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GLOBALFOUNDRIES yesterday announced plans to expand its global manufacturing footprint in response to growing customer demand for its comprehensive and differentiated technology portfolio. The company is investing in its existing leading-edge fabs in the United States and Germany, expanding its footprint in China with a fab in Chengdu, and adding capacity for mainstream technologies in Singapore.

“We continue to invest in capacity and technology to meet the needs of our worldwide customer base,” said GF CEO Sanjay Jha. “We are seeing strong demand for both our mainstream and advanced technologies, from our world-class RF-SOI platform for connected devices to our FD-SOI and FinFET roadmap at the leading edge. These new investments will allow us to expand our existing fabs while growing our presence in China through a partnership in Chengdu.”

In the United States, GF plans to expand 14nm FinFET capacity by an additional 20 percent at its Fab 8 facility in New York, with the new production capabilities to come online in the beginning of 2018. This expansion builds on the approximately $13 billion invested in the United States over the last eight years, with an associated 9,000 direct jobs across four locations and 15,000 jobs within the regional ecosystem. New York will continue to be the center of leading-edge technology development for 7nm and extreme ultraviolet (EUV) lithography, with 7nm production planned for Q2 2018.

In Germany, GF plans to build up 22FDX 22nm FD-SOI capacity at is Fab 1 facility in Dresden to meet demand for the Internet of Things (IoT), smartphone processors, automotive electronics, and other battery-powered wirelessly connected applications, growing the overall fab capacity by 40 percent by 2020. Dresden will continue to be the center for FDX technology development. GF engineers in Dresden are already developing the company’s next-generation 12FDX technology, with customer product tape-outs expected to begin in the middle of 2018.

In China, GF and the Chengdu municipality have formed a partnership to build a fab in Chengdu. The partners plan to establish a 300mm fab to support the growth of the Chinese semiconductor market and to meet accelerating global customer demand for 22FDX. The fab will begin production of mainstream process technologies in 2018 and then focus on manufacturing GF’s commercially available 22FDX process technology, with volume production expected to start in 2019.

In Singapore, GF will increase 40nm capacity at its 300mm fab by 35 percent, while also enabling more 180nm production on its 200mm manufacturing lines. The company will also add new capabilities to produce its industry-leading RF-SOI technology.

“GF has had a strong foundry relationship with Qualcomm Technologies for many years across a wide range of process nodes,” said Roawen Chen, senior vice president, QCT global operations, Qualcomm Technologies, Inc. “We are excited to see GF making these new investments in differentiated technology and expanding global capacity to support Qualcomm Technologies in delivering the next wave of innovation across a range of integrated circuits that support our business.”

“Collaborative foundry partnerships are critical for us to differentiate ourselves in the competitive market for mobile SoCs,” said Min Li, chief executive officer of Rockchip. “We are pleased to see GF bringing its innovative 22FDX technology to China and investing in the capacity necessary to support the country’s growing fabless semiconductor industry.”

“As our customers increasingly demand more from their mobile experiences, the need for a strong manufacturing partner is greater than ever,” said Joe Chen, co-chief operating officer of MediaTek. “We are thrilled to have a partner like GF that invests in the global capacity we need to deliver powerful and efficient mobile technologies for markets ranging from networking and connectivity to the Internet of Things.”

IC Insights’ 20th anniversary, 2017 edition of The McClean Report shows that since 2010, worldwide economic growth has been the primary influencer of IC industry growth.  In this “global economy-driven” IC industry, factors such as interest rates, oil prices, and fiscal stimulus are the primary drivers of IC market growth.  This is much different than prior to 2010, when capital spending, IC industry capacity, and IC pricing characteristics drove IC industry cycles.

Figure 1 plots the actual annual growth rates for worldwide GDP and the IC market from 1992 and includes IC Insights’ 2017 forecast.  As shown, both of these categories displayed extremely volatile behavior from 1992 through 2010 before registering much more subdued growth rates from 2011 through 2016.  Moreover, IC Insights forecasts similar restrained annual growth rates for worldwide GDP and the IC market through 2021.

