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By Lara Chamness, senior market analyst manager, SEMI

Semiconductor Market Trends

2014 was the second record breaking year in a row in terms of semiconductor device revenues; the industry grew a robust 10 percent to total $336 billion, according to the WSTS. The strong momentum of the device market was enough to drive positive growth for both the equipment and materials markets. After two successive years of revenue decline, both the equipment and materials markets grew 18 percent and 3 percent, respectively last year, according to SEMI (www.semi.org). Even though the semiconductor materials market did not enjoy the same magnitude of recovery as the equipment market last year, the materials market has been larger than the equipment for the past seven years.

Just like last year, the weakened Yen negatively impacted total revenues for semiconductor materials and equipment (refer to Dan Tracy’s March 2014 article for more detail). The Table (below) shows the impact of the weakened Yen on Semiconductor Equipment Association of Japan’s (SEAJ) book-to-bill data. SEMI reveals that if the data was kept in Yen, the 2014 market for Japan-based suppliers would be up 37 percent. However, when the Yen are converted to dollars the 2014 equipment market for Japan-based suppliers only increased 26 percent. When silicon semiconductor shipment volumes are compared year-over-year, shipments were up 11 percent. By comparison, silicon revenues only increased one percent. SEMI also tracks leadframe unit shipments. In 2014, leadframe shipments were up 9 percent year-over-year; however, leadframe revenues increased only 4 percent. Silicon and leadframe revenues were adversely impacted by intense price down pressure exasperated by the weakened Yen. Given that Japan-headquartered suppliers represent a significant portion of the equipment and materials markets; this has the effect of muting the growth of the global equipment and materials markets as well.

Semiconductor Equipment

Worldwide sales of semiconductor manufacturing equipment totaled $37.5 billion in 2014, representing a year-over-year increase of 18 percent and placing spending on par with 2004 levels. According to SEMI, looking at equipment sales by major equipment category, 2014 saw expansions in all major categories — Wafer Processing equipment increased 15 percent, while the Assembly and Packaging and Test equipment segments grew 32 and 31 percent, respectively. The Other Front-end segment (Other Front End includes Wafer Manufacturing, Mask/Reticle, and Fab Facilities equipment) increased 15 percent.

Taiwan retained its number one ranking last year at $8.2 billion, even though it was the only region to experience a year-over-year contraction in spending. The equipment market in North America maintained second place at $8.2 billion for the second year as its market grew a robust 55 percent due to investments in excess of a billion dollars each from Intel, GLOBALFOUNDRIES, and Samsung.  Spending levels of $6.8 billion in South Korea remain significantly below their market high set in 2012 resulting in South Korea maintaining the third spot for the second year in a row. China moved up in the rankings to hit a market high and displacing Japan to claim the fourth position in the market. Strong investments by Samsung, SK Hynix, SMIC, and back-end companies are driving the equipment market in China. Equipment sales to Europe and Rest of world increased 24 and 4 percent, respectively in 2014. Rest of World region aggregates Singapore, Malaysia, Philippines, other areas of Southeast Asia and smaller global markets.

Semiconductor Materials
SEMI reports that the global semiconductor materials market, which includes both fab and packaging materials, increased 3 percent in 2014 totaling $44.3 billion. Looking at the materials market by wafer fab and packaging materials, the wafer fab materials segment increased 6 percent, while the packaging materials segment was flat.  However if bonding wire were excluded from the packaging materials segment, the segment increased more than 4 percent last year. The continuing transition to copper-based bonding wire from gold is negatively impacting overall packaging materials revenues.

Taiwan maintained the top spot for the fifth year in a row, followed by Japan, South Korea, Rest of World, and China. Driving the materials market in Taiwan are advanced packaging operations and foundries. Japan still claims a significant installed fab base and has a tradition in domestic-based packaging, although many companies in Japan have rapidly adopted a fab lite strategy and have consolidated their fab and packaging plants. South Korea passed Rest of World (primarily SE Asia) as the third largest market for semiconductor materials given the dramatic increase in advanced fab capacity in the region in recent years.

