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IC Insights traced the sales of the top 10 semiconductor companies dating back to 1985, in its Research Bulletin dated August 27, 2013.  In 1990, six Japanese companies were counted among the top 10 leaders in semiconductor sales.  In that year—in many ways, the peak of its semiconductor manufacturing and market strength—Japanese companies accounted for 51 percent of total semiconductor capital spending (Figure 1).

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North American companies accounted for 31 percent of semiconductor capex in 1990 and the Asia-Pacific region captured 10 percent share, slightly ahead of the eight percent held by European companies.  For perspective, Japan’s share of semi capex in 1990 was 20 points more than North America, 41 points more than Asia-Pacific, and 43 points more than Europe.

After reaching its highest-ever share of capital spending in 1990, Japan relinquished 20 points of marketshare and in five years trailed North America in semiconductor capital spending.  Economic malaise forced many of Japan’s strongest semiconductor companies to trim capex budgets and re-evaluate long-term strategic business plans.  At the same time, Japan was also feeling competitive pressure from South Korea, which had developed a strong memory manufacturing presence of its own; and from Taiwan, where the foundry business model was beginning to prosper.  In 1998, Japan trailed not only the North America region in semiconductor capital spending, but the Asia-Pacific region as well.  Fast-forward to 2010 and Japan and Asia-Pacific had essentially swapped places in terms of semiconductor capex marketshare.  In 1H13, Japan’s share of total semiconductor capital spending had dwindled to seven percent.

Japanese suppliers that are no longer in the semiconductor business include NEC, Hitachi, and Matsushita.  Other Japanese semiconductor companies that have greatly curtailed semiconductor operations include Sanyo, which was acquired by ON Semiconductor; Sony, which cut semiconductor capital spending and announced its move to an asset-lite strategy for ICs; Fujitsu, which sold its wireless group to Intel, sold its MCU and analog IC business to Spansion, and is consolidating its system LSI business with Panasonic’s; and Mitsubishi.

Meanwhile, from 2000-1H13, China joined semiconductor companies in South Korea, Taiwan, and Singapore by investing heavily in wafer fabs and advanced process technology.  These investments by Asia-Pacific companies were used primarily to produce DRAM and flash memory, microcontrollers, and to bolster wafer foundry operations.  Asia-Pacific accounted for 53 percent of capex marketshare in 1H13, down slightly from its 55 percent peak in 2010.

Mostly on account of spending by Intel, GlobalFoundries, Micron, and SanDisk, North America accounted for 37 percent of capital spending in 1H13, a few points higher than the steady 29 percent-33 percent share it has held since 1990.

There are three large European semiconductor suppliers and each now operates using a fab-lite or asset-lite strategy, which is why semiconductor capital spending from European companies accounted for only three percent of total capex in 1H13.  IC Insights forecasts capex spending by Europe-based ST, Infineon, and NXP and all other European semiconductor suppliers combined will amount to less than $1.5 billion in 2013.  Led by Samsung, Intel, and TSMC, there are nine semiconductor suppliers that are forecast to spend more money on their own than Europe will spend collectively in 2013.  In IC Insights’ opinion, IC manufacturers that are currently spending less than $1.0 billion a year on capital outlays will find it just about impossible to continue being able to manufacture using leading-edge digital processing technology, which is why European suppliers now outsource their most critical processing to foundries.

In accordance with Governor Andrew Cuomo’s strategic blueprint for growing nanotechnology industry jobs, companies, and investment across New York, the SUNY College of Nanoscale Science and Engineering and Mohawk Valley EDGE today announced an expanded partnership through which CNSE will lead development of the Marcy Nanocenter site by serving as the site end user.

The EDGE-SUNY CNSE partnership is designed to accelerate the attraction of next-generation 450mm computer chip manufacturing to the Mohawk Valley by deploying Governor Andrew Cuomo’s publicly-led and publicly-managed public-private partnership model that he first introduced with the CNSE Global 450mm Consortium (G450C).

“Today’s announcement of an expanded partnership among CNSE, Mohawk Valley EDGE and SUNYIT is yet another example of how New York State’s world-class higher education and research institutions are partnering with the private sector to revitalize Upstate New York,” Lieutenant Governor Robert J. Duffy said. “The Marcy Nanocenter has the potential to transform the economy of the Mohawk Valley and position the region to become a global leader in the nanotechnology industry. Under Governor Cuomo’s direction, the State remains committed to collaborating with the private sector to attract new investment, grow businesses and create jobs for Upstate New York. I applaud everyone who has been involved in moving this exciting partnership forward.”

