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Samsung Electronics Co., Ltd. announced today that its second generation 10-nanometer (nm) FinFET process technology, 10LPP (Low Power Plus), has been qualified and is ready for production. With further enhancement in 3D FinFET structure, 10LPP allows up to 10-percent higher performance or 15-percent lower power consumption compared to the first generation 10LPE (Low-Power Early) process with the same area scaling.

Samsung was the first in the industry to begin mass production of system-on-chips (SoCs) products on 10LPE last October. The latest Samsung Galaxy S8 smartphones are powered by some of these SoCs.

To meet long-term demand for the 10nm process for a wide range of customers, Samsung has started installing production equipment at its newest S3-line in Hwaseong, Korea. The S3-line is expected to be ready for production by the fourth quarter of this year.

“With our successful 10LPE production experience, we have commenced production of the 10LPP to maintain our leadership in the advanced-node foundry market,” said Ryan Lee, Vice President of Foundry Marketing at Samsung Electronics. “10LPP will be one of our key process offerings for high performance mobile, computing and network applications, and Samsung will continue to offer the most advanced logic process technology.”

The new, higher-speed DDR4 DRAM generation gained significant marketshare in 2016, representing 45% of total DRAM sales. Previously, DDR3 DRAM, including low-power versions used in tablets, smartphones, and notebook PCs, accounted for 84% of total DRAM sales in 2014 and 76% in 2015, but in 2016, DDR4 price premiums evaporated and prices fell to nearly the same ASP as DDR3 DRAMs. A growing number of microprocessors, like Intel’s newest 14nm x86 Core processors, now contain DDR4 controllers and interfaces.  As a result, IC Insights expects DDR4 to become the dominant DRAM generation in 2017 with 58% marketshare versus 39% for DDR3 (Figure 1).

Figure 1

Figure 1

The Joint Electron Devices Engineering Council (JEDEC) officially launched the fourth generation of DDR in 2012.  In 2014, DDR4 memories first began appearing on the market in DRAM modules for powerful servers and a small number of high-end desktop computers, which had souped-up motherboards or the “extreme” versions of Intel’s 22nm Haswell-E processors for high-performance gaming software and PC enthusiasts, but volume sales remained low until 2015, when data centers and Internet companies began loading up servers with the new-generation memories to increase performance and lower power consumption. In 2016, DDR4 memories quickly spread into more data center servers, mainframes, and high-end PCs, accounting for about 45% of total DRAM sales versus 20% in 2015.  In 2017, DDR4 will move into more notebook PCs, high-end tablets, and smartphones and is expected to hold a 58% share of DRAM sales.

The DDR4 standard contains a number of features that are expected to speed up memory operations and increase SDRAM storage in servers, notebook and desktop PCs, tablet computers, and a wide range of consumer electronics.  The DDR4 standard supports stacked memory chips with up to eight devices presenting a single signal load to memory controllers.  Compared to DDR3, DDR4 can potentially double the module density, double the speed, and lower power consumption up to 20%, thereby extending battery life in future 64-bit tablets and smartphones.

Meanwhile, the DRAM average selling price has been increasing very rapidly since mid-2016.  Figure 2 shows that the DRAM ASP increased 54% from $2.41 in April 2016 to $3.70 in February 2017.  As a result of this big increase, IC Insights raised its 2017 DRAM market forecast to $57.3 billion, which is a 39% increase over 2016.  IC Insights believes that DRAM ASPs will continue to trend upward through most of the first half of 2017, though probably not as rapidly as they did between the period from April 2016 to February 2017.

Figure 2

Figure 2

In its latest quarterly financial conference call, Micron indicated its DRAM outlook through the balance of its fiscal year 2017 (ending August 31) was very encouraging, with solid demand coming from PC, server, communication, automotive, and several other applications.

However, the bigger question for Micron and other top DRAM suppliers is available supply and whether (more accurately, when will) prices plateau and begin trending downward.  One indication that DRAM prices could soften in the second half of the year is the fact that Samsung and SK Hynix are bringing additional DRAM capacity online that features smaller process geometries. Samsung is slated to begin operations at its new Fab 18, in Pyeongtaek, South Korea in 2Q17.  Fab 18, with capacity of 300,000 300mm wafer starts per month, features five production lines that are dedicated primarily to making DRAM.  The company plans to begin DRAM operations at the fab using an 18nm process technology.

