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Microchip Technology Incorporated, a provider of microcontroller, mixed-signal, analog and Flash-IP solutions, and Atmel Corporation) today announced that Microchip has signed a definitive agreement to acquire Atmel for $8.15 per share in a combination of cash and Microchip common stock.  The acquisition price represents a total equity value of about $3.56 billion, and a total enterprise value of about $3.40 billion, after excluding Atmel’s cash and investments net of debt on its balance sheet of approximately $155.0 million at December 31, 2015.

“We are delighted to welcome Atmel employees to Microchip and look forward to closing the transaction and working together to realize the benefits of a combined team pursuing a unified strategy.  As the semiconductor industry consolidates, Microchip continues to execute a highly successful consolidation strategy with a string of acquisitions that have helped to double our revenue growth rate compared to our organic revenue growth rate over the last few years.  The Atmel acquisition is the latest chapter of our growth strategy and will add further operational and customer scale to Microchip,” said Steve Sanghi, President and CEO of Microchip.

“Microchip and Atmel have a strong tradition of innovation, stretching across microcontroller, analog, touch, connectivity and memory solutions.  Joining forces and combining our product portfolios will offer our customers a richer set of solution options to enable innovative and competitive products for the markets they serve,” said Ganesh Moorthy, COO of Microchip.

“Our Board of Directors determined, after consultation with our financial advisor and outside legal counsel, that the transaction with Microchip is a superior proposal for Atmel’s stockholders under the terms of our merger agreement with Dialog Semiconductor plc that we terminated today.  Under the Microchip transaction, Atmel stockholders will receive a much higher cash consideration per share compared to the Dialog deal, as well as the opportunity for further upside through the ownership of stock of Microchip,” said Steven Laub, President and CEO of Atmel.

Concurrent with this announcement, Microchip announced that its Board of Directors has authorized an increase in the existing share repurchase program to 15.0 million shares of common stock from the approximately 11.4 million shares remaining under the prior authorization.  Under this program, in the next several months, Microchip intends to repurchase the approximate number of shares it issues in the Atmel acquisition, which is expected to result in the transaction having the accretive effects of a cash transaction from a financial perspective.

Following the closing, the transaction is expected to be immediately accretive to Microchip’s non-GAAP earnings per share.  Based on currently available information, Microchip anticipates achieving an estimated $170 million in synergies from cost savings and incremental revenue growth in fiscal year 2019 that begins on April 1, 2018.

The transaction has been approved by the Board of Directors of each company and is expected to close in the second quarter of calendar year 2016, subject to approval by Atmel’s stockholders, regulatory approvals and other customary closing conditions.  No approval by Microchip’s stockholders is required in connection with the transaction.  The transaction is not subject to any financing conditions.

Transaction Details

In the transaction, stockholders of Atmel will receive $7.00 per share in cash and $1.15 per share in Microchip common stock, valued at the average closing price for a share of Microchip common stock for the ten most recent trading days ending on the last trading day prior to the closing, with the maximum number of Microchip shares to be issued in the transaction being 13.0 million.  To the extent that the number of Microchip shares issuable would exceed 13.0 million, the cash consideration per Atmel share will be increased such that the value of the combined cash and stock consideration will remain at $8.15 per share (as valued based upon the average closing price described in the previous sentence). Microchip expects to fund the cash portion of the purchase price through a combination of cash on its balance sheet and borrowings under its existing credit facility.

In connection with the termination of the merger agreement with Dialog, Atmel has paid Dialog a termination fee of $137.3 million.

Target dates are critical when the semiconductor industry adds small, enhanced features to our favorite devices by integrating advanced materials onto the surfaces of computer chips. Missing a target means postponing a device’s release, which could cost a company millions of dollars or, worse, the loss of competitiveness and an entire industry. But meeting target dates can be challenging because the final integrated devices, which include billions of transistors, must be flawless – less than one defect per 100 square centimeters.

Researchers at the University of Chicago and the U.S. Department of Energy’s Argonne National Laboratory, led by Juan de Pablo and Paul Nealey, may have found a way for the semiconductor industry to hit miniaturization targets on time and without defects.

Researchers from the University of Chicago and Argonne use the supercomputing resources at the Argonne Leadership Computing Facility to predict the path molecules must follow to find defect-free states and designed a process that delivers industry-standard nanocircuitry that can be scaled down to smaller densities without defects. Credit: de Pablo et al.