“I have made the Quad C and Marcy Nanocenter initiatives key priorities for the Mohawk Valley. I applaud Governor Cuomo’s commitment to the Mohawk Valley and believe that CNSE is the catalyst that can help build a sustainable high technology economy that will create jobs, reclaim population and produce critical secondary benefits throughout the Upstate economy,” said New York State Senator Joseph A. Griffo.

“This announcement marks a major turning point in helping the Mohawk Valley reclaim its rich heritage as a center for manufacturing and innovation,” said Assemblyman Anthony Brindisi. “I want to thank the Governor and Dr. Kaloyeros for their commitment, and Mohawk Valley EDGE for its leadership in positioning the Marcy site as a strategic site that is pivotal to strengthening New York’s position as a global hub for semiconductor manufacturing.”

CNSE Senior Vice President and CEO Alain Kaloyeros said, “The NanoCollege’s role in leading development of the Marcy Nanocenter site builds upon Governor Cuomo’s visionary leadership and strategic investments in leveraging assets that not only remain under public ownership, but also attract substantially greater private industry investment. We look forward to working closely with Mohawk Valley EDGE and SUNYIT to ensure expansion of the nanotechnology research, development, commercialization and manufacturing ecosystem in the Mohawk Valley, which is further strengthening New York’s innovation-enabled economy.”

“The Mohawk Valley Regional Economic Development Council has made the development of the Marcy Nanocenter site and the investments in the Quad C at SUNYIT regional priorities that can have a catalytic economic impact on the Mohawk Valley region and build a technology corridor that extends across I-90,” said Larry Gilroy, Co-Chair for the Mohawk Valley Regional Economic Development Council.

With this announcement, CNSE is broadening its partnership with Mohawk Valley EDGE and SUNYIT to further the historic agreement announced in 2011 by Governor Cuomo to establish the G450C at CNSE. Spearheaded by CNSE, the $4.8 billion G450C has brought together five leading global high-tech companies – Intel, IBM, GLOBALFOUNDRIES, TSMC, and Samsung – at CNSE as part of a first-of-its-kind wafer and equipment development environment that will enable a cost effective and timely transition from the current 300mm wafer technology to the new 450mm technology.

Through the leadership and investment of Governor Cuomo, and as a critical component of G450C, CNSE built NanoFab Xtension (NFX) to provide state-of-the-art cleanroom facilities, tools, and infrastructure to support the research, development and pilot prototyping for 450mm wafer technology. Similarly, with the Marcy Nanocenter site, CNSE will lead development of a full-scale manufacturing facility designed to serve the world’s leading high-tech companies and enhance New York’s position as a global semiconductor hub.

A new Wetlands Permit application will be filed with the Buffalo District of the US Army Corps of Engineers that names CNSE as the end user to develop the site for semiconductor manufacturing, satisfying one of the requirements under Section 404 of the Clean Water Act. Concurrently, an application for Preliminary Development Plan approval is being filed with the Town of Marcy.  Securing these local and federal approvals will enable site development and infrastructure improvements that are required before CNSE can undertake plans for initial phases of development.

CNSE and EDGE expect that a new Wetlands Permit will be issued within the next few months so that work can commence on development of the site and support critical time-to-market requirements.

As part of the CNSE development plan, the potential full build-out of the Marcy site would include:

  • Up to 8.25 million square feet of facilities, with up to three 450mm computer chip fabs, each with a cleanroom of approximately 450,000 square feet;
  • Total public and private investment of $10 Billion to $15 Billion for each phase of development; and
  • Creation of approximately 5,000 direct jobs and approximately 15,000 indirect jobs.

From data centers to ultra-mobile devices such as tablets, phones and wearables, computing segments are undergoing exciting and even game-changing transitions, said new Intel CEO Brian Krzanich during today’s opening session of the Intel Developer Forum. Krzanich laid out Intel’s vision and described how Intel is addressing each dynamic market segment – such as accelerating Intel’s progress in ultra-mobile devices – with new products over the next year and beyond, including a new, lower-power product family.

Krzanich said Intel plans to leave no segment untapped. “Innovation and industry transformation are happening more rapidly than ever before, which play to Intel’s strengths. We have the manufacturing technology leadership and architectural tools in place to push further into lower power regimes. We plan to shape and lead in all areas of computing.”

This year’s Intel Developer Forum marked the first keynote addresses by Krzanich and Intel President Renée James since assuming their new roles in May.