Outlook

Most analysts predict mid- to high single-digit growth for the semiconductor device market for 2015. Initial monthly data for silicon shipments and semiconductor equipment are proving to be encouraging. In light of growth expectations for the device market, SEMI projects that the semiconductor materials market will increase 4 percent this year. Given current CapEx announcements, the outlook for semiconductor equipment is optimistic as well, with current projections of the equipment market showing another year of growth, which would place the equipment market on par with the last market high set in 2011.

2014 was a much welcomed year for equipment and materials suppliers as device manufacturers easily exceeded revenues of $300 billion. Even with the weakened Yen, both the semiconductor and equipment segments experienced growth. 2015 is promising to be another growth year for the entire market with device, materials and equipment suppliers poised to experience increases for the year.

Portions of this article were derived from the SEMI Worldwide Semiconductor Equipment Market Statistics (WWSEMS), the Material Market Data Subscription (MMDS) and the World Fab Watch database. These reports are essential business tools for any company keeping track of the semiconductor equipment and material market. Additional information regarding this report and other market research reports is available at www.semi.org/marketinfo

STATS ChipPAC Ltd., a provider of advanced semiconductor packaging and test services, today announced that Cavendish Kinetics, a provider of high performance RF MEMS tuning solutions for LTE smartphones and wearable devices, has adopted its advanced wafer level packaging technology to deliver Cavendish’s SmarTune RF MEMS tuners in the smallest possible form factor, as a 2mm2 chip scale package.

LTE smartphone original equipment manufacturers (OEMs) are rapidly adopting antenna tuning solutions to be able to provide the required signal strength across the large number of LTE spectrum bands used globally. Cavendish’s SmarTune RF MEMS tuners outperform traditional RF silicon-on-insulator (SOI) switch-based antenna tuning solutions by 2-3dB, resulting in much higher data rates (up to 2x) and improved battery life (up to 40 percent). Cavendish RF MEMS tuner shipments are ramping aggressively and can now be found in six different smartphone models across China, Europe and North America, with many additional designs in development.

“Our RF MEMS tuners present demanding packaging requirements, including the need to deliver the smallest possible form factor in a process that protects the integrity of our hermetically sealed MEMS structure,” said Atul Shingal, Executive Vice President of Operations, Cavendish Kinetics. “STATS ChipPAC’s wafer level packaging platform provided advantages in package size, performance and scalability, and a proven, cost effective manufacturing process that supports our accelerating volume production.”

STATS ChipPAC provides a comprehensive platform of wafer level technology from Fan-in Wafer Level Packaging (FIWLP) to highly integrated Fan-out Wafer Level Packaging (FOWLP) solutions known as embedded Wafer Level Ball Grid Array (eWLB). Cavendish Kinetics and STATS ChipPAC are jointly working to utilize the inherent benefits of wafer level packaging technology to drive further RF antenna tuning innovations for the smartphone market.

“Through our successful partnership, Cavendish Kinetics has been able to implement their current generation industry leading MEMS-based antenna tuning solution. In future products, we will be able to provide Cavendish Kinetics with options for greater functional integration and silicon partitioning capabilities that are only feasible with our industry leading fan-out eWLB technology,” said Dr. Rajendra Pendse, Vice President and Chief Marketing Officer, STATS ChipPAC.

The global semiconductor materials market increased 3 percent in 2014 compared to 2013 while worldwide semiconductor revenues increased 10 percent. Revenues of $44.3 billion mark the first increase in the semiconductor materials market since 2011.

Total wafer fabrication materials and packaging materials were $24.0 billion and $20.4 billion, respectively. Comparable revenues for these segments in 2013 were $22.7 billion for wafer fabrication materials and $20.4 billion for packaging materials. The wafer fabrication materials segment increased 6 percent year-over-year, while the packaging materials segment remained flat. However, if bonding wire were excluded from the packaging materials segment, the segment increased more than 4 percent last year. The continuing transition to copper-based bonding wire from gold is negatively impacting overall packaging materials revenues.