SK Hynix has transitioned most of its South Korean-based DRAM output from Fab M10 to Fab M14. With Fab M14 and its dedicated DRAM fab in Wuxi, China, SK Hynix has DRAM capacity of about 280,000 300mm wafer starts per month.  SK Hynix is manufacturing most of its DRAM at the 21nm node, but expects to begin using sub 20nm process technology later this year, thereby helping to reduce costs and increase the number of chips on a wafer.

Following a year of extraordinary gains in pricing, a boost to DRAM supply in the second half of 2017 could lead to reduced ASPs and the inevitable start of a cyclical slowdown in the DRAM market.

Participating in the DRAM market has always been a big challenge for suppliers.  Hot or cold, boom or bust—the DRAM market is rarely moving along in a steady, predictable manner.  For at least the first half of 2017, it appears that DRAM market will be very favorable for these top three suppliers.

IHS Markit (Nasdaq: INFO) announced that the worldwide semiconductor market showed signs of recovery in 2016 following a down year in 2015. In 2016, the market posted a year-end growth rate of 2 percent with chip growth seen across multiple market segments. Global revenue came in at $352.4 billion, up from $345.6 billion in 2015.

Key growth drivers

Key drivers of this growth were DRAM and NAND flash memory, which grew more than 30 percent collectively in the second half of 2016. Key to this turnaround was supply constraints and strong demand, coupled with an ASP increase. We expect these factors to drive memory revenue into record territory throughout 2017.

Semiconductors used for automotive applications were also a key driver of 2016 growth, with a 9.7 percent expansion by year-end. Chip content in cars continues to climb, with micro components and memory integrated circuits (IC) leading the pack, both experiencing over 10 percent growth in automotive applications.

“The strong component demand that drove record capital expenditures in 2016 also provided the industry with advanced technology platforms which will support further semiconductor revenue growth in 2017,” said Len Jelinek, Senior Director and Chief Analyst for Semiconductor Manufacturing at IHS Markit.

Continued consolidation

Continuing a recent trend, the semiconductor market saw another year of intense consolidation with no signs of slowing down. The year began with the close of the biggest-ever acquisition in the semiconductor industry. Avago Technologies finalized its $37 billion acquisition of Broadcom Corp. to form Broadcom Limited, which jumped to rank fourth in terms of market share (Avago previously ranked 11th). This acquisition resulted in the newly formed company increasing its market share in several market segments, including taking a large lead in the wired application market.

“After some selective divestiture, Broadcom Limited has focused on market segments where its customer base holds dominant market share positions. These also tend to be markets which have fairly stable and visible TAM growth,” said Senior Analyst Brad Shaffer. “These characteristics may help entrench the company’s market share positions in areas where it chooses to compete,” added Shaffer.

Among the top 20 semiconductor suppliers, ON Semiconductor and nVidia enjoyed the largest revenue growth, followed closely by MediaTek. ON and MediaTek achieved growth through multiple acquisitions, while nVidia saw an enormous demand for its GPU technology as it moves into new markets and applications.

Qualcomm remained the top fabless company in 2016 while MediaTek and nVidia moved into the number two and three spots, respectively. The fabless company with the largest market share gain was Cirrus Logic, a major supplier for Apple and Samsung mobile phones. They moved up five spots in 2016, to number 10.

Intel remains in the number one spot for semiconductor suppliers, followed by Samsung. Qualcomm comes in at number three, with plans to increase its market share in 2017 with its pending acquisition of NXP.

Find more information on this topic in the latest release of the Competitive Landscaping Tool from the Semiconductors & Components service at IHS Markit.