In her presentation, James envisioned a new era in which every device and every object computes, meaning that integrated computing solutions must be smaller, faster, more versatile and produced in higher volume.

“Semiconductor-based technology will continue to address the world’s most pressing problems and exciting opportunities, changing how we live our lives, run our cities and care for our health,” said James. “Intel has played a pivotal role in every previous technology transition and will continue to enable breakthroughs in the future.”

Accelerating progress in ultra-mobile devices

Krzanich said that Intel this week will introduce “Bay Trail,” Intel’s first 22nm system-on-a-chip (SoC) for mobile devices. “Bay Trail” is based on the company’s new low-power, high-performance Silvermont microarchitecture, which will power a range of innovative Android and Windows designs, most notably tablets and 2 in 1 devices.

Defining the expanding ultra-mobile segment as smartphones, tablets, 2-in-1 tablets that take on PC functions with add-on keyboards, and other devices beyond traditional mobile computers, he said that ultra-mobiles are a more dynamic segment than is often recognized.

“Smartphones and tablets are not the end-state,” he said. “The next wave of computing is still being defined. Wearable computers and sophisticated sensors and robotics are only some of the initial applications.”

As an example of how Intel will continue to use its manufacturing and architectural leadership to push further into lower power regimes, Krzanich announced the Intel Quark processor family. The new lower-power products will extend Intel’s reach to growing segments from the industrial Internet-of-Things to wearable computing. It is designed for applications where lower power and size take priority over higher performance.

Intel will sample form-factor reference boards based on the first product in this family during the fourth quarter of this year to help partners accelerate development of tailored, optimized solutions initially aimed at the industrial, energy and transportation segments.

As the next era of computing grows even more personal, wearables are a hotbed for innovation. Krzanich highlighted a bracelet as an example of a concept with reference designs under development, and said the company is actively pursuing opportunities with partners in this area.

In high-speed 4G wireless data communications, Krzanich said Intel’s new LTE solution provides a compelling alternative for multimode, multiband 4G connectivity, removing a critical barrier to Intel’s progress in the smartphone market segment. Intel is now shipping a multimode chip, the Intel XMM 7160 modem, which is one of the world’s smallest and lowest-power multimode-multiband solutions for global LTE roaming.

As an example of the accelerating development pace under Intel’s new management team, Krzanich said that the company’s next-generation LTE product, the Intel XMM 7260 modem, is now under development. Expected to ship in 2014, the Intel XMM 7260 modem will deliver LTE-Advanced features, such as carrier aggregation, timed with future advanced 4G network deployments. Krzanich showed the carrier aggregation feature of the Intel XMM 7260 modem successfully doubling throughput speeds during his keynote presentation.

He also demonstrated a smartphone platform featuring both the Intel XMM 7160 LTE solution and Intel’s next-generation Intel Atom SoC for 2014 smartphones and tablets codenamed “Merrifield.” Based on the Silvermont microarchitecture, “Merrifield” will deliver increased performance, power-efficiency and battery life over Intel’s current-generation offering.

Intel manufacturing leadership

Citing continued, rapid innovation for PCs of the future, Krzanich demonstrated a 14nm-based “Broadwell” system. “Broadwell,” set to begin production by the end of this year, will be the lead product made using Intel’s 14nm manufacturing process. The first “Broadwell” products will deliver higher performance, longer battery life and low platform power points for 2-in-1 and fanless devices, Ultrabooks and various PC designs.

Saying that Intel will bring the full weight of its manufacturing process and architectural leadership to the Intel Atom processor family, he confirmed Intel intends to bring its Intel Atom processor and other products based on the next-generation “Airmont” microarchitecture to market on Intel’s leading-edge 14nm process technology beginning next year. Timing will vary by product segment.

As the only company offering 3-D Tri-gate transistors and the only semiconductor manufacturer in production at 22nm, Intel leads the industry in transistor technology by about three years. With its coming 14nm process, Intel’s second process generation with 3-D Tri-gate transistors, the company will further extend this lead. Advanced 3-D Tri-gate transistors enable the improved performance and energy efficiency demanded by today’s spectrum of computing that ranges from ultra-mobiles to servers.

Re-architecting the datacenter

Intel’s datacenter business, which generates more than $10 billion in revenues annually, develops solutions that help businesses keep pace with the increasing demands for cloud services and for managing data generated from billions of users and connected devices worldwide. Intel’s goal is to re-architect the datacenter to enable a common, software-defined foundation for both datacenters and cloud service providers that spans servers, networking, storage and security.