For the fifth consecutive year, Taiwan was the largest consumer of semiconductor materials due to its large foundry and advanced packaging base, totaling $9.8 billion. Japan claimed the second spot during the same time. Annual revenue growth was the strongest in the Taiwan market. The materials market in North America had the second largest increase at 5 percent, followed by China, South Korea and Europe. The materials markets in Japan and Rest of World were flat relative to 2013 levels. (The ROW region is defined as Singapore, Malaysia, Philippines, other areas of Southeast Asia and smaller global markets.)

Region 2013 2014 % Change
Taiwan

8.91

9.58

8%
Japan

7.17

7.19

0%
South Korea

6.87

7.03

2%
Rest of World

6.64

6.66

0%
China

5.66

5.83

3%
North America

4.76

4.98

5%
Europe

3.04

3.08

1%
Total

43.05

44.35

3%

Source: SEMI, April 2015
Note: Figures may not add due to rounding.

The Material Market Data Subscription (MMDS) from SEMI provides current revenue data along with seven years of historical data and a two-year forecast.

The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing and design, today announced worldwide sales of semiconductors reached $27.8 billion for the month of February 2015, an increase of 6.7 percent from February 2014 when sales were $26.0 billion. Global sales from February 2015 were 2.7 percent lower than the January 2015 total of $28.5 billion, reflecting seasonal trends. Regionally, sales in the Americas increased by 17.1 percent compared to last February to lead all regional markets. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.

“The global semiconductor industry maintained momentum in February, posting its 22nd straight month of year-to-year growth despite macroeconomic headwinds,” said John Neuffer, president and CEO, Semiconductor Industry Association. “Sales of DRAM and Analog products were particularly strong, notching double-digit growth over last February, and the Americas market achieved its largest year-to-year sales increase in 12 months.”

Regionally, year-to-year sales increased in the Americas (17.1 percent) and Asia Pacific (7.6 percent), but decreased in Europe (-2.0 percent) and Japan (-8.8 percent). Sales decreased compared to the previous month in Europe (-1.6 percent), Asia Pacific (-2.2 percent), Japan (-2.3 percent), and the Americas (-4.4 percent).

“While we are encouraged by the semiconductor market’s sustained growth over the last two years, a key driver of our industry’s continued success is free trade,” Neuffer continued. “A legislative initiative called Trade Promotion Authority (TPA) has paved the way for opening markets to American goods and services for decades, helping to give life to nearly every U.S. free trade agreement in existence, but it expired in 2007. With several important free trade agreements currently under negotiation, Congress should swiftly re-enact TPA.”

February 2015
Billions
Month-to-Month Sales
Market Last Month Current Month % Change
Americas 6.51 6.23 -4.4%
Europe 2.95 2.90 -1.6%
Japan 2.62 2.56 -2.3%
Asia Pacific 16.47 16.10 -2.2%
Total 28.55 27.79 -2.7%
Year-to-Year Sales
Market Last Year Current Month % Change
Americas 5.32 6.23 17.1%
Europe 2.96 2.90 -2.0%
Japan 2.81 2.56 -8.8%
Asia Pacific 14.96 16.10 7.6%
Total 26.04 27.79 6.7%
Three-Month-Moving Average Sales
Market Sep/Oct/Nov Dec/Jan/Feb % Change
Americas 6.53 6.23 -4.6%
Europe 3.19 2.90 -9.2%
Japan 2.93 2.56 -12.7%
Asia Pacific 17.12 16.10 -6.0%
Total 29.77 27.79 -6.7%

Semiconductor equipment manufacturer ClassOne Technology announced the sale and delivery of its Solstice S8 Plating System to Advanced Wireless Semiconductor Company (AWSC) of Taiwan. The fully automated Solstice S8 will be installed at the AWSC facility in the Tainan Industrial Park in Taiwan where it will be used for volume manufacturing processes such as lead-free wafer level packaging (WLP) and through wafer vias (TWV) used in the manufacture of RF and other microdevices.

“Foundries often need to weigh performance and price carefully, and we believe the S8 strikes the right balance,” said Kevin Witt, ClassOne’s V.P. of Technology. “For example, the Solstice can enable a customer to move Copper Pillar, Nickel, Tin Bump, and Cu Backside Via production from several wet benches onto a single automated tool that gives a better process result and higher productivity. In addition, ClassOne supports customers with process development and deployment every step of the way.”