Researchers from the University of Chicago and Argonne use the supercomputing resources at the Argonne Leadership Computing Facility to predict the path molecules must follow to find defect-free states and designed a process that delivers industry-standard nanocircuitry that can be scaled down to smaller densities without defects. Credit: de Pablo et al.

To make microchips, de Pablo and Nealey’s technique includes creating patterns on semiconductor surfaces that allow block copolymer molecules to self-assemble into specific shapes, but thinner and at much higher densities than those of the original pattern. The researchers can then use a lithography technique to create nano-trenches where conducting wire materials can be deposited.

This is a stark contrast to the industry practice of using homo-polymers in complex “photoresist” formulations, where researchers have “hit a wall,” unable to make the material smaller.

Before they could develop their new fabrication method, however, de Pablo and Nealey needed to understand exactly how block copolymers self-assemble when coated onto a patterned surface – their concern being that certain constraints cause copolymer nanostructures to assemble into undesired metastable states. To reach the level of perfection demanded to fabricate high-precision nanocircuitry, the team had to eliminate some of these metastable states.

To imagine how block copolymers assemble, it may be helpful to picture an energy landscape consisting of mountains and valleys where some valleys are deeper than others. The system prefers defect-free stability, which can be characterized by the deepest (low energy) valleys, if they can be found. However, systems can get trapped inside higher (medium energy) valleys, called metastable states, which have more defects.

To move from a metastable to stable state, block copolymer molecules must find ways to climb over the mountains and find lower energy valleys.

“Molecules in these metastable states are comfortable, and they can remain in that state for extraordinarily long periods of time,” said de Pablo of the University of Chicago’s and Argonne’s Institute for Molecular Engineering. “In order to escape such states and attain a perfect arrangement, they need to start rearranging themselves in a manner that allows the system to climb over local energy barriers, before reaching a lower energy minimum. What we have done in this work is predict the path these molecules must follow to find defect-free states and designed a process that delivers industry-standard nanocircuitry that can be scaled down to smaller densities without defects.”

Using an INCITE grant, de Pablo and his team used the Mira and Fusion supercomputers at the Argonne Leadership Computing Facility, a DOE Office of Science User Facility. There, the team generated molecular simulations of self-assembling block polymers along with sophisticated sampling algorithms to calculate where barriers to structural rearrangement would arise in the material.

After all the calculations were done, the researchers could precisely predict the pathways of molecular rearrangement that block copolymers must take to move from a metastable to stable state. They could also experiment with temperatures, solvents and applied fields to further manipulate and decrease the barriers between these states.

To test these calculations, de Pablo and Nealey partnered with IMEC, an international consortium located in Belgium. Their commercial-grade fabrication and characterization instruments helped the researchers perform experiments under conditions that are not available in academic laboratories. An individual defect measures only a handful of nanometers; “finding a defect in a 100 square centimeter area is like finding a needle in hay stack, and there are only a few places in the world where one has access to the necessary equipment to do so,” says de Pablo.

“Manufacturers have long been exploring the feasibility of using block copolymer assembly to reach the small critical dimensions that are demanded by modern computing and higher data storage densities,” de Pablo said. “Their biggest challenge involved evaluating defects; by following the strategies we have outlined, that challenge is greatly diminished.”

John Neuffer, president and CEO of the Semiconductor Industry Association (SIA), says industry is relentlessly focused on designing and building chips that are smaller, more powerful and more energy-efficient. “The key to unlocking the next generation of semiconductor innovation is research,” he said. “SIA commends the work done by Argonne National Laboratory and the University of Chicago, as well as other critical scientific research being done across the United States.”

De Pablo, Nealey and their team will continue their investigations with a wider class of materials, increasing the complexity of patterns and characterizing materials in greater detail while also developing methods based on self-assembly for fabrication of three-dimensional structures.

Their long-term goal, with support from the DOE’s Office of Science, is to arrive at an understanding of directed self-assembly of polymeric molecules that will enable creation of wide classes of materials with exquisite control over their nanostructure and functionality for applications in energy harvesting, storage and transport.