Intel’s newest Intel Xeon processor family for datacenters will launch later today; last week Intel introduced a portfolio of datacenter products and technologies, including the second generation 64-bit Intel Atom C2000 product family of SoC designs for microservers and cold storage platforms (codenamed “Avoton”) as well as for entry networking platforms (codenamed “Rangeley”).

Computing to solve the world’s problems

In her comments, James highlighted smart cities and customized healthcare as examples of potential applications for technology that can turn computing theories into life-changing realities.

By 2050, 70 percent of the world’s population is expected to live in megacities, according to James. Developments in semiconductor technology will further advance machine-to-machine data management in smart cities. Intel is partnering with the cities of Dublin and London to build a reference solution that could revolutionize urban management, providing citizens with better cities and improved municipal services with lower costs.

“It’s one thing to install computing power in billions of smart objects,” said James. “What we’re doing is harder — making powerful computing solutions that turn data to wisdom and search for answers to the world’s most complex problems like cancer care. What we’ve seen so far is just a glimpse of how Intel technology could be used to help heal, educate, empower and sustain the planet.”

James also highlighted Intel’s supercomputing work as one of many examples where computational ability can transform healthcare, the largest sector of the global economy. Intel is working with the Knight Cancer Institute at Oregon Health and Science University on a project aimed at shrinking the cost and time to analyze human genetic profiles and create searchable maps of DNA in multiple dimensions.

“For the first time in modern medicine, the computing and technology side of health care is as important as the biological side,” James said. “The more computing power we can deliver at a feasible price point, the more lives are saved.”

The SEMI World Fab Forecast indicates that capital expenditure for semiconductor fab equipment spending will increase to US$ 39.8 billion in 2014, the highest on record.  Semiconductor revenue has improved in 2013 compared to 2012 and early forecasts for 2014 project revenue growth averaging about eight percent. Semiconductor companies have adjusted their capital expenditure accordingly, and the SEMI report tracks over 200 projects, with details revealing that fab equipment spending is expected to decline by one percent in 2013 (to $31.8 billion), but increase by 25 percent in 2014, including new, used and internally manufactured in-house equipment.

Overall fab spending in the first half of 2013 was slow, especially for fab equipment spending.  Fab equipment spending is stronger in the second half of 2013, with a 30 to 40 percent increase over the first half.  The SEMI data shows a different outlook for fab construction projects, forecasting a 25 percent spending increase in 2013 to over $7 billion and then a drop of 16 percent in 2014 to about $5.9 billion. Fabs under construction this year will begin equipping next year which affects fab equipment spending.

Read more: SEMI sees 21% increase in chip equipment spending for 2014

Overall fab spending in the first half of 2013 was slower, especially for fab equipment spending.  Excluding a large purchase by Globalfoundries for used 300mm equipment from Promos (NT$20 to NT$30 billion) the decline in 2013 would have been -3.4 percent instead of -1 percent.

fab equipment spending

While DRAM equipment spending dropped by 35 percent in 2011 and 25 percent in 2012, the SEMI data shows that DRAM fab equipment spending will increase by 17 percent in 2013 and at least 30 percent in 2014. An increase of about 2 to 3 percent for installed capacity for DRAM in 2014 is small but remarkable, given that the industry has not added any new DRAM capacity for years, and actually cutback capacity between 2011 and 2013.

The sector with largest growth rate for fab equipment spending in 2014 is expected to be Flash with a 40 to 45 percent increase (YoY).  Over the last few years, capacity additions for the Flash sector also stagnated though technology investments. SEMI’s reports show detailed predictions for robust spending in DRAM and Flash by several large companies including Micron and Samsung. Overall fab equipment spending for Flash alone is expected to hit a record of almost $8 billion in 2014. After Flash and DRAM, MPU is expected to show the next largest growth in 2014, with fab equipment spending growing by over 40 percent (YoY). Intel is now preparing for 14nm, kicking off an MPU surge for 2014. The World Fab Forecast report gives insight into Intel’s preparations for 14nm.

Since the last fab database publication at the end May 2013, the SEMI worldwide dedicated analysis team has made 242 updates to 205 facilities (including Opto/LED fabs) in the database. The latest edition of the World Fab Forecast lists 1,147 facilities (including 247 Opto/LED facilities), with 66 facilities with various probabilities starting production this year and in the near future. SEMI added 14 new facilities and closed eight facilities.