“Solstice fills a void in the market between wet benches on the low end and the large, expensive 300mm plating systems on the high end,” said Win Carpenter, ClassOne’s V.P. of Global Sales. “The Solstice S8 was designed to provide advanced plating performance at a reasonable cost for everyone who manufactures on 200mm and smaller substrates. Those users include many emerging markets such as MEMS, LEDs, RF, power, and sensors.”

The Solstice electroplating systems were introduced in 2014 and are available in fully automated, 4- and 8-chamber configurations that deliver up to 75 wph of capacity. The Solstice family handles substrates up to and including 200mm, whether transparent or opaque, and performs key processes such as electroplating of various metals and alloys. Solstice pricing is less than half that of similarly configured 300mm plating systems outfitted for 200mm from the large manufacturers.

IC Insights recently released its March Update to the 2015 McClean Report.  The Update includes a review of IC company sales by headquarters location.  In this example, Samsung’s sales from its fabrication facility in Austin, Texas, are counted as sales from South Korean companies.  Intel’s sales from its fabs in China, Ireland, and Israel are included among U.S. companies, etc.  As shown, U.S. companies held a 55 percent share of the total worldwide IC market in 2014, which includes sales from IDMs and fabless IC companies. The total does not include foundry sales.  South Korean companies captured an 18 percent share and Japanese companies placed third with a 9 percent share. Chinese companies accounted for only 3 percent of total IC sales in 2014 (Figure 1).

IDM fab sales Fig 1

 

Among IDMs (companies with wafer fabs that manufacture their own ICs), U.S.-headquartered companies accounted for slightly over half of worldwide sales followed by companies based in South Korea, Japan, and Europe. Taiwan companies (not including foundries) held only a 2 percent share.

Over the next couple of years, NXP’s purchase of Freescale (expected to close later this year) and Infineon’s purchase of IR will likely boost the European share of worldwide IDM IC sales by a few percentage points at the expense of U.S. share.  In contrast, Europe is expected to lose fabless IC company marketshare in the next few years due to Qualcomm’s acquisition of CSR, Europe’s second-largest fabless IC supplier, and Intel’s purchase of Lantiq, Europe’s third-largest fabless IC supplier (Figure 2).

IDM fab sales Fig 2

 

U.S. companies held the dominant share of fabless IC sales last year, although its share was down from 69 percent in 2010.  The largest increase in fabless IC marketshare came from Chinese companies, which held a 9 percent share in 2014 compared to only 5 percent in 2010.

Further details on IC sales by region and by company, including IC Insights’ final sales ranking of the top 50 IDMs and top 50 fabless IC companies for 2014, are included in the March Update to The McClean Report—A Complete Analysis and Forecast of the Integrated Circuit Industry.

Programme information is now available on the inaugural SEMICON Southeast Asia, which will run from 22–24 April at SPICE in Penang. The event, organized by SEMI, a global industry association, features an expanded programme and larger audience base focusing on Southeast Asia communities in the semiconductor and microelectronics sector.  SEMI estimates spending of US$19 on semiconductor equipment and materials in the Southeast Asia region for 2015 and 2016. With an emphasis on opening up new business opportunities and fostering stronger cross-regional engagement, SEMICON Southeast Asia will feature a tradeshow exhibition, networking events, market and technology seminars, and conferences.

Ng Kai Fai, President of SEMI Southeast Asia, said, “Southeast Asia is a vibrant and changing market for the semiconductor industry. For 2015 and 2016, SEMI estimates spending of almost US$ 5 billion on front-end and back-end equipment in the Southeast Asia region, and another $14 billion in spending on materials including $11 billion on packaging-related materials.  Southeast Asia has over 35 production fabs including Foundry, Compound Semiconductors, MEMS, Power, LED, and other devices. The region contributes a substantial 27 percent of global assembly, test and production, on top of being the largest market for assembly and test equipment,” he added.

More than 60 industry speakers and 200 companies will participate in SEMICON Southeast Asia, with thousands of attendees participating in the event. Attendees will learn the latest technology developments and strategies from industry leaders. SEMICON Southeast Asia connects decision makers from leading and emerging semiconductor companies with important industry stakeholders from both the region and all over the world.

