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IC Insights has just released its new Global Wafer Capacity 2017-2021—Detailed Analysis and Forecast of the IC Industry’s Wafer Fab Capacity report.  Shown below is a brief excerpt from that report.

Prior to 2008, the 200mm wafer was used in more cases for manufacturing ICs than any other wafer size.  However, since 2008, the majority of IC fabrication has taken place on 300mm wafers.  Rankings of IC manufacturers by installed capacity for each of the wafer sizes are shown in Figure 1.  The chart also compares in a relative manner the amounts of capacity held by the top 10 leaders.

installed capacity

Figure 1

Looking at the ranking for 300mm wafers, it is not surprising that the list includes only DRAM and NAND flash memory suppliers like Samsung, Micron, SK Hynix, and Toshiba/Western Digital; the world’s five largest pure-play foundries TSMC, GlobalFoundries, UMC, Powerchip, and SMIC; and Intel, the industry’s biggest IC manufacturer (in terms of revenue). These companies offer the types of ICs that benefit most from using the largest wafer size available to best amortize the manufacturing cost per die, and have the means to continue investing large sums of money in new and improved 300mm fab capacity.

The leaders in the 200mm size category consist of pure-play foundries and manufacturers of analog/mixed-signal ICs and microcontrollers.

The ranking for the smaller wafer sizes (i.e., ≤150mm) includes a more diversified group of companies. STMicroelectronics has a huge amount of 150mm wafer capacity at its fab site in Singapore, but the company has been busy converting this production to 200mm wafers. Another STMicroelectronics 150mm fab in Catania, Italy, is also undergoing a conversion to 200mm wafers, with plans for that project to be completed in 2017.

A significant trend regarding the industry’s IC manufacturing base, and a challenging one from the perspective of companies that supply equipment and materials to chip makers, is that as the industry moves IC fabrication onto larger wafers in bigger fabs, the group of IC manufacturers continues to shrink in number (Figure 2).

Today, there are less than half the number of companies that own and operate 300mm wafer fabs than 200mm fabs. Moreover, the distribution of worldwide 300mm wafer capacity among those manufacturers is becoming increasingly top-heavy.

installed capacity 2

Figure 2

 

SEMI, the global industry association representing more than 2,000 companies in the electronics manufacturing supply chain, today reported that worldwide sales of new semiconductor manufacturing equipment are projected to increase 8.7 percent to $39.7 billion in 2016, according to the SEMI Year-end Forecast, released today at the annual SEMICON Japan exposition.  In 2017, another 9.3 percent growth is expected, resulting in a global semiconductor equipment market totaling $43.4 billion.

The SEMI Year-end Forecast predicts that wafer processing equipment, the largest product segment by dollar value, is anticipated to increase 8.2 percent in 2016 to total $31.2 billion. The assembly and packaging equipment segment is projected to grow by 14.6 percent to $2.9 billion in 2016 while semiconductor test equipment is forecast to increase by 16.0 percent, to a total of $3.9 billion this year.

For 2016, Taiwan and South Korea are projected to remain the largest spending regions, with China joining the top three for the first time. Rest of World (essentially Southeast Asia), will lead in growth with 87.7 percent, followed by China at 36.6 percent and Taiwan at 16.8 percent.

SEMI forecasts that in 2017, equipment sales in Europe will climb the most, 51.7 percent, to a total of $2.8 billion, following a 10.0 percent contraction in 2016. In 2017, Taiwan, Korea and China are forecast to remain the top three markets, with Taiwan maintaining the top spot even with a 9.2 percent decline to total $10.2 billion. Equipment sales to Korea are forecast at $9.7 billion, while equipment sales to China are expected to reach $7.0 billion.

The following results are given in terms of market size in billions of U.S. dollars:

2016-year-end

The Global Semiconductor Alliance (GSA) is proud to announce the award recipients honored at the 2016 GSA Awards Dinner Celebration that took place in Santa Clara, California. Over the past 22 years the awards program has recognized the achievements of semiconductor companies in several categories ranging from outstanding leadership to financial accomplishments, as well as overall respect within the industry.

The GSA’s most prestigious award, the Dr. Morris Chang Exemplary Leadership Award, was presented to Mr. Lip-Bu Tan, President and CEO of Cadence Design Systems, Inc. and Founder and Chairman of Walden International.