Argonne National Laboratory seeks solutions to pressing national problems in science and technology. The nation’s first national laboratory, Argonne conducts leading-edge basic and applied scientific research in virtually every scientific discipline. Argonne researchers work closely with researchers from hundreds of companies, universities, and federal, state and municipal agencies to help them solve their specific problems, advance America’s scientific leadership and prepare the nation for a better future. With employees from more than 60 nations, Argonne is managed by UChicago Argonne, LLC for the U.S. Department of Energy’s Office of Science.

Viewpoints: 2016 outlook


January 11, 2016

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 2016.

New technologies will fuel pockets of growth in 2016

Plisinski_headshotBy Mike Plisinski, Chief Executive Officer, Rudolph Technologies, Inc.

While the 2016 outlook for the semiconductor industry as a whole appears increasingly uncertain, there are areas where significant growth remains likely. In particular, advanced packaging, driven by growing consumer demand in applications ranging from smartphones and tablets to the Internet of Things (IoT), shows great promise for continued innovation.

First, we see outsourced assembly and test (OSAT) manufacturers driving the development of new packaging technology. For example, we’ve seen major gains in the adoption of fan-out packaging and copper pillar technology, evidenced by ongoing capacity expansion, and the addition of new players—the most obvious perhaps being the large ongoing investment by a leading foundry in Asia where our inspection equipment has received a prominent role. We see more and more manufacturers choosing to add yield management and/or advanced process control (APC) software, to obtain a competitive advantage in not only cost, but also reliability. This is achieved by transforming ultra-large data sets into useful information used for predictive analytics (reducing costs) and analysis across the supply chain (improving reliability).

The growth in advanced packaging is also driving the adoption of sophisticated lithography techniques for these new technologies. Our JetStep advanced packaging stepper is now in high-volume manufacturing use at several top OSATs. The system allows our customers the flexibility to handle all of the current advanced processes within a single tool, which provides a compelling cost of ownership value. We also see emerging processes, such the adoption of rectangular panel substrates, in some packaging applications, certainly in fan-out, but also embedded and other packaging technologies. Rectangular panels promise significant gains in economy-of-scale and processing efficiency.

Lastly, expansion in radio frequency (RF) device capability continues to grow, with the increasing number of devices that communicate wirelessly and the increasing number of frequencies with which they communicate. Measuring the electrode and piezo layers of SAW/BAW filters will only grow as more and more filters are required in mobile devices. Beyond mobile, the expansion in RF is also driven by WiFi, Bluetooth and IoT requirements for connectivity, so we expect it to accelerate even as the smartphone growth curve flattens.

By Denny McGuirk, SEMI president and CEO

“In like a lion, out like a lamb” is just half the story for 2015.  While initial expectations forecasted a double-digit growth year, the world economy faded and dragged our industry down to nearly flat 2015/2014 results.

However, 2015 will be remembered for a wild ride that fundamentally changed the industry.  In 2015 a wave of M&A activity swept across the industry supply chain — unlike any single year before — with scores of transactions and notable multi-billion dollar companies being absorbed.  In 2016, we all will be working within a newly reconfigured supply chain.

Increasingly, in this business landscape, collaboration is required simultaneously across the extended supply chain — customers’ customers’ customers are now routinely part of the discussion in even unit process development.  Facilitating interaction and collaboration across the extended supply chain is part of what SEMI does and I’ll be updating you in next week’s letter on how, but first, let’s review what’s happened and what’s happening.

2015 Down 1%: “In Like a Lion, Out Like a Lamb”

2015 had an optimistic start with a strong outlook and good pace in Q1 and 1H.  In January 2015 forecasters projected semiconductor equipment and materials growing in a range of 7 percent to nearly 14 percent vs. 2014.  Global GDP, as late as May 2015, was pegged at 3.5 percent for 2015 after coming in at only 3.4 percent in 2014.  In August, estimates dropped to 3.3 percent, in November estimates dropped further to 3.1 percent for the year.

As our industry has matured, semiconductor equipment and materials growth rates are ever more tightly correlated to shifts in global GDP.  With global GDP unexpectedly dropping, the second half saw declining book-to-bill activity and the year will likely end flat or slightly negative for 2015.  Though nearly flat, the numbers are still impressive with a healthy $37.3 billion annual revenue for semiconductor manufacturing equipment and $43.6 billion for semiconductor materials.

An important change is since the 2009 financial crisis, electronics, chips, and semiconductor equipment and materials markets have been much more stable year-to-year than in the years prior to 2009.  Also, the movement of the three segments is much more synchronized compared to the earlier years of boom and bust. For SEMI’s members this means cycles are becoming more muted — enabling members to shift business models accordingly to better maintain prosperity.