Combined sales for optoelectronics, sensors and actuators, and discrete semiconductors increased 2% in 2016 to reach a seventh consecutive record-high level of $67.9 billion, but growth rates in the three market segments were all over the map last year. Optoelectronics sales fell 4% in 2016, primarily because of the first decline in lamp devices in 15 years due to an oversupply of high-brightness light-emitting diodes (LEDs) for solid-state lighting applications, but the slump was offset by a 16% increase in revenues for sensors and actuators along with a modest 4% rise in discretes, according to IC Insights’ new 2017 O-S-D Report—A Market Analysis and Forecast for Optoelectronics, Sensors/Actuators, and Discretes.

The new 360-page report shows O-S-D products generated 19% of total semiconductor sales in 2016, with the rest of the dollar volume coming in integrated circuits ($297.7 billion, which was a 4% increase from 2015).  IC Insights believes optoelectronics, sensors/actuators, and discretes sales will stabilize in 2017 and gradually return to more normal growth rates in the 2016-2021 forecast period of the new O-S-D Report (Figure 1).

Figure 1

Figure 1

Slight improvements in the weak global economy, steady increases in electronics production, and new end-use applications—such as wearable systems, billions of connections to the Internet of Things (IoT), the spread of image recognition in all types of equipment, and the proliferation of LED lighting around the world—are forecast to lift the three O-S-D markets in the next five years to $92.2 billion, which is a compound annual growth rate (CAGR) of 6.3% from 2016 compared to a projected CAGR of 5.7% for ICs.  The newly released 2017 O-S-D Report offers detailed market forecasts of the optoelectronics, sensor/actuator, and discretes market segments through 2021. A summary of how the three O-S-D market segments performed in 2016 and their outlooks for 2017 are shown below.

Optoelectronics sales fell 3.6% in 2016 to $33.9 billion, suffering their first setback in eight years. Sales of lamp devices, the largest optoelectronics product category, declined 8%.  Meanwhile, an oversupply of high-brightness LEDs for solid-state lighting applications also dragged the market down. The downturn is expected to be short lived as image sensors, especially those made with CMOS technology, are in the midst of a major new wave of growth, driven by new embedded cameras and digital imaging applications in automotive, medical, machine vision, security, wearable systems, and user-recognition interfaces.  Laser transmitters are also hitting new record-high sales because of the build-out of high-speed optical networks for huge increases in Internet traffic, digital video transmissions, cloud-computing services, and billions of new IoT connections in the coming years. Total optoelectronics sales are expected to grow 7.5% in 2017 to reach a new record high of $36.5 billion.

Sensors/Actuators, the smallest and until recently the fastest-increasing semiconductor market, ended four straight years of severe price erosion in 2016 and finally benefitted from strong unit growth. Sensors/actuator sales climbed 15.9% to a record-high $11.9 billion.  All major sensor product categories (pressure, acceleration/yaw, and magnetic sensors) and the large actuator segment saw double-digit sales growth in 2016.  The sensors/actuators market is projected to rise 7.8% in 2017 to reach a new record-high level of $12.8 billion.  In the next five years, sensors/actuators sales are forecast to be driven by the spread of automated embedded-control functions in vehicles (including autonomous driving capabilities), flying drones, industrial and robotic systems, home electronics, and measurement units being tied to IoT.

Discretes, the semiconductor industry’s oldest market, returned to normal growth in 2016 with sales increasing 4.2% to $22.1 billion.  In the last seven years, worldwide discretes sales have swung back and forth between strong increases and declines because systems manufacturers tend to abruptly cancel purchases whenever the economy and end-use product markets appears to be slowing, but then quickly resume buying to replenish factory inventories once the outlook improves.  With inventories being replenished in much of 2016, growth returned to five out of the six discretes product categories—power transistors, small-signal transistors, diodes, rectifiers, and miscellaneous “other” discretes group. The only sales drop in discretes was recorded by thyristors.  Total discretes revenues are forecast to rise 4.7% in 2017 to a new record-high $23.1 billion.

IC Insights has raised its worldwide IC market growth forecast for 2017 to 11%—more than twice its original 5% outlook—based on data shown in the March Update to the 20th anniversary 2017 edition of The McClean Report. The revision was necessary due to a substantial upgrade to the 2017 growth rates forecast for the DRAM and NAND flash memory markets.