The SEMI World Fab Forecast uses a bottom-up approach methodology, providing high-level summaries and graphs; and in-depth analyses of capital expenditures, capacities, technology and products by fab. Additionally, the database provides forecasts for the next 18 months by quarter. These tools are invaluable for understanding how the semiconductor manufacturing will look in 2013 and 2014, and learning more about capex for construction projects, fab equipping, technology levels, and products.

The SEMI Worldwide Semiconductor Equipment Market Subscription (WWSEMS) data tracks only new equipment for fabs and test and assembly and packaging houses.  The SEMI World Fab Forecast and its related Fab Database reports track any equipment needed to ramp fabs, upgrade technology nodes, and expand or change wafer size, including new equipment, used equipment, or in-house equipment. Also check out the Opto/LED Fab Forecast. Learn more about the SEMI fab databases at: www.semi.org/MarketInfo/FabDatabase and www.youtube.com/user/SEMImktstats

EV Group, a supplier of wafer bonding and lithography equipment for the MEMS, nanotechnology and semiconductor markets, today unveiled a new polymer via-filling process for 3D-IC/through-silicon-via (TSV) semiconductor packaging applications.  Available on the EVG100 series of resist processing systems, the new NanoFill process provides void-free via filling of very deep trenches and high-aspect ratio structures, and is suitable for all common polymeric dielectrics—offering a highly flexible, low-cost and production-ready via-fill platform for interposer development for 3D-integrated image sensors and other device types.

TSV interconnects are critical to the development of 3D-ICs since they enable through-chip communication between the vertically stacked device layers.  Currently, most TSVs employ a solid copper via structure.  However, the mismatch in coefficient thermal expansion (CTE) between the copper via and the surrounding silicon can create a high amount of stress on the via structure, which results in long-term reliability issues.  Replacing copper as the conducting material is not practical due to the general ease of use of the process as well as the fact that the tooling infrastructure for copper is already well established.  However, replacing the solid copper via with a partial copper-plated via that is filled with a polymeric dielectric has been demonstrated to reduce CTE mismatch and stress, thus minimizing reliability issues. EVG’s proprietary process and system enable simultaneous void-free via filling and dielectric redistribution layer (RDL) formation utilizing a field-proven process technology that is compatible with all standard polymeric materials.

“3D packaging represents a fundamental change in the semiconductor industry that paves the way for continued advances in device performance and cost reduction through ‘More than Moore’ approaches,” stated Markus Wimplinger, corporate technology development and IP director at EV Group.  “EV Group has made significant investments in our portfolio of wafer-level manufacturing solutions to add new products and capabilities, such as our NanoFill solution, to help our customers accelerate the commercialization of 3D-integrated devices.”

EVG’s new NanoFill via-filling solution provides numerous advantages over traditional spin coating and dry lamination techniques, including providing complete via filling for permanent passivation and planarization without forming voids or cavities.  The solution’s ability to use all common polymeric materials provides customers with a high degree of flexibility.  In addition, a sidewall passivation option is available that provides cost and throughput benefits for selected applications.

Innovation in MEMS no longer comes solely from new devices, but also from the integration of mature MEMS technologies into new applications. Along with mature devices used for new applications, innovation in new MEMS devices is still active and will continue to strongly participate to the MEMS market growth in the next five years.

Yole Développement reports on emerging MEMS looks at the new MEMS technologies that, as a group, are expected to represent almost ten percent of the value of the general MEMS market by 2018. The market will be mainly driven by medical applications – especially pharmaceutical research through DNA sequencing – and by consumer applications through innovations in mobile phones. Most of this growth is expected to take place after 2015, once products have been qualified and are suitable for volume manufacturing.

Emerging MEMS challenge: Dream vs. Reality

The dream:

After several decades of commercial existence, MEMS devices can now rely on a solid foundation for new developments. The time from R&D to commercialization has shrunk over the years, from 21 years for pressure sensors back in the 60’s to 11 years for oscillators. MEMS devices have been successful in fields with very high volumes, and have been proven capable of generating big profits. When you look at MEMS devices, you think about large volumes, and inexpensive devices; all aiming at the golden nugget that is the consumer market. This is where emerging MEMS devices try to go.

The reality:

An important barrier still exists for new devices: the cost reduction step before commercial ramp up. Most of the emerging MEMS companies are fabless start-ups that rely on the large worldwide MEMS foundry capabilities. These start-ups with new MEMS-based devices such as micro speakers, autofocus or micro-fuel cells aim at the consumer market for their commercial entrance. But this is without going through the usual “small volumes” phase in niche markets that can enable progressive cost reduction and product maturation. Those companies now face a great challenge: the price pressure of the consumer market.