Fab-Equipmt-600w Capital-Equip-600w

 

2015’s $125+ Billion M&A:  Inflection Point for Silicon Valley Icons and Global Titans

2015 is a year that will be viewed as an inflection point in our industry.  The unprecedented M&A volume (more than $125 billion for semiconductor related companies) and the size of individual deals through the electronics supply chain will forever  change the industry.

historic-proportions

While there have been waves of consolidation for semiconductor Integrated Device Manufacturers (IDMs) in the 1980s and 1990s, and semiconductor equipment and materials in the 1990s and 2000s, the fabless semiconductor companies are the latest wave undergoing consolidation.  Although, in 2015, not just fabless, but all segments saw major deals — even iconic chemical brands DuPont and Dow Chemical announced their intention to merge.

Large and familiar brands like Broadcom (Avago), SanDisk (Western Digital), Altera (Intel), Freescale (NXP), and KLA-Tencor (Lam Research) have been merged and will continue forward as part of their acquirers.  China is on the move with its ambitions to quickly grow its indigenous semiconductor supply chain with recent acquisitions of ISSI, OmniVision, NXP RF power unit, and notably Mattson in the semiconductor equipment segment.

In an age when new fab costs are pushing double-digit billions of dollars and leading-edge device tapeouts are surpassing $300 million per part, consolidation is a strategy to increase scale, leverage R&D, and compete better.  For SEMI’s members, the winner-take-all stakes increase and raise expectations for technology, product performance, application development, speed, and support.  This, in turn, means that SEMI members have an increased need for a newly drawn pre-competitive collaboration model along the extended electronics supply chain and for Special Interest Groups (SIGs) to drive collective action in focused sub-segments and for specific issues.

Collaboration-is-critical-6

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

2016 Up ~1%: Stay Close to your Customer and your Customer’s Customer and …

Current projections for semiconductor equipment and materials suggest that 2016 will not be a high growth year.  The span of forecasts ranges from almost -10 percent to +5 percent.  At SEMI’s Industry Strategy Symposium (ISS), 10-13 January, we will be taking a deep-dive into the 2016 forecast and on the business drivers and will have a much better picture of the consensus outlook.

However, it is already quite clear that following this enormous wave of consolidation, the industry will look different and will offer new and different opportunities.  Listening to SEMI’s members, I’ve heard that during this period of upheaval it’s absolutely critical to stay close to one’s customers – but more than that – to have access and ongoing direct dialogue with the customer’s customer … and customers’ customers’ customers.

In light of the cost of research and development, the magnitude of risks, and the speed of new consumer electronics adoption, SEMI members find that they need to intimately know emerging requirements two to three steps away in the supply chain, and may require rapid and innovative development from their own sub-suppliers to meet product delivery in time.  In parallel, we see system integrators (electronics providers) staffing up with semiconductor processing engineers and equipment expertise, both for differentiation of their own products and for potential strategic vertical manufacturing.

2016 will mark an acceleration of collaboration and interdependence across the extended supply chain.  Next week, I’ll provide an update letter on SEMI’s related activities with an overview of what SEMI is doing to meet the realities of a reshaped industry.  SEMI’s role is evolving, and more important now than ever, in helping the industry achieve together, what it cannot accomplish alone.

SEMI-Infographic--Achieving

Learn more about SEMI membership and upcoming events.

The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing, design, and research, today announced worldwide sales of semiconductors reached $28.9 billion for the month of November 2015, 0.3 percent lower than the previous month’s total of $29.0 billion and 3.0 percent down from the November 2014 total of $29.8 billion. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.

“Softening demand and lingering macroeconomic challenges continued to limit global semiconductor sales in November,” said John Neuffer, president and CEO, Semiconductor Industry Association. “Despite these headwinds, the industry may narrowly surpass total annual sales from 2014 and is projected to post modest sales increases in 2016 and beyond.”

Regionally, month-to-month sales increased in China (1.0 percent), Europe (1.0 percent), and the Americas (0.3 percent), but decreased in Japan (-0.6 percent), and Asia Pacific/All Other (-2.4 percent). Compared to November 2014, sales were up in China (5.3 percent), but down in Asia Pacific/All Other (-4.1 percent), the Americas (-7.1 percent), Europe (-8.0 percent), and Japan (-8.6 percent).