Focusing on key trends and technologies in semiconductor design and manufacturing, the event also addresses expanding applications markets like mobile devices and other connected “Internet of Things” (IoT) technologies. Key enablers, such as specialised materials, packaging, and test technologies, as well as new architectures and processes, will be featured throughout the event. Highlights of SEMICON Southeast Asia include:

  • Market Trend Briefing — Features presentations from: EQUVO, Gartner, GFK Retail Technology , IC Insights, SMC Pneumatics (SEA), SEMI, and Yole Developpement
  • Assembly and Packaging Forum — “Emerging Packaging Solutions for Computing, Mobility and IoT Platforms” forum features presentations from: Advantest, AMD, ASE Group, Freescale Semiconductor, GLOBALFOUNDRIES Singapore, Intel, Infineon, Kulicke & Soffa, Lam Research, MediaTek, Tanaka Kikinzoku, and Yole Developpement
  • Product and System Test Forum — “Testing Strategy for a Fast-paced Semiconductor Market” with presentations from Advantest, ATMEL, GLOBALFOUNDRIES Singapore, Intel, Keysight Technologies, Silicon Labs International, UTAC Singapore, Xcerra

In addition, the event features forums on Technology Innovation, LED Technology, and Yield Productivity and Failure Analysis.

For more information and exhibition opportunities, visit www.semiconsea.org or register now.

According to IHS Inc. (NYSE: IHS), a global source of critical information and insight, the recent agreement to merge NXP Semiconductor and Freescale Semiconductor creates a company that would have reached $4 billion in automotive semiconductor revenues in 2014. The merged company would, therefore, become the leading supplier of semiconductors to the automotive market, with at least $1 billion more revenue than the next-largest supplier, Renesas.

“The merger brings together two companies with complementary semiconductor portfolios in several automotive segments, as well as overlapping areas,” said Luca DeAmbroggi, principal analyst of automotive semiconductors for IHS. “The merged company’s broader portfolio will consequently strengthen its position in the automotive semiconductor market, even though functional overlaps could create some internal hurdles. But most of all, buyers in the electronics industry now have fewer choices.”

“NXP and Freescale both have a strong automotive tradition, and both companies are focused on making high reliability, quality components,” DeAmbroggi continued. “The announced merger between Freescale and NXP gives birth to a company that is strongly positioned in the automotive sector and can serve complete semiconductor solutions to all high-growth segments, including infotainment, advanced driver assistance systems, and connectivity, as well as new frontiers represented by in-vehicle security and hybrid and electric vehicles.”

In the past NXP led the automotive infotainment segment, thanks to application-specific standard products (ASSPs), such as AM/FM tuner and audio processing, audio amplifier, and digital radio, as well as networking and discrete components; while Freescale supplies the brain of the automotive infotainment system — specifically, microprocessing units (MCUs) and the company’s successful i.MX6 family of microprocessors used in infotainment solutions.

By making use of Freescale’s integrated circuits (ICs), the merged company could rapidly target autonomous driving systems, including automatic emergency braking and adaptive cruise control. Freescale also delivers its strong market position in radar chipsets, automotive image system-on-chip (SoC) solutions, radar-signal and data-fusion processing components, and ASIL-compliant MCUs for active-control functions.

Freescale contributes its strong position in products for hybrid-electric vehicles, thanks to the company’s portfolio of broad-based MCU solutions. NXP-Freescale will also become a dominant supplier for vehicular wireless communications (V2X), using Freescale’s secure processor solutions and NXP’s dedicated short-range communication (DSRC) wireless chipsets.

According to the IHS ADAS Semiconductor Market Tracker, the merged company could potentially target about 80 percent of the $3 billion advanced driver assistance systems (ADAS) semiconductor market by 2020. Freescale’s diverse portfolio of processors, MCUs, digital systems processors (DSPs) and sensors, fused with NXP’s strong profile in networking ASSPs, will allow the merged company to address the safety application market, including lane departure warning (LDW) and pedestrian detection (PD). The company will also address automatic emergency braking (AEB), adaptive cruise control (ACC), and other solutions for autonomous driving systems.