This ambition to go fast and rapidly target large volumes induces numerous supply chain challenges for those emerging MEMS start-ups. They want their foundry partner to be able to provide fast process transfer, to have fast yield improvement, and provide full solutions from front-end to packaging. This is one of the reasons why some MEMS developments, long awaited for, are still a few years away from mass commercialization.

On the other hand, some emerging technologies – often developed by larger companies that are already involved in the targeted field – go through the standard ramp-up process, targeting niche applications that require MEMS advantages while improving their product to enlarge their spectrum. This is what can be seen with MEMS switches for example. They address niche markets of pill cams or ATE (Automated Test Equipment) for now, but can potentially address the billion units market of reed switches in the longer term. Nevertheless those examples tend to remain marginal.

Emerging MEMS driving forces

Yole Développement has identified a total of 15 emerging MEMS technologies that are supposed to enter the market within the next 5 years, with – or without – commercial success. Most of those developments have been motivated by the same three forces:

This implies that the promise of a potential large market is a strong driver for today’s developments. Too bad for smaller industries that could also benefit from MEMS unique functionalities, but investments follow the buzz. MEMS development still requires strong backing to survive the at-least- 10-years between R&D and first commercialization.

Looking only at large volume markets is risky due to strong commercial barriers, but it can also be a good bet: the autofocus market is expected to reach $450M by 2018 and chemical sensors market should reach $185M in 2018.

The future for MEMS devices

The MEMS industry has a strong future; despite the global economic downturn, innovation is still there. Nevertheless what must be understood is that commercial success takes some time, and there is no fast lane to success. Even though development time gets shorter and shorter, emerging technologies will still have to go through the usual cost reduction phase, and wait for market acceptance. The MEMS industry is one of those rare high-tech industries where innovation needs time.

IC Insights’ recently released August Update to The McClean Report includes Part 1 of an in-depth analysis of the fast-growing IC foundry market.  Part 2 of the IC foundry analysis will be presented in the September Update.

foundry sales
Figure 1

Figure 1 shows the reported IC foundry sales and “final market value” IC foundry sales as a percent of total IC industry sales from 2007-2017.  The “final market value” figure is 2.22x the reported IC foundry sales number. The 2.22x multiplier estimates the IC sales amount (i.e., market value) that is eventually realized when an IC is ultimately sold to the final customer (i.e., the electronic system producer).

An example of how an IC foundry’s “final market value” sales level is determined can be made using Altera. Since a fabless company like Altera purchases PLDs from an IC foundry, and does not incorporate them into an electronic system, Altera is not considered the final end-user of these ICs.  Eventually, Altera resells its IC foundry-fabricated PLDs to electronic system producers/final end-users such as Cisco or Nokia at a much higher price than it paid the IC foundry for the devices (i.e., gross margin).  As a result, a 2.22x multiplier, which assumes a 55 percent industry-wide average gross margin for the IC foundry’s customer base, is applied to the IC foundry’s reported sales to arrive at the “final market value” sales figure.

As was shown in Figure 1, the total “final market value” sales figure for the IC foundries is expected to represent just over 36 percent of the worldwide $271 billion IC market forecast for 2013, and just over 45 percent of the $359 billion worldwide IC market forecast for 2017.  The “final” IC foundry share in 2017 is forecast to be slightly more than double the 22.6 percent “final” marketshare the IC foundries held ten years earlier in 2007.

Read more: The changing future of the Asian foundry landscape

To further illustrate the increasingly important role that foundries play in the worldwide IC market, IC Insights applied the “final market value” sales multiplier to TSMC’s quarterly revenues and compared them to Intel’s quarterly IC sales from 1Q11 through 2Q13. Since TSMC’s sales are so heavily weighted toward leading-edge devices, IC Insights estimates that the gross margin for TSMC’s customer base averages 57 percent (a 57 percent gross margin equates to a 2.33x sales multiplier).  Using the 2.33x multiplier, IC Insights believes that TSMC’s “final market value” IC sales surpassed Intel’s IC sales in 2Q13 (Figure 2), and that TSMC currently has more impact on total IC market revenue than any company in the world. Considering that Intel’s IC sales were 45 percent greater than TSMC’s “final market value” IC sales as recently as 1Q12, this was a dramatic change in a very short period of time.