November 2015

Billions

Month-to-Month Sales                               

Market

Last Month

Current Month

% Change

Americas

6.05

6.07

0.3%

Europe

2.91

2.93

1.0%

Japan

2.70

2.68

-0.6%

China

8.59

8.68

1.0%

Asia Pacific/All Other

8.73

8.52

-2.4%

Total

28.97

28.88

-0.3%

Year-to-Year Sales                          

Market

Last Year

Current Month

% Change

Americas

6.53

6.07

-7.1%

Europe

3.19

2.93

-8.0%

Japan

2.93

2.68

-8.6%

China

8.24

8.68

5.3%

Asia Pacific/All Other

8.88

8.52

-4.1%

Total

29.77

28.88

-3.0%

Three-Month-Moving Average Sales

Market

Jun/Jul/Aug

Sept/Oct/Nov

% Change

Americas

5.60

6.07

8.3%

Europe

2.81

2.93

4.5%

Japan

2.67

2.68

0.3%

China

8.23

8.68

5.4%

Asia Pacific/All Other

8.57

8.52

-0.6%

Total

27.88

28.88

3.6%

Mark Adams, President of Micron Technology

Micron Technology, Inc. today announced that President Mark Adams will resign for personal health reasons. He will remain with the company until February 1, 2016, to support the transition.

Adams joined Micron in June 2006 and has served as President since February 2012.

“Mark has been a stellar leader and contributor to Micron’s growth and success during his time with the company,” said Micron CEO Mark Durcan. “We thank him for his dedication and service and wish him the very best with his recovery and into the future.”

Micron Technology, Inc., is a global leader in advanced semiconductor systems. Micron’s portfolio of high-performance memory technologies—including DRAM, NAND and NOR Flash—is the basis for solid state drives, modules, multichip packages and other system solutions.

In 2015, Chinese state-owned, chip-design company Tsinghua Unigroup Ltd. tried unsuccessfully to buy Micron for $23 billion.

By Dr. Phil Garrou, Contributing Editor

At the 12th annual 3D ASIP [Architectures for Semiconductor Interconnect and Packaging] Conference, sponsored by RTI Int, in Redwood City CA last week, Professor Mitsumasa Koyanagi of Tohoku University and Dr. Peter Ramm of Fraunhofer EMFT were the conference’s first recipients of the “3DIC Pioneer Award”.

Conference Chair Dr. Phil Garrou from Microelectronic Consultants of NC commented, “Since we are now more than a decade into the concerted effort to commercialize 2.5 and 3DIC technology it seemed appropriate to look back and document who actually led the way in this technically challenging effort. After significant study, we are convinced that the research groups in Tohoku University and Fraunhoffer – Munich were not only the first in the field, but also have continued their studies to this day to help commercialize this important leading edge technology.”

Professor Koyanagi (left) and Dr. Ramm (right) accept                                                           3DIC Pioneering Award from conference chair Garrou.

Professor Koyanagi (left) and Dr. Ramm (right) accept 3DIC Pioneering Award from conference chair Garrou.

Profesor Koyanagi’s work started back with his seminal paper “Roadblocks in achieving 3-dimensional LSI” presented at the Symposium on Future Electronic Devices in 1989. His 1995 paper “Three dimensional Integration Technology Based on a Wafer Bonding Technique Using Micro Bumps” showed a process sequence similar to todays TSV etch, thin and bond for an image sensor circuit.

Dr. Ramm began his work in the early 1990s in collaboration with Siemens under the German sponsored R&D program “Cubic Integration – VIC”. Their paper “Performance Improvement of the Memory Hierarchy of RISC-Systems by Application of 3-D Technology,” which appeared in IEEE Trans on Components, Packaging and Manufacturing Technology in 1996 woke up the larger community to the possibilities of using 3DIC. A key patent from that era was USP 5,563,084 “Method of Making a 3 Dimensional Integrated Circuits” which issued in 1996.

Between 2015 and 2019, worldwide systems revenues for applications connecting to the Internet of Things will nearly double, reaching $124.5 billion in the final year of this decade, according to IC Insights’ new 2016 edition of its IC Market Drivers report.  During that same timeframe, new connections to the Internet of Things (IoT) will grow from about 1.7 billion in 2015 to nearly 3.1 billion in 2019 (Figure 1), based on the forecast in the new 450-page report, which examines emerging and major end-use applications fueling demand for ICs.