Freescale recently announced an ASIL-compliant automotive image SoC (i.e., S32V) with sensor fusion capabilities. So far Renesas, Texas Instruments and Mobileye have similar SoCs for the fast growing ADAS market, including R-Car from Renesas, TDA from Texas Instruments and EyeQ from Mobileye. “The addition of S32V to this list will allow NXP to address the front-view camera processor market, which is currently being led by EyeQ processors,” DeAmbroggi said.

According to IHS ADAS semiconductor research, the revenue for MCUs, DSPs, processors and SoCs used for data fusion, front-view camera functions and radar-sensor functions is set to grow fourfold, reaching $600 million by 2020. Freescale is also one of the major suppliers for silicon-germanium (SiGe) 77GHz-based radar chipsets used in long-range and mid-range ADAS applications. Radar technology is primarily found in collision warning and AEB applications, which are a part of the car safety guidelines from EuroNCAP, NHTSA and other regional bodies. The radar sensor market will double by 2020, and NXP can get on board with other radar sensor suppliers.

Vehicle-to-vehicle communications (V2V) will be an important milestone in the evolution of self-driving functions, according to IHS. “NXP could leverage Freescale’s expertise in secure processors and combine their DSRC based wireless chipset technology to create a strong portfolio for the V2V communication market, which set to soar after 2020,” DeAmbroggi said.

NXP could also target the automotive night-vision market, with Freescale’s microbolometers. Currently night vision is a niche market, as it is an expensive comfort application found in luxury segments; however, automotive night vision could be one of the technologies used to implement sophisticated self-driving functions.

Mentor Graphics Corporation this week announced its new Xpedition Package Integrator flow, the industry’s broadest solution for integrated circuit (IC), package, and printed circuit board (PCB) co-design and optimization. The Package Integrator solution automates planning, assembly and optimization of today’s complex multi-die packages. It incorporates a unique virtual die model concept for true IC-to-package co-optimization. In support of early marketing-level studies for a proposed new device, users can now plan, assemble and optimize complex systems with minimal source data. The new Package Integrator flow allows design teams to realize faster and more efficient physical path finding and seamless tool integration for rapid prototyping, right to the production flow.

This solution ensures that ICs, packages and PCBs are optimized with each other to reduce package substrate and PCB costs by efficient layer reduction, optimized interconnect paths, and streamlined/automated control of the design process. The Xpedition Package Integrator product also provides the industry’s first formal flow for ball grid array (BGA) ball-map planning and optimization based on an “intelligent pin” concept, defined by user rules. In addition, a groundbreaking multi-mode connectivity management system (incorporating hardware description language (HDL), spreadsheet and graphical schematic) provides cross-domain pin-mapping and system level cross-domain logical verification.

“Companies are recognizing that it will not be possible to design optimal systems in a timely fashion without the ability to co-design the IC, package, and board,” said E. Jan Vardaman, president and founder, TechSearch International, Inc. “Incorporating key parameters from thermal and electromagnetic modeling will be critical in meeting performance objectives. Automating this process is essential to meet development and product launch schedules in our fast moving market segments. Mentor’s Xpedition Package Integrator tool is a breakthrough in the design process.”

The Xpedition Package Integrator flow leverages other Mentor Graphics tools such as the HyperLynx signal and power integrity product, FloTHERM computational fluid dynamics (CFD) thermal modeling tools, and the Valor NPI substrate fabrication checking tool. To complete the Mentor Graphics co-design solution, Nimbic was acquired in 2014. The Nimbic technology provides Maxwell-accurate, 3D full-wave electromagnetic (EM) high-performance simulation solutions that accurately calculate complex electromagnetic fields for chip-package-board simulation.

“The Xpedition Package Integrator design flow, especially the unique virtual die model, gives package and board design experts really meaningful guidance and tools for their parts of the system design efforts,” said Herb Reiter, president of eda2asic and Director of 3D-IC Programs at Si2. “This flow also allows quick and structured feedback to the IC designers and enables true die-package-board co-design and optimization towards best possible performance versus power ratios for your next system design.”