IC Insights currently expects DRAM sales to grow 39% and NAND flash sales to increase 25% this year, with upside potential from those forecasts.  DRAM market growth is expected to be driven almost entirely by a huge 37% increase in the DRAM average selling price (ASP), as compared to 2016, when the DRAM ASP dropped by 12%. Moreover, NAND flash ASPs are forecast to rebound and jump 22% this year after falling by 1% last year.

The DRAM market started 2017 the way it ended 2016—with strong gains in DRAM ASP.  In April 2016, the DRAM ASP was $2.41 but rapidly increased to $3.60 in January 2017, a 49% jump.  A pickup in DRAM demand from PC suppliers during the second half of 2016 caused a significant spike in the ASP of PC DRAM.  Currently, strengthening ASPs are also evident in the mobile DRAM market segment.

With total DRAM bit volume demand expected to increase by 30% this year and DRAM bit volume production capacity forecast to increase by 20%, IC Insights believes that quarterly DRAM ASPs could still surprise on the upside in 2017. Furthermore, DRAM output is also being slowed, at least temporarily, by the ongoing transition of DRAM production to ≤20nm feature sizes by the major DRAM producers this year.

At $57.3 billion, the DRAM market is forecast to be by far the largest IC product category in 2017, exceeding the expected MPU market for standard PCs and servers ($47.1 billion) by $10.2 billion this year.  Figure 1 shows that the DRAM market has been both a significant tailwind (i.e., positive influence) and headwind (i.e., negative influence) on total worldwide IC market growth in three out of the past four years.

Figure 1

Figure 1

Spurred by a 12% decline in the DRAM ASP in 2016, the DRAM market slumped 8% last year.  The DRAM segment became a headwind to worldwide IC market growth in 2016 instead of the tailwind it had been in 2013 and 2014. As shown, the DRAM market shaved two percentage points off of total IC industry growth last year.  In contrast, the DRAM segment is forecast to have a positive impact of four percentage points on total IC market growth this year. It is interesting to note that the total IC market growth rate forecast for 2017, when excluding the DRAM and NAND flash markets, would be only 4%, about one-third of the current worldwide IC market growth rate forecast including these memory devices.

The March Update to the 2017 edition of The McClean Report further describes IC Insights’ IC market forecast revision, updates its 2017-2021 semiconductor capital spending forecast, and shows the final 2016 top 10 OSAT company ranking.

Research information that will be posted in the March Update to the 20th anniversary 2017 edition of IC Insights’ McClean Report shows that fabless IC suppliers represented 30% of the world’s IC sales in 2016 (up from only 18% ten years earlier in 2006).  As the name implies, fabless IC companies do not have an IC fabrication facility of their own.

Figure 1 depicts the 2016 fabless company share of IC sales by company headquarters location.  As shown, at 53%, the U.S. companies held the dominant share of fabless IC sales last year, although this share was down from 69% in 2010 (due in part to the acquisition of U.S.-based Broadcom by Singapore-based Avago).  Although Avago, now called Broadcom Limited after its merger with fabless IC supplier Broadcom became official on February 1, 2016, has fabrication facilities that produce III-V discrete devices, it does not possess its own IC fabrication facilities and is considered by IC Insights to be a fabless IC supplier.

Figure 1

Figure 1

Figure 2 shows that in 2009, there was only one Chinese company in the top-50 fabless IC supplier ranking as compared to 11 in 2016.  Moreover, since 2010, the largest fabless IC marketshare increase has come from the Chinese suppliers, which held a 10% share last year as compared to only 5% in 2010. However, when excluding the internal transfers of HiSilicon (over 90% of its sales go to its parent company Huawei), ZTE, and Datang, the Chinese share of the fabless market drops to about 6%.