Figure 1

Figure 1

The new IC Market Drivers report shows about 30.0 billion Internet connections are expected to be in place worldwide in 2020, with 85% of those attachments being to web-enabled “things”—meaning a wide range of commercial, industrial, and consumer systems, distributed sensors, vehicles, and other connected objects—and 15% for electronics used by humans to communicate, download and receive streams of data files, and search for online information.  It was the opposite of that in 2000, with 85% of 488 million Internet connections providing human users with online access to the World Wide Web and the remaining 15% serving embedded systems, remote sensing and measurements, control, and machine-to-machine communications.

Strong double-digit increases in the Internet of Things market will drive up IC sales in IoT applications by a compound annual growth rate (CAGR) of 15.9% between 2015 and 2019 to about $19.4 billion in the final year of this decade (Figure 2), according to the new report.  IoT applications will also fuel strong sales growth in optoelectronics, sensors/actuators, and discrete semiconductors (O-S-D), which are projected to rise by a CAGR of 26.0% between 2015 and 2019 to $11.6 billion in four years.  The new IC Market Drivers report shows microcontrollers and system-on-chip microprocessors topping integrated circuit sales growth with a CAGR of 22.3% in the next four years, followed by memories at 19.8%, application specific standard products (ASSPs) at 16.4%, and analog ICs at an annual growth rate of 12.7%.

Figure 2

Figure 2

In the 2014-2019 forecast period of the IC Market Drivers report, wearable systems are projected to be the fastest growing IoT application with sales increasing by a CAGR of 59.0%, thanks in great part to a 440% surge in 2015 due to the launch of Apple’s first smartwatches in 2Q15.  Sales of IoT-connected wearable systems are expected to reach $15.2 billion in 2019 compared to $1.5 billion in 2014 and about $8.1 billion in 2015.

Meanwhile, connected vehicles (passenger cars and light trucks) are expected to be the second fastest market category for IoT technology with revenues growing by a CAGR of 31.5% between 2014 and 2019 to $5.3 billion in the final year of this decade.

2016 bounce to modest gains


December 14, 2015

By Christian G. Dieseldorff, Industry Research & Statistics Group, SEMI

SEMI just published the latest quarterly update of its World Fab Forecast report.  While the year started with a positive outlook, the initial optimism has largely deflated, and the year will end largely flat. Fab equipment spending growth (new and used) for 2015 is expected to be 0.5 percent (US$ 35.8 billion). For 2016, spending is forecast to grow by 2.6 percent ($36.7 billion), with a possible continued upward trend.

Past trends prove again the close correlation of spending to global GDP and revenue.  The IMF predicted worldwide GDP to grow by 3.5 percent back in May, and has revised it down to only 3.1 percent.  Likewise, as of May, the year’s average revenue growth for the semiconductor industry was predicted to be in the mid- to high-single digits (according to ten leading market research firms).  Now these firms have revised their 2015 predictions to an average of just 1.3 percent.

Fab equipment spending (new, used and in-house) follows the same rollercoaster as revenue, and is now expected to grow by only 0.5 percent by the end of 2015, possibly 1 percent, according to SEMI.

Fab-Equipment-Spending

In 2015, 80 to 90 percent of fab equipment spending went to 300mm fabs, while only 10 percent was for 200mm or smaller.  SEMI’s recently published “Global 200mm Fab Outlook” provides more detail about past and future 200mm activities.

Cherish the Memory

Examining fab equipment spending by product type, Memory accounts for the largest share in 2015 and 2016. In 2015, DRAM spending was second in place but in 2016 3D Flash will, by far, outspend DRAM.

Most DRAM spending in 2015 went towards 21/20nm ramp.  In 2016, DRAM companies are expected to start risk production of 1xnm (for example, Samsung in 1H 2016; Hynix in 2H 2016; and Micron in 2016).

While 2015’s spending was dominated by DRAM, SEMI reports that 2016 will be dominated by Flash, mainly 3D-related architectures.  Capacity for 3D-NAND will continue to surge.  SEMI’s report tracks 10 major 3D producing facilities, with a capacity expansion of 47 percent in 2015 and 86 percent in 2016.