GSA members identified the Most Respected Public Semiconductor Company Award winners by casting ballots for the industry’s most respected companies judging by their products, vision and future opportunities. Winners included the “Most Respected Emerging Public Semiconductor Company Achieving $100 Million to $500 Million in Annual Sales Award” presented to Nordic Semiconductor; “Most Respected Public Semiconductor Company Achieving $500 Million to $1 Billion in Annual Sales Award” awarded to Silicon Labs; “Most Respected Public Semiconductor Company Achieving $1 Billion to $5 Billion in Annual Sales Award” awarded to Analog Devices, Inc.; and “Most Respected Public Semiconductor Company Achieving Greater than $5 Billion in Annual Sales Award” received by NVIDIA Corporation.

The “Most Respected Private Company Award” was voted on by GSA membership and presented to Quantenna Communications, Inc. Other winners include “Best Financially Managed Company Achieving up to $1 Billion in Annual Sales Award” presented to Silicon Motion Technology Corporation (Silicon Motion, Inc.) and “Best Financially Managed Semiconductor Company Achieving Greater than $1 Billion in Annual Sales Award” earned by NVIDIA Corporation. Both companies were recognized based on their continued demonstration of the best overall financial performance according to specific financial metrics.

GSA’s Private Awards Committee, comprised of venture capitalists and select industry entrepreneurs, chose the “Start-Up to Watch Award” winner by identifying a company that has demonstrated the potential to positively change its market or the industry through the innovative use of semiconductor technology or a new application for semiconductor technology. This year’s winner is Innovium, Inc.

As a global organization, the GSA recognizes outstanding companies headquartered in the Europe/Middle East/Africa and Asia-Pacific regions. Chosen by the leadership council of each respective region, award winners are semiconductor companies that demonstrate the most strength when measuring products, vision, leadership and success in the marketplace. The recipient of this year’s “Outstanding Asia-Pacific Semiconductor Company Award” is MediaTek Inc. and the recipient of this year’s “Outstanding EMEA Semiconductor Company Award” is Movidius.

Semiconductor financial analyst Quinn Bolton from Needham & Company presented this year’s “Favorite Analyst Semiconductor Company Award” to Microsemi Corporation. The criteria used in selecting this year’s winner included historical, as well as projected data, such as stock price, earnings per share, revenue forecasts and product performance.

The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing, design, and research, today announced worldwide sales of semiconductors reached $30.5 billion for the month of October 2016, an increase of 3.4 percent from last month’s total of $29.5 billion and 5.1 percent higher than the October 2015 total of $29.0 billion. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average. Additionally, a new WSTS industry forecast projects roughly flat annual semiconductor sales in 2016, followed by slight market growth in 2017 and 2018.

“The global semiconductor market has rebounded in recent months, with October marking the largest year-to-year sales increase since March 2015,” said John Neuffer, president and CEO, Semiconductor Industry Association. “Sales increased compared to last month across all regional markets and nearly every major semiconductor product category. Meanwhile, the latest industry forecast has been revised upward and now calls for flat annual sales in 2016 and small increases in 2017 and 2018. All told, the industry is well-positioned for a strong close to 2016.

Regionally, year-to-year sales increased in China (14.0 percent), Japan (7.2 percent), Asia Pacific/All Other (1.9 percent), and the Americas (0.1 percent), but decreased in Europe (-3.0 percent). Compared with last month, sales were up across all regional markets: the Americas (6.5 percent), China (3.2 percent), Japan (3.0 percent), Europe (2.2 percent), and Asia Pacific/All Other (2.0 percent).

Additionally, SIA today endorsed the WSTS Autumn 2016 global semiconductor sales forecast, which projects the industry’s worldwide sales will be $335.0 billion in 2016, a 0.1 percent decrease from the 2015 sales total. WSTS projects a year-to-year increase in Japan (3.2 percent) and Asia Pacific (2.5 percent), with decreases expected in Europe (-4.9 percent) and the Americas (-6.5 percent). Among major semiconductor product categories, WSTS forecasts growth in 2016 for sensors (22.6 percent), discretes (4.2 percent), analog (4.8 percent) and MOS micro ICs (2.3 percent), which include microprocessors and microcontrollers.

Beyond 2016, the semiconductor market is expected to grow at a modest pace across all regions. WSTS forecasts 3.3 percent growth globally for 2017 ($346.1 billion in total sales) and 2.3 percent growth for 2018 ($354.0 billion). WSTS tabulates its semi-annual industry forecast by convening an extensive group of global semiconductor companies that provide accurate and timely indicators of semiconductor trends.