“Mentor Graphics recognizes the increasing complexity in electrical systems design and manufacturing, particularly for IC, package and board co-design,” stated A.J. Incorvaia, vice president and general manager of Mentor Graphics Systems Design Division. “Our new Xpedition Package Integrator flow will enable systems designers to achieve optimum productivity by saving time and costs while improving the overall quality and performance of advanced systems.”

Following two lethargic years of low growth and some setbacks, worldwide sales of optoelectronics, sensors, actuators, and discrete semiconductors regained strength in 2014 and collectively increased 9 percent to reach an all-time high of $63.8 billion after rising just 1 percent in 2012 and 2013, according to IC Insights’ new 2015 O-S-D Report—A Market Analysis and Forecast for Optoelectronics, Sensors/Actuators, and Discretes.  Modest gains in the global economy, steady increases in electronic systems production, and higher unit demand in 2014 drove a strong recovery in discretes along with substantial improvements in sensors/actuators and greater growth in optoelectronics, says the new 360-page annual report, which becomes available in March 2015.

Each of the three O-S-D market segments are forecast to increase at or above their long-term annual growth rates in 2015 and 2016 (Figure 1) as the global economy continues to gradually improve and major new end-use systems applications boost sales in some of the largest product categories of optoelectronics, sensors/actuators, and discretes.  After a modest slowdown in 2017, due to the next anticipated economic downturn, all three O-S-D market segments are expected to continue reaching record-high sales in 2018 and 2019, based on the five-year forecast in the new 10th edition of IC Insights’ O-S-D Report.

Optoelectronics sales are now forecast to rise 10 percent in 2015 to set a new record-high $34.8 billion after growing 8 percent in 2014 to reach the current annual peak of $31.6 billion.  Sales of sensors/actuators are also expected to strengthen slightly in 2015, rising 7 percent to $9.9 billion, which will break the current record high of $9.2 billion set in 2014 when this market segment grew 6 percent.  The commodity-filled discretes market is forecast to see a more normal 5 percent increase in 2015 and reach a new record high of $24.2 billion after roaring back in 2014 with a strong 11 percent increase following declines of 7 percent in 2012 and 5 percent in 2013.  The two-year drop was the first back-to-back decline for discretes sales in more than 30 years and primarily resulted from delays in purchases of power transistors and other devices as cautious systems manufacturers kept their inventories low in the midst of uncertainty about the weak global economy and end-user demand.

OSD fig 1

 

In 2014, combined sales of O-S-D accounted for 18 percent of the semiconductor industry’s $354.9 billion in total revenues compared to 16 percent in 2004 and 13 percent in 1994.  (Optoelectronics was 9 percent of the 2014 sales total with sensors/actuators being 3 percent, discretes at 6 percent and ICs accounting for 82 percent, or $290.8 billion, last year).  On the strength of optoelectronics and sensor products—including CMOS image sensors, high-brightness light-emitting diodes (LEDs), and devices built with microelectromechanical systems (MEMS) technology—total O-S-D sales have outpaced the compound annual growth rate (CAGR) of ICs since the late 1990s.  IC Insights’ new report shows this trend continuing between 2014 and 2019 with combined O-S-D sales projected to grow by a CAGR of 6.9 percent versus 5.5 percent for ICs.

The 2015 O-S-D Report shows strong optoelectronics growth being driven in the next five years by new embedded cameras and image-recognition systems made with CMOS imaging devices as well as the spread of LED-based solid-state lights and high-speed fiber optic networks built with laser transmitters that are needed to keep up with tremendous increases in Internet traffic, video transmissions, and cloud-computing services, including those connected to the huge potential of the Internet of Things (IoT). The sensors/actuators market is forecast to see steady growth from high unit demand driven by the spread of automated embedded-control functions, new sensing networks, wearable systems, and measurement capabilities being connected to IoT in the second half of this decade.  Discretes sales are expected to climb higher primarily due to strong growth in power transistors and other devices used in battery-operated electronics and to make all types of systems more energy efficient—including automobiles, high-density servers in Internet data centers, industrial equipment, and home appliances.