled as an in-house development project or is outsourced. If it’s an outsourced project, the selection of a design-and-build partner and its ability to help clarify and focus the development effort is critical to the overall success of the program. While there is always a desire in a tight economy to keep as many costs in-house as possible, the money spent engaging the right outsource design-and-build partner at the beginning is likely to end up benefiting the project budget long-term. Where a typical equipment OEM may produce a new tool every couple of years, a good outsource partner might go through this development process 10-20 times per year. As a result, this outsource design-and-build partner will have established and proven procedures that can take that fuzzy picture at the beginning of the project and put it into focus.

Time must be committed early in the development phase of a project to bring the fuzzy parameters into focus. Tool cost vs. functionality trade-offs must be well understood by all stake holders. By leveraging either in-house or outside expertise in project planning and management, as well as design input from the very beginning, one can end up saving a lot of time, money, and aggravation.

Mark Danna is VP for new business development at Owens Design.

October 11, 2012 – High pricing and ineffective marketing, in a consumer market fighting for attention against hot-selling mobile devices, are weighing down expectations for ultrabook demand — but the future’s still bright with new models promising more tablet- and smartphone-like features.

IHS iSuppli has slashed its estimates for 2012 ultrabook shipments to 10.3M units (with hopes of half of them coming in 4Q12), down from 22M units earlier this year. The firm also has lowered its outlook for 2013 ultrabook shipments, to 44M units from 61M units. (Part of this forecast-lowering is a classification issue: Intel’s rigid definition of what qualifies as an "ultrabook" has redefined many notebooks as "ultrathins," iSuppli notes.)

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
714 1,540 2,692 5,392 8,752 9,806 11,473 14,297

Forecasted global ultrabook unit shipments, in thousands of units. (Source: IHS iSuppli)

So far, the PC industry has failed to create the kind of buzz and excitement among consumers that is required to propel ultrabooks into the mainstream," noted Craig Stice, senior principal analyst for compute platforms at IHS. "This is especially a problem amid all the hype surrounding media tablets and smartphones."

The other sticking point for ultrabooks: pricing. Systems need to get from today’s ~$1000 levels to below the $600 threshold to achieve mainstream-friendly volumes. Ramping up sales for 2013 especially will depend on this, while also incorporating the new Windows 8 operating system as well as attractive features (read: expected by consumers) such as touchscreens. If they don’t, they’ll continue to face an uphill battle, in a persistently languishing economy against a growing roster of lower-priced tablets and smartphones (iPhone 5, Kindle Fire HD, forthcoming Microsoft Surface).

Intel seems to be focusing its attention on the mid-2013 introduction of its Haswell chip, which it hopes will "catalyze[e] the ultrabook revolution" with improved performance, lower power consumption, security features, and support for multiple displays and high-definition monitors, iSuppli notes. At the recent Intel Developer Forum, the chipmaking giant reportedly mapped out 40 ultrabook designs in progress with touchscreens, and showed survey results indicating consumers prefer touchscreens 80% of the time. Ultrabooks with convertible form factors — e.g. with a detachable touchscreen, usable either as a traditional clamshell laptop or as a tablet — offer the best of both worlds.

Ultrabooks: Key market for motions sensors

One component sector that’s counting on that ultrabook demand to materialize is motion sensors. Various accelerometers, gyroscopes and compasses will be required to deliver the new features promised in new ultrabooks, from gaming to indoor navigation to augmented reality. IHS iSuppli projects an eye-popping 14-fold growth for motion sensor sales over the next four years to $117.3M, up from just $8.3M in 2012 — that’s a 93% CAGR. Before ultrabooks, the only motion sensors found in notebooks were accelerometers used to identify if the unit was dropped, to trigger protection of the hard-disk drive’s read/write head. With more solid-state devices (SSD) being used in notebooks, that functionality isn’t needed, notes iSuppli.

But the new ultrabooks do use accelerometers for functions such as auto screen rotation, and will employ compasses and gyroscopes to detect direction and motion — functions already common in games for tablets and smartphones. While Intel had originally asserted that it wouldn’t make sense to incorporate such motion sensors into conventional ultrabooks, the planned future convertible/detachable ultrabook models will indeed require them, points out Jérémie Bouchaud, director and senior principal analyst for MEMS and sensors at IHS. And that’s the kind of assured end market that component suppliers need.

2011 2012 2013 2014 2015 2016
0.4 8.3 32.8 60.2 92.3 117.3

 Forecast of global motion sensor revenues in ultrabooks. (Source: IHS iSuppli)

October 5, 2012- The market for semiconductor magnetic sensors used in industrial and medical applications expanded by 6% in 2011 to $118.2 million, with green energy initiatives acting as a major growth driver, according to IHS iSuppli. This market is small compared to other areas, most notably automotive and wireless/consumer, but the technology will continue to grow at a 8% CAGR through 2016, topping $175.5M, the firm says. (Here’s a list of the top makers of magnetic sensors.)

Improving energy efficiency is a big opportunity in motors of all kinds, which collectively consume an estimated 45% of all electricity generated worldwide. "As government legislation comes into play, this is acting as a boon for the sensors, implemented with an eye toward reducing energy consumption," says Richard Dixon, principal analyst for MEMS and sensors at IHS. "In the industrial market, a main growth driver for magnetic sensors is renewable energy, such as solar installations, and to a smaller extent, wind turbines," he notes.