Figure 1

Figure 1

Some observations regarding worldwide economic growth (GDP) include the following.

•    Since 1980, the annual worldwide GDP growth has averaged 2.8%. The average annual worldwide GDP growth rate has declined every decade since the 1960s with a slight rebound forecast to be registered in the first seven years of the current decade.

•    Worldwide GDP growth of 2.5% or less is currently considered by most economists to be indicative of a global recession, which puts 2016’s growth right at the threshold.  The 2017 global growth rate is forecast to come in only slightly better at 2.6%.  Prior to the late 1990s, when emerging markets like China and India represented a much smaller share of the worldwide economy, a global recession was typically defined as 2.0% or less growth.  The global recession threshold has never been a “hard and fast” rule, but the guidelines discussed here are useful for this analysis.

Figure 2 compares the actual annual growth rates of worldwide GDP and the worldwide IC market from 2011 through IC Insights’ 2017 forecast.  It is worth mentioning that the same scale used in Figure 1 for both worldwide GDP growth (-2% to 5%) and IC market growth (-40% to 50%) was used for this chart.  It is clear when looking at this specific timeperiod and using the historical growth rate scale end points, that IC market and worldwide GDP growth volatility from 2011 through 2017 is expected to be much more tame than in the past.

Figure 2

Figure 2

Worldwide GDP growth rates are expected to range from 2.5% to 3.0% from 2016 through 2021.  IC Insights’ expects the IC market to mirror the narrow range of worldwide GDP growth with forecasted growth rates ranging from a low of 2% to a high of 7% through 2021.

Given the tight correlation between annual worldwide GDP growth rates and IC market growth rates, IC Insights believes that a significant and noticeable IC market cycle will not occur through 2021 unless there is a significant departure from trend, up or down, for worldwide GDP growth (e.g., <2% growth on the low side and >3.0% growth on the high side).

The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing, design, and research, today announced the global semiconductor industry posted sales totaling $338.9 billion in 2016, the industry’s highest-ever annual sales and a modest increase of 1.1 percent compared to the 2015 total. Global sales for the month of December 2016 reached $31.0 billion, equaling the previous month’s total and bettering sales from December 2015 by 12.3 percent. Fourth quarter sales of $93.0 billion were 12.3 percent higher than the total from the fourth quarter of 2015 and 5.4 percent more than the third quarter of 2016. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.

“Following a slow start to the year, the global semiconductor market picked up steam mid-year and never looked back, reaching nearly $340 billion in sales in 2016, the industry’s highest-ever annual total,” said John Neuffer, president and CEO, Semiconductor Industry Association. “Market growth was driven by macroeconomic factors, industry trends, and the ever-increasing amount of semiconductor technology in devices the world depends on for working, communicating, manufacturing, treating illness, and countless other applications. We expect modest growth to continue in 2017 and beyond.”

2016 worldwide revenue

Several semiconductor product segments stood out in 2016. Logic was the largest semiconductor category by sales with $91.5 billion in 2016, or 27.0 percent of the total semiconductor market. Memory ($76.8 billion) and micro-ICs ($60.6 billion) – a category that includes microprocessors – rounded out the top three segments in terms of total sales. Sensors and actuators was the fastest growing segment, increasing 22.7 percent in 2016. Other product segments that posted increased sales in 2016 include NAND flash memory, which reached $32.0 billion in sales for a 11.0 percent annual increase, digital signal processors ($2.9 billion/12.5 percent increase), diodes ($2.5 billion/8.7 percent increase), small signal transistors ($1.9 billion/7.3 percent), and analog ($47.8 billion/5.8 percent increase).

Regionally, annual sales increased 9.2 percent in China, leading all regional markets, and in Japan (3.8 percent). All other regional markets – Asia Pacific/All Other (-1.7 percent), Europe (-4.5 percent), and the Americas (-4.7 percent) – saw decreased sales compared to 2015.

“A strong semiconductor industry is strategically important to U.S. economic growth, national security, and technological leadership,” said Neuffer. “We urge Congress and the new administration to enact polices in 2017 that spur U.S. job creation, and innovation and allow American businesses to compete on a more level playing field with our competitors abroad. We look forward to working with policymakers in the year ahead to further strengthen the semiconductor industry, the broader tech sector, and our economy.”