Figure 2

Figure 2

European companies held only 1% of the fabless IC company marketshare in 2016 as compared to 4% in 2010.  The reason for this loss of share was the acquisition of U.K.-based CSR, the second largest European fabless IC supplier, by U.S.-based Qualcomm in 1Q15 and the purchase of Germany-based Lantiq, the third largest European fabless IC supplier, by U.S.-based Intel in 2Q15.  These acquisitions left U.K.-based Dialog ($1.2 billion in sales in 2016) as the only Europe-headquartered fabless IC supplier in the fabless top 50-company ranking last year (Norway-based Nordic Semiconductor just missed making the top 50 ranking with 2016 sales of $198 million).

There is also only one major fabless Japanese firm—Megachips, which saw its sales increase by 20% in 2016 (8% using a constant 2015 exchange rate), one major South Korean fabless IC company (Silicon Works), and one major Singapore-based (Broadcom Ltd.) fabless supplier.

Annual total semiconductor unit shipments (integrated circuits and opto-sensor-discrete, or O-S-D, devices) are forecast to continue their upward march in the next five years and are now expected to top one trillion units for the first time in 2018, according to data presented in IC Insights’ soon to be released March Update to the 2017 edition of The McClean Report—A Complete Analysis and Forecast of the Integrated Circuit Industry, and the 2017 O-S-D Report—A Market Analysis and Forecast for the Optoelectronics, Sensors/Actuators, and Discretes.

Semiconductor shipments totaled 868.8 billion in 2016 and are forecast to top one trillion units in 2018. Figure 1 shows that semiconductor unit shipments are forecast to climb to 1,002.6 billion devices in 2018 from 32.6 billion in 1978, which amounts to average annual growth of 8.9% over the 40 year period and demonstrates how dependent on semiconductors the world has become.

semiconductor unit growth

Figure 1

The largest annual increase in semiconductor unit growth during the timespan shown was 34% in 1984, and the biggest decline was 19% in 2001 following the dot-com bust.  The global financial meltdown and ensuing recession caused semiconductor shipments to fall in both 2008 and 2009; the only time that the industry experienced consecutive years in which unit shipments declined. Semiconductor unit growth then surged 25% in 2010, the second-highest growth rate across the time span.

Despite advances in integrated circuit technology and the blending of functions to reduce chip count within systems, the percentage split of IC and O-S-D shipments within total semiconductor units remains heavily weighted toward O-S-D devices.  In 2016, O-S-D devices accounted for 72% of total semiconductor units compared to 28% for ICs. Thirty-six years ago in 1980, O-S-D devices accounted for 78% of semiconductor units and ICs represented 22% (Figure 2).

Figure 2

Figure 2

Surprisingly, shipments of commodity-filled discretes devices category (transistor products, diodes, rectifiers, and thyristors) accounted for 44% of all semiconductor unit shipments in 2016. The long-term resiliency of discretes is primarily due to their broad use in all types of electronic system applications. Consumer and communications applications remain the largest end-use segments for discretes, but increasing levels of electronics being packed into vehicles for greater safety and fuel efficiency have boosted shipments of discretes to the automotive market as well. Discretes are used for circuit protection, signal conditioning, power management, high current switching, and RF amplification. Small signal transistors are still used in and around ICs on board designs to fix bugs and tweak system performance.

Among ICs, analog products accounted for the largest number of shipments in 2016. Analog ICs represented 52% of IC unit shipments in 2016, but only 15% of total semiconductor units. Figure 3 shows the split of semiconductor unit shipments by product type in 2016.

2016 semiconductor unit shipments

For 2017, semiconductor products showing the strongest unit growth rates are those that are essential building-block components in smartphones, new automotive electronics systems, and within systems that are helping to build out of Internet of Things.  Some of the fast-growing IC unit categories for 2017 include Consumer—Special Purpose Logic, Signal Conversion (Analog), Auto—Application-Specific Analog, and flash memory.  Among O-S-D devices, CCDs and CMOS image sensors, laser transmitters, and every type of sensor product (magnetic, acceleration and yaw, pressure, and other sensors) are expected to enjoy strong double-digit unit growth this year. More coverage about these semiconductor products and end-use applications are included in the 2017 editions of IC Insights’ McClean Report and O-S-D Report.