Foundry Segment Holds Steady

The Foundry segment is next in terms of the largest share of fab equipment spending in 2015 and 2016.  In general, the foundry segment shows steadier, more predictable spending patterns than other device product segments. The largest foundry player, TSMC, has a strong impact on the foundry industry.  In the second half of 2015, TSMC cut 2015 capex from $10.5 billion to $8 billion, due to a flagging market.  SEMI expects a stronger fourth quarter in 2015 for equipment spending for foundry as TSMC fulfills its capital expenditure for the year and we expect an increased capex in 2016.

TSMC recently announced revenue expectation for 2016 to be in double digits and expects to increase capex for 2016 as it ramps 16nm and adds initial 10nm capacity.

It’s Only Logical (and MPU)

Coming in third place in fab equipment spending, MPU had lower spending in 2015.  Intel revised its planned capex down four times, from $10 billion to $8.7 billion then to $7.7 billion, and finally to $7.3 billion, and it decided to delay the launch of 10nm products (Cannonlake) to 2H17.  Intel still announced lofty plans for 2016 capex, around $10 billion.  Especially in 2H16, spending will pick up for anticipated 10nm activities.

Meanwhile for Logic spending has been very strong in 2015, with 90 percent growth, driven by SONY’s CMOS image sensors.  This exuberant growth, however, is expected to slow down in 1H16.

Consequence of Consolidations: the End of Wild Times?

Between 2010 and 2014, change rates for equipment spending fluctuated wildly, from +16 percent in 2011 to -16 percent in 2012, -8 percent in 2013 to 15 percent in 2014. These drastic changes have been replaced by dampened spending growth rate for 2015 and into 2016.  Multiple reasons may apply: a more mature and lower growth industry, increased caution regarding capacity ramp, or perhaps the recent frenzy of consolidations further concentrating capex spending.  SEMI’s next quarterly publication, in February 2016, will give further insight into early indicators of 2017.  Will sedate, positive spending growth continue?

The SEMI World Fab Forecast Report in Excel format, tracks spending and capacities for 1,167 facilities across industry segments from Analog, Power, Logic, MPU, Memory, and Foundry to MEMS and LEDs facilities. It uses a bottoms-up approach methodology, providing high-level summaries and graphs and in-depth analyses of capital expenditures, capacities, technology and products by fab.  Learn more about the SEMI fab databases at: www.semi.org/MarketInfo/FabDatabase and www.youtube.com/user/SEMImktstats

Worldwide semiconductor fab equipment capital expenditure growth (new and used) for 2015 is expected to be 0.5 percent (total capex of US$35.8 billion), increasing another 2.6 percent (to a total of $36.7 billion) in 2016, according to the latest update of the quarterly SEMI World Fab Forecast report.

SEMI reports that in 2015, Korea outspent all other countries ($9.0 billion) on front-end semiconductor fab equipment, and is expected to drop to second place in 2016 as Taiwan takes over with the largest capex spending at $8.3 billion. In 2015, Americas ranked third in overall regional capex spending with about $5.6 billion and is forecast to increase only slightly to (5.1 percent) in 2016.

fab equipment spending 2016

In 2015, 80 to 90 percent of fab equipment spending went to 300mm fabs, while only 10 percent was for 200mm or smaller.  SEMI’’s recently published “Global 200mm Fab Outlook” provides more detail about past and future 200mm activities.

Examining fab equipment spending by product type, Memory accounts for the largest share in 2015 and 2016.  While 2015’s spending was dominated by DRAM, the SEMI World Fab Forecast reports that 2016 will be dominated by Flash, mainly 3D-related architectures.  Capacity for 3D-NAND will continue to surge. SEMI’’s report tracks 10 major 3D producing facilities, with a capacity expansion of 47 percent in 2015 and 86 percent in 2016.

The Foundry segment is next in terms of the largest share of fab equipment spending in 2015 and 2016.  In general, the foundry segment shows steadier, more predictable spending patterns than other device product segments. Coming in third place in fab equipment spending, MPU had lower spending in 2015.  Logic spending was very strong in 2015, with 90 percent growth, driven by SONY’s CMOS image sensors.

Throughout 2015, SEMI anticipates that there will be 1,167 facilities worldwide investing in semiconductor equipment in 2016, including 56 future facilities across industry segments from Analog, Power, Logic, MPU, Memory, and Foundry to MEMS and LEDs facilities. For further details, please reference to the latest edition of SEMI’s World Fab Forecast report.