Commodity prices, supplier viability, and geopolitical concerns top the list of risks sourcing professionals face in 2017, according to survey from IHS Markit (Nasdaq: INFO).

Findings from the Trends in Global Sourcing Survey, the fifth annual survey of global procurement and purchasing executives which assesses the risk environment and sourcing trends, indicate that support for China as a low-cost sourcing destination is waning.

“The share of respondents who agree that China is a low-cost sourcing destination dipped below 50 percent for the first time in 2016,” said Paul Robinson, economist at IHS Markit. “This was down markedly from 70 percent in the 2012 survey.”

“Taken together with continued support for the country as a sourcing destination, the survey signals the arrival of China as a hub, or even the hub, of global supply chains rather than a mere cheap outsourcing destination,” Robinson continued.

China, India, and other nations in Asia continue to be the biggest winners in insourcing, with each showing strong increases. The developed world, particularly the European Union and the United States, show the weakest results, with less than a quarter of respondents planning to increase sourcing in either region. A rare bright spot outside of Asia was the continued growth in Mexico, where 26 percent of respondents are looking to increase sourcing, up from 20 percent a year ago.

chinas role

The survey respondents see the financial costs of supply chain disruptions increasing, with 19 percent of respondents saying that it was significantly increasing. This represents a reversal of the 2015 results when just one percent of respondents had that view. Less than two percent of respondents in the 2016 survey viewed the risk as decreasing at all.

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

Driving the industry forward with materials engineering

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

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

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

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

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

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

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

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Fire, rain, and M&A 


January 19, 2017

By SEMI staff

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

fire rain

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

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

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

Will the huge deals of 2015 and 2016 continue?

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

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

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

China becomes a player

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

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

The future for semiconductor equipment consolidation

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

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

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

Size matters

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

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

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

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

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

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

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

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

Figure 1

Figure 1

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

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

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

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

From the ground-breaking research breakthroughs to the shifting supplier landscape, these are the stories the Solid State Technology audience read the most during 2016.

#1: Moore’s Law did indeed stop at 28nm

In this follow up, Zvi Or-Bach, president and CEO, MonolithIC 3D, Inc., writes: “As we have predicted two and a half years back, the industry is bifurcating, and just a few products pursue scaling to 7nm while the majority of designs stay on 28nm or older nodes.”

#2: Yield and cost challenges at 16nm and beyond

In February, KLA-Tencor’s Robert Cappel and Cathy Perry-Sullivan wrote of a new 5D solution which utilizes multiple types of metrology systems to identify and control fab-wide sources of pattern variation, with an intelligent analysis system to handle the data being generated.

#3: EUVL: Taking it down to 5nm

The semiconductor industry is nothing if not persistent — it’s been working away at developing extreme ultraviolet lithography (EUVL) for many years, SEMI’s Deb Vogler reported in May.

#4: IBM scientists achieve storage memory breakthrough

For the first time, scientists at IBM Research have demonstrated reliably storing 3 bits of data per cell using a relatively new memory technology known as phase-change memory (PCM).

#5: ams breaks ground on NY wafer fab

In April, ams AG took a step forward in its long-term strategy of increasing manufacturing capacity for its high-performance sensors and sensor solution integrated circuits (ICs), holding a groundbreaking event at the site of its new wafer fabrication plant in Utica, New York.

#6: Foundries takeover 200mm fab capacity by 2018

In January, Christian Dieseldorff of SEMI wrote that a recent Global Fab Outlook report reveals a change in the landscape for 200mm fab capacity.

#7: Equipment spending up: 19 new fabs and lines to start construction

While semiconductor fab equipment spending was off to a slow start in 2016, it was expected to gain momentum through the end of the year. For 2016, 1.5 percent growth over 2015 is expected while 13 percent growth is forecast in 2017.

#8: How finFETs ended the service contract of silicide process

Arabinda Daa, TechInsights, provided a look into how the silicide process has evolved over the years, trying to cope with the progress in scaling technology and why it could no longer be of service to finFET devices.