The Semiconductor Industry Association (SIA) today announced worldwide sales of semiconductors reached $30.6 billion for the month of January 2017, an increase of 13.9 percent compared to the January 2016 total of $26.9 billion. Global sales in January were 1.2 percent lower than the December 2016 total of $31.0 billion, reflecting normal seasonal market trends. January marked the global market’s largest year-to-year growth since November 2010. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.

“The global semiconductor industry is off to a strong and encouraging start to 2017, posting its highest-ever January sales and largest year-to-year sales increase in more than six years,” said John Neuffer, president and CEO, Semiconductor Industry Association. “Sales into the China market increased by more than 20 percent year-to-year, and most other regional markets posted double-digit growth. Following the industry’s highest-ever revenue in 2016, the global market is well-positioned for a strong start to 2017.”

Year-to-year sales increased substantially across all regions: China (20.5 percent), the Americas (13.3 percent), Japan (12.3 percent), Asia Pacific/All Other (11.0 percent), and Europe (4.8 percent). Month-to-month sales increased in Europe (1.2 percent), but fell slightly in China (-0.2 percent), Japan (-1.6 percent), Asia Pacific/All Other (-1.6 percent), and the Americas (-3.1 percent).

January 2017

Billions

Month-to-Month Sales                               

Market

Last Month

Current Month

% Change

Americas

6.33

6.13

-3.1%

Europe

2.80

2.84

1.2%

Japan

2.84

2.79

-1.6%

China

10.17

10.15

-0.2%

Asia Pacific/All Other

8.86

8.72

-1.6%

Total

31.01

30.63

-1.2%

Year-to-Year Sales                          

Market

Last Year

Current Month

% Change

Americas

5.41

6.13

13.3%

Europe

2.71

2.84

4.8%

Japan

2.49

2.79

12.3%

China

8.42

10.15

20.5%

Asia Pacific/All Other

7.86

8.72

11.0%

Total

26.89

30.63

13.9%

Three-Month-Moving Average Sales

Market

Aug/Sept/Oct

Nov/Dec/Jan

% Change

Americas

6.06

6.13

1.2%

Europe

2.82

2.84

0.7%

Japan

2.89

2.79

-3.2%

China

9.78

10.15

3.7%

Asia Pacific/All Other

8.88

8.72

-1.8%

Total

30.43

30.63

0.7%

 

GlobalFoundries_Ajit_ManochSEMI, the global association connecting and representing the worldwide electronics manufacturing supply chain, today announced the appointment of Ajit Manocha as its president and CEO. He will succeed Denny McGuirk, who announced his intention to retire last October. The SEMI International Board of Directors conducted a comprehensive search process, selecting Manocha, an industry leader with over 35 years of global experience in the semiconductor industry.  Manocha will begin his new role on March 1 at SEMI’s new Milpitas headquarter offices.

“Ajit has a deep understanding of our industry’s dynamics and the interdependence of the electronics manufacturing supply chain,” said Y.H. Lee, chairman of SEMI’s board of directors. “From his early days developing dry etch processes at AT&T Bell Labs, to running global manufacturing for Philips/NXP, Spansion, and, as CEO of GLOBALFOUNDRIES, Ajit has been formative to our industry’s growth. Ajit is the ideal choice to drive our SEMI 2020 plan and beyond, ensuring that SEMI provides industry stewardship and engages its members to advance the interests of the global electronics manufacturing supply chain.”

“Beyond his experience leading some of our industry’s top fabs, Ajit has long been active at SEMI and has served on boards of several global associations and consortia,” said Denny McGuirk, retiring president and CEO of SEMI. “Ajit’s experience in technology, manufacturing, and industry stewardship is a powerful combination. I’m very excited to be passing the baton to Ajit as he will continue to advance the growth and prosperity of SEMI’s members.”

“I have tremendous respect for the work SEMI does on behalf of the industry,” said Ajit Manocha, incoming president and CEO of SEMI. “I am excited to be joining SEMI at a time when our ecosystem is rapidly expanding due to extensive innovation on several fronts.  From applications based on the Internet and the growth of mobile devices to artificial intelligence/machine learning, autonomous vehicles, and the Internet of Things, there is a much broader scope for SEMI to foster heterogeneous collaboration and fuel growth today than ever before.  I am looking forward to leading the global SEMI organization as we strive to maximize value for our members across this extended global ecosystem.”