Magnetic sensor technologies include Hall-effect and magneto-resistive semiconductor integrated circuits (ICs) that are used to track rotational speed and linear angles in machines and devices, or to detect and process magnetic fields to establish positioning. In industrial and medical applications (which split about 70%/30% of total usage), these sensors are used in motors to improve their energy efficiency and other applications where motor control is involved, such as pumps. They are also used in uninterruptible power supplies (UPS) for a host of industrial applications and environments: computer servers, welding systems, robotics, train transport infrastructure, off-road vehicles, and forklift trucks.

Most magnetic sensors used in industrial applications are electronic current sensors: shunt resistors, Hall-effect integrated circuits, current-sensing transformers, open- and closed-loop Hall devices, and fluxgate transducers. Residential solar inverters, for example, and smaller UPS settings, use simple resistive bars or shunts to measure lower currents (>50A), while higher-current measurements such as large inverter motors use Hall IC sensors packaged with an amplifier. Industrial washing machines pair Hall ICs with ASICs.

In medical applications, magnetic sensors are used for motion control in things like ventilator machines, pumps for infusion/insulin/syringes, and kidney dialysis machines. These sensors also are used in simple centrifuges for preparing samples to smooth control of small motors. They are also found as switches for medication-dispensing cabinets, bed-positioning systems, and hearing aids.

  2010 2011 2012 2013 2014 2015 2016
US $M 111.9 118.2 123.2 131.9 144.3 160.4 175.5

Worldwide revenue forecast (in US $M) for magnetic sensors in industrial and medical applications. (Source: IHS iSuppli)

October 4, 2012 – Fab equipment spending continues to soften in 2012, but don’t hope for a reprieve until later in 2013, warns one analyst.

Worldwide wafer fab equipment (WFE) spending is projected at $31.4 billion in 2012, a -13.3% decline from 2011, according to Gartner. But counter to some other industry watchers, the firm now thinks there won’t be a big rebound in 2013 — it’s now forecasting a -0.8% slip next year to $31.2B, before finding its footing again and bouncing back in 2014 with 15.3% growth to $35.9B.

Earlier this summer Gartner foresaw a -8.9% decline in 2012, followed by 7.4% growth in 2013. Less than a month ago SEMI predicted 2013 could be a "golden year" with nearly 17% growth in fab spending.

"The outlook for semiconductor equipment markets has deteriorated as the macro economy has weakened," stated Bob Johnson, research VP at Gartner. After starting the year strong thanks to sub-30nm production ramps at foundries and other logic manufacturers, demand for new equipment logic production will soften as yields improve, leading to declining shipment volumes for the rest of the year."

Fab utilization rates will erode to the low 80% range by the end of this year, slowly increase to about 87% by the end of 2013. (That’s less optimistic than its June outlook which saw mid-80% in mid-2012 and 87% by the end of the year.) Leading-edge capacity will recover slightly better, hitting the high-80% range by year’s end and gradually getting into the low-90% range as 2013 progresses.

Increased demand combined with less-than-mature yields at the leading edge had been hoped to consume extra capacity and raise utilization rates. In leading-edge logic that has in fact helped create inventory shortages, Johnson noted, but "not enough to bring total utilization levels up to desired levels. In the memory segment, some suppliers are even cutting production in an attempt to shore up weak market fundamentals."

Memory is expected to be weak through 2012, with strong declines in DRAM investments and a virtually flat NAND market, the firm notes. Foundry spending has been revised downward for both 2012 and 2013; some foundries have improved their 28nm yields, but mainly for SiON technology, as 28nm high-k/metal gate (HKMG) processes are still yielding below normal. Longer-term, Gartner thinks foundries will ratchet up their spending more in future years due to aggressive development of EUV lithography and 450mm wafer processing.

October 3, 2012 – Macroeconomic malaise continues to weigh down global semiconductor sales, although there’s a possible ray of hope for a boost by year’s end thanks to introduction of much-desired electronics devices (hello iPhone 5).

Worldwide sales of semiconductors in August were $24.30 billion, up just a fraction of a percent from the previous month (as they were in July), and down a couple of percentage points from the same month a year ago (also continuing the trend). For the year through August, chip sales are down about -4.6% to $189.46 billion. (The WSTS’ midyear forecast in June, which the SIA now "endorses" in lieu of its own numbers, projected a scant 0.4% increase in 2012.)

The regional sales map remained uneven in August, with month/month pullbacks in Japan and Europe, but a surprising rebound in the Americas — its first M/M growth period since April. Compared with a year ago though, the Americas is still showing weakness (around -9%).

"Global semiconductor sales have held steady in recent months despite strong macroeconomic headwinds, but these challenges have hampered growth," stated Brian Toohey, SIA president & CEO. He also urged "vigorous discussion" between the two US presidential candidates heading into the final weeks of the election period, to enact "government policies to reduce business uncertainty, accelerate the economic recovery and keep America at the forefront of innovation."

Barclays’ CJ Muse breaks down the SIA’s August numbers by device category and end market, determining that almost every sub-segment underperformed in the quarter except NAND thanks mainly to ASP declines. He also points out that with most industry watchers still holding out hope for even 1% growth in 3Q12 (and for the full year 2012), September’s chip sales would have to be gangbusters at 6% growth — and in recent days both Intel and TI have lowered their 3Q outlooks echoing softness (a $1B shortfall for INTC).

Analyzing end market demand, Muse notes that a weak back-to-school period pushed consumer chip sales into negative territory for the first time since the beginning of the year (-4.3% Y/Y), though there was a slight uptick in sales M/M thanks to ASPs.

Chip sales tracking is now entering the critical seasonal period of buildup to make electronics products for year-end holiday sales. And therein lies a ray of hope, at least for some vendors — there’s a new iPhone 5 hitting shelves, and reports of an iPad mini ahead, Muse notes.