#9: Five suppliers to hold 41% of global semiconductor marketshare in 2016

In December, IC Insights reported that two years of busy M&A activity had boosted marketshare among top suppliers.

#10: Countdown to Node 5: Moving beyond FinFETs

A forum of industry experts at SEMICON West 2016 discussed the challenges associated with getting from node 10 — which seems set for HVM — to nodes 7 and 5.

BONUS: Most Watched Webcast of 2016: View On Demand Now

IoT Device Trends and Challenges

Presenters: Rajeev Rajan, GLOBALFOUNDRIES, and Uday Tennety, GE Digital

The age of the Internet of Things is upon us, with the expectation that tens of billions of devices will be connected to the internet by 2020. This explosion of devices will make our lives simpler, yet create an array of new challenges and opportunities in the semiconductor industry. At the sensor level, very small, inexpensive, low power devices will be gathering data and communicating with one another and the “cloud.” On the other hand, this will mean huge amounts of small, often unstructured data (such as video) will rippling through the network and the infrastructure. The need to convert that data into “information” will require a massive investment in data centers and leading edge semiconductor technology.

Also, manufacturers seek increased visibility and better insights into the performance of their equipment and assets to minimize failures and reduce downtime. They wish to both cut their costs as well as grow their profits for the organization while ensuring safety for employees, the general public and the environment.

The Industrial Internet is transforming the way people and machines interact by using data and analytics in new ways to drive efficiency gains, accelerate productivity and achieve overall operational excellence. The advent of networked machines with embedded sensors and advanced analytics tools has greatly influenced the industrial ecosystem.

Today, the Industrial Internet allows you to combine data from the equipment sensors, operational data , and analytics to deliver valuable new insights that were never before possible. The results of these powerful analytic insights can be revolutionary for your business by transforming your technological infrastructure, helping reduce unplanned downtime, improve performance and maximize profitability and efficiency.

IC Insights will release its 20th anniversary edition of The McClean Report in January of next year.  The following represents a portion of the memory forecast that will appear in the new report.

After increasing by more than 20% in both 2013 and 2014, the memory market fell upon difficult times in 2015. Conditions that would normally be seen as favorable for boosting demand and increasing prices for memory devices such as supplier consolidation, limited capacity expansion, and a growing list of emerging applications did not prop up the market at all in 2015.   Instead, slow system demand in personal computers led to excess inventory and steep price cuts in the second half of 2015. This resulted in a 3% decline to $78.0 billion for the 2015 memory market. These same weak market conditions carried into the first half of 2016, but then memory prices began to firm in the second half of the year and the market finished the year on a strong note, though still down 1% year over year.

Looking to 2017, IC Insights’ forecast the total memory IC market will increase 10% to a new record high of $85.3 billion as gains in average selling prices for DRAM and NAND flash help boost total memory sales. Increases in the memory market are forecast to continue each year through the forecast, with sales topping $100.0 billion for the first time in 2020 and then reaching nearly $110.0 billion in 2021 (Figure 1).

From 2016-2021, the average annual growth rate for the memory market is forecast to be 7.3%; about 2.4 points more than the total IC market CAGR during this same time.  Memory units are expected to grow by a CAGR of 5.6%. Playing a bigger role in memory market growth through 2021 will be strengthening average selling prices (ASPs).  Memory market ASPs fell 3% in 2015 and declined another 10% in 2016 but are expected to increase in all but one year (2020) through the forecast at an average annual rate of 1.8%.

Figure 1

Figure 1

The DRAM market, which was the catalyst for strong total memory market growth in 2013 and 2014, tumbled 3% in 2015 and another 10% in 2016, dragging the total memory market down with it in both years (Figure 1).  For 2017, IC Insights forecasts a strong increase in DRAM average selling prices, which is expected to lift the DRAM market to 11% growth.   The NAND flash memory market—the only memory segment to show an increase in 2016—is expected to grow 10% in 2017.  Together, DRAM and NAND flash are forecast to help propel the total memory IC market up 10% in 2017.