Read more: Reinventing Intel

The “final market value” IC sales figure of TSMC helps explain why the capital expenditures of Intel and TSMC are expected to be fairly close in size this year ($11.0 billion for Intel and $10.0 billion for TSMC) and next year ($11.0 billion for Intel and $11.5 billion for TSMC).  Thus, when comparing the semiconductor capital spending as a percent of sales ratios for IDMs and IC foundries, the foundries’ “final market value” sales levels should be used.

In general, IC foundries have two main types of customers—fabless IC companies (e.g., Qualcomm, Nvidia, Xilinx, AMD, etc.) and IDMs (e.g., Freescale, ST, TI, Fujitsu, etc.).  The success of the fabless IC segment of the market, 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 IDT, LSI Corp., Avago, and AMD, which have all become fabless IC suppliers over the past few years.  IC Insights believes that the result of these trends will be continued strong growth for the total IC foundry market, which is forecast to increase by 14 percent this year as compared to only six percent growth expected for the total IC market.

tsmc passes intel in final market value

Printed electronics refers to a process in which printing technology is used to produce various kinds of electronics goods, such as electronic circuits, sensors and devices. Printed electronics is emerging as a technology that will replace traditional photolithography, which requires costly materials, complex processes and expensive equipment, for the production of simple circuits or electronics components. In addition, printing technology allows patterning a desired substance on a specific location without complex processes. 

According to the “Emerging Displays Report – Printed Electronics Technology – 2013” report, published by IHS, the applied market for printed electronics is forecast to gradually grow after 2015. The total applied market created by printed electronics technology is expected to grow at a compound annual growth rate (CAGR) of 47 percent to $24.3 billion by 2020 from $3.3 billion in 2013.

The global printed electronics market is expected to grow in sync with the opening of the flexible display market. Currently, the technology is commercially applied to touch panel sensors and FPCBs, which have relatively low entry barriers. With partial application to RFIDs, smart tags, LCDs and OLEDs, the technology will gradually expand its application to the fabrication of flexible displays and thin film photovoltaics.

The market for semiconductors used in industrial electronics applications relished a better-than-expected first quarter as macroeconomic headwinds turned out to be less severe than initially feared, according to the latest Industrial Electronics report from information and analytics provider IHS.

Worldwide industrial electronics chip revenue in the first quarter reached $7.71 billion, up 1 percent from $7.63 billion in the final quarter of 2012. Although the uptick seemed modest, the increase marked a turnaround from the three percent decline in the fourth quarter. It also represents a major improvement compared to the 3 percent contraction of the market a year ago in the first quarter of 2011, as shown in the figure below.

 

“The industrial semiconductor market’s performance was encouraging, especially in light of continuing global economic uncertainty and the seasonal nature of the market, which typically sees slower movement in the first quarter of every year,” said Robbie Galoso, principal analyst for electronics at IHS. “Some large segments of the industry, particularly avionics and oil and gas process-automation equipment, saw muscular double-digit gains, helping to drive up overall revenue.”

In another positive development, several large industrial semiconductor suppliers also reported very lean inventories because of strong orders from customers. Infineon Technologies of Germany, Analog Devices of Massachusetts, and Dallas-based Texas Instruments all posted a sequential decline in industrial chip stockpiles as their days of inventory (DOI) measure fell well below average. Infineon achieved higher sales from increased volume in isolated-gate bipolar transistor (IGBT) chips; Analog Devices was strong in factory automation and medical instrumentation; and Texas Instruments saw growth in its analog products.

Other companies reporting sound increases during the period were Xilinx of California for its test and measurement, military aerospace and medical product lines; and Microsemi, also from California, which likewise enjoyed expansion in medical electronics along with broad-based growth for the period.

Europe’s woes inhibit industry, but China counters with growth

However, the industry was not without its challenges, with the Eurozone crisis causing the most havoc.

Read more: Regional developments to affect the growth of semiconductor industry

“The financial troubles on the continent, particularly in Greece, Italy and Spain, had the effect of stifling growth as a whole, especially in the commercial market for building and home control,” Galoso said. “As a result, the individual sectors for lighting, security, climate control and medical imaging were deleteriously impacted in the first quarter, compared to positive performance for those areas in the fourth quarter of 2012.

In contrast to Europe’s woes was China, which displayed growth momentum and much-improved demand across a number of industrial end markets. Manufacturers like Siemens of Germany, Philips of the Netherlands, Swiss-based ABB and Schneider Electric of France said their first-quarter sales in China improved from the earlier quarter.