Manocha was formerly CEO at GLOBALFOUNDRIES, during which he also served as vice chairman and chairman of the Semiconductor Industry Association (SIA).  Earlier, Manocha served as EVP of worldwide operations at Spansion. Prior to Spansion, he was EVP and chief manufacturing officer at Philips/NXP Semiconductors. Manocha also held senior management positions within AT&T Microelectronics. He began his career at AT&T Bell Laboratories as a research scientist where he was granted several patents related to microelectronics manufacturing. Manocha holds a bachelor’s degree from the University of Delhi and a master’s degree in physical chemistry from Kansas State University.

Intel continued to top all other chip companies in R&D expenditures in 2016 with spending that reached $12.7 billion and represented 22.4% of its semiconductor sales last year.  Intel accounted for 36% of the top-10 R&D spending and about 23% of the $56.5 billion total worldwide semiconductor R&D expenditures in 2016, according to the 20th anniversary 2017 edition of The McClean Report that was released in January 2017.  Figure 1 shows IC Insights’ ranking of the top semiconductor R&D spenders based on semiconductor manufacturers and fabless suppliers with $1 billion or more spent on R&D in 2016.

Figure 1

Figure 1

Intel’s R&D spending is lofty and exceeded the combined R&D spending of the next three companies on the list. However, the company’s R&D expenditures increased 5% in 2016, below its 9% average increase in spending per year since 2011 and less than its 8% annual growth rate since 2001, according to the new report.

Underscoring the growing cost of developing new IC technologies, Intel’s R&D-to-sales ratio has climbed significantly over the past 20 years.  In 2010, Intel’s R&D spending as a percent of sales was 16.4%, compared to 22.4% in 2016. Intel’s R&D-to-sales ratios were 14.5% in 2005, 16.0% in 2000, and just 9.3% in 1995.

Among other top-10 R&D spenders, Qualcomm—the industry’s largest fabless IC supplier—remained the second-largest R&D spender, a position it first achieved in 2012.  Qualcomm’s semiconductor-related R&D spending was down 7% in 2016 compared to an adjusted total in 2015 that included expenditures by U.K.-based CSR and Ikanos Communications in Silicon Valley, which were acquired in 2015.  Broadcom Limited—which is the new name of Avago Technologies after it completed its $37 billion acquisition of U.S-based Broadcom Corporation in early 2016—was third in the R&D ranking. Excluding Broadcom’s expenditures in 2015, Avago by itself was ranked 13th in R&D spending that year (at nearly $1.1 billion).

Memory IC leader Samsung was ranked fourth in R&D spending in 2016 with expenditures increasing 11% from 2015. Among the $1 billion-plus “R&D club,” the South Korean company had the lowest investment-intensity level with 6.5% of its total semiconductor revenues going to chip-related research and development in 2016, which was up from just 6.2% in 2015.

Toshiba in Japan moved up two positions to fifth as it aimed its R&D spending at 3D NAND flash memories.  Foundry giant Taiwan Semiconductor Manufacturing Co. (TSMC) was sixth with a 7% increase in 2016 R&D spending, followed by fabless IC supplier MediaTek in Taiwan, which moved up one position to seventh with 13% growth in R&D expenditures. U.S.-based memory supplier Micron Technology advanced from ninth to eighth in the ranking with its research and development spending rising 5% in 2016.

Rounding out the top 10, NXP in Europe was ninth in 2016, slipping from sixth in 2015 and SK Hynix grew its R&D spending 9% to complete the list.   Fabless Nvidia just missed the cut with a 10% increase in expenditures for research and development.

Semiconductor consolidation played a factor in industry R&D spending rising just 1% in 2016 to a record-high $56.5 billion after a 1% increase in 2015 to $56.2 billion.  The slowdown in industry-wide R&D spending growth also corresponded with weakness in worldwide semiconductor sales, which declined 1% in 2015 and then recovered with a low single-digit increase in 2016.