In the rare earth industrial sector, however, China’s hold on the market loosened as rare earth prices started going south this year. China had a more than 90 percent monopoly on rare earth elements in the past, but new sources in Australia, the United States, Brazil, Canada and South Africa have opened up the market, decreasing dependence on China.

Products that incorporate rare earth materials include wind turbines, rechargeable batteries for electric vehicles and defense applications, including jet-fighter engines, missile guidance systems, and space satellites and communications systems.

Aerospace flies high; oil and gas equipment is also a winner

The military and civil aerospace market had the most robust performance among all industrial semiconductor segments in the first quarter. Avionics was especially vigorous, driven by commercial aircraft sales from pan-European entity EADS Airbus and U.S. maker Boeing, up 9 percent and 14 percent, respectively, on the quarter.

The oil and gas exploration market also saw solid revenue growth, with strong subsea systems and drilling equipment driving sales for ABB, Honeywell and GE.

In contrast to those high-performing segments, lackluster sales were reported in the markets for building and home control, for energy generation and distribution, and for test and measurement. One other market, manufacturing and process automation, reported stable growth, even though its sector for motor drives remained in negative territory.

Worldwide microprocessor sales are on pace to reach a record-high $61.0 billion in 2013 mostly due to strong demand for tablet computers and cellphones that connect to the Internet, but the ongoing slump in standard personal computers-including notebook PCs-is once again dragging down overall MPU growth this year.  Total microprocessor sales are now expected to increase eight percent in 2013 after rising just two percent in 2012, according to a new forecast in IC Insights’ Mid-Year Update of The McClean Report 2013.

IC Insights’ mid-year forecast trims the marketshare of x86 microprocessors primarily sold by Intel and rival Advanced Micro Devices for PCs and servers to 56 percent  of total MPU sales in 2013 compared to the previous estimate of 58 percent.  Figure 1 shows embedded microprocessors are now expected to account for 11 percent of MPU sales in 2013 (versus nine percent previously), while tablet processors are projected to be six percent of the total (compared to five percent in the original January forecast).  The new forecast keeps cellphone application processors at 26 percent of total MPU sales in 2013 but lowers the marketshare of non-x86 central processing units (CPUs) in computers outside of tablets to one percent (from two percent previously).

The proliferation of multimedia cellphones and the surge in popularity of touch-screen tablet computers are fueling strong double-digit growth rates of MPU sales and unit shipments in these two systems categories. The vast majority of these systems are built with mobile processors based on 32-bit CPU architectures licensed from ARM in the U.K.  Many MPU suppliers serve smartphone and tablet applications with the same processor platform design.   The falloff in standard PC shipments is a major problem for Intel and AMD since they have supplied more than 95 percent of the x86-based MPUs used in personal computers since the 1980s.

Read more: Qualcomm and Samsung pass AMD in MPU ranking

The new mid-year forecast raises tablet processor sales in 2013 to nearly $3.5 billion, which is a 54 percent increase from $2.3 billion in 2012.  Cellphone application processor sales are now expected to grow 30 percent in 2013 to $16.1 billion from $12.4 billion in 2012.  At the start of this year, sales of mobile processors in tablet computers and cellphones were forecast to grow 50 percent and 28 percent, respectively.  Stronger unit shipment growth in mobile processors has lifted the revenue forecast in these MPU market segments.

 mpu sales

 Figure 1

Meanwhile, the larger market segment of MPUs used in PCs, servers, and embedded-microprocessor applications continues to contract, albeit at a slower rate than in 2012.  The mid-year forecast shows sales of MPUs in PCs, servers, large computers, and embedded applications slipping by one percent to $41.4 billion in 2013 from $41.9 billion in 2012, when revenues dropped  six percent.  This large MPU market segment was previously forecast to rebound with sales increasing five percent, but the anticipated bounce back has been blocked by weak shipments of standard PCs, which IC Insights believes will fall by five percent in 2013 to 327 million systems.

While the mid-year outlook lowers total MPU revenues in 2013, it slightly increases the growth in microprocessor unit shipments to 10 percent this year from a projection of nine percent in the January forecast.  Total MPU shipments are now expected to reach 2.15 billion devices in 2013, with tablet processors growing 62 percent to 190 million units and cellphone application processors increasing 11 percent to 1.50 billion this year.  IC Insights’ microprocessor category does not include cellular radio-frequency baseband processors or stand-alone graphics processing units (GPUs), which are counted in the special-purpose logic/MPR category of the IC market.