Vigorous M&A activity in 2015 and 2016 has reshaped the landscape of the semiconductor industry, with the top companies now controlling a much greater percentage of marketshare.  Not including foundries, IC Insights forecasts to top five semiconductor suppliers—Intel, Samsung, Qualcomm, Broadcom, and SK Hynix— will account for 41% marketshare in 2016 (Figure 1).  This represents a nine-point increase from the 32% marketshare held by the top five suppliers ten years ago. Furthermore, the top 10 semiconductor suppliers are forecast to account for 56% marketshare in 2016, an 11-point swing from 45% in 2006, and the top 25 companies are forecast to account for more than three-quarters of all semiconductor sales this year.

semiconductor sales leaders

Figure 1

Following an historic surge in semiconductor merger and acquisition agreements in 2015, the torrid pace of transactions eased a bit in the first half of 2016.  However, 2016 is now forecast to be the second-largest year ever for chip industry M&A announcements, thanks to three major deals struck in 3Q16 that have a combined total value of $51.0 billion.  These deals were SoftBank’s purchase of ARM, Analog Devices’ intended purchase of Linear Technology, and Renesas’ potential acquisition of Intersil. With the surge in mergers and acquisitions expected to continue over the next few years, IC Insights believes that the consolidation will raise the shares of the top suppliers to even loftier levels.

Integrated circuit sales for connections to the Internet of Things are forecast to grow more than three times faster than total IC revenues during the last half of this decade, according to IC Insights’ new 2017 Integrated Circuit Market Drivers report.  ICs used to embed Internet of Things (IoT) functionality into a wide range of systems, sensors, and objects are expected to generate sales of $12.8 billion in 2016, says the new report, which becomes available this week.

Between 2015 and 2020, IoT integrated circuit sales are projected to rise by a compound annual growth rate (CAGR) of 13.3% compared to 4.3% for the entire IC market, which is projected to reach $354.7 billion in four years versus $287.1 billion last year, based on the forecast in the 492-page report.  As shown in Figure 1, strong five-year IC sales growth rates are also expected in automotive (a CAGR of 10.3%), medical electronics (a CAGR of 7.3%), digital TVs (a CAGR of 5.9%), and server computers (a CAGR of 5.4%).

Cellphone IC sales—the biggest end-use market application for integrated circuits—are expected to grow by a CAGR of 4.8% in the 2015-2020 period.  Saturation in smartphone markets and economic weakness in some developing regions are expected to curb cellphone IC market growth in the next four years after sales increased by a CAGR of 10.8% between 2010 and 2015.  Meanwhile, weak and negative IC sales growth rates are expected to continue in standard personal computers, set-top boxes, touchscreen tablets, and video game consoles.

The new 2017 IC Market Drivers report shows 2016 integrated circuit sales for IoT applications climbing nearly 19% compared to 2015 to an estimated $12.8 billion, followed by the automotive segment increasing about 12% to $22.9 billion, medical electronics rising 9% to $4.9 billion, and digital TV systems growing 4% to $12.9 billion this year.  The report estimates IC sales growth in server computers being about 3% in 2016 to $15.1 billion, cellphones being 2% to $74.2 billion, and set-top boxes being 2% to $5.7 billion.  Meanwhile, standard PC integrated circuit sales are estimated to be down 5% in 2016 to $54.6 billion while video game console IC revenues are expected to finish this year with a 4% drop to $8.9 billion and tablet IC sales are on track to decline 10% to $12.1 billion in 2016, according to IC Insights’ new report.

Figure 1

Figure 1

Siemens and Mentor Graphics (NASDAQ: MENT) today announced that they have entered into a merger agreement under which Siemens will acquire Mentor for an enterprise value of $4.5 billion. Mentor’s Board of Directors approved and declared advisable the merger agreement, and Mentor’s Board of Directors recommends the approval and adoption of the merger agreement by the holders of shares of Mentor common stock.

“Siemens is acquiring Mentor as part of its Vision 2020 concept to be the Benchmark for the New Industrial Age. It’s a perfect portfolio fit to further expand our digital leadership and set the pace in the industry,” said Joe Kaeser, President and CEO of Siemens AG.

“With Mentor, we’re acquiring an established technology leader with a talented employee base that will allow us to supplement our world-class industrial software portfolio. It will complement our strong offering in mechanics and software with design, test and simulation of electrical and electronic systems,” said Klaus Helmrich, member of the Managing Board of Siemens.

Mentor is headquartered in Wilsonville, Oregon, U.S., and has employees in 32 countries worldwide. In its fiscal year ended January 31, 2016, Mentor had over 5,700 employees and generated revenue of approximately $1.2 billion with an adjusted operating margin of 20.2%. Siemens expects these attractive margins to continue in the future and contribute significantly to the Product Lifecycle Management (PLM) software business of Siemens Digital Factory (DF) Division, which Mentor will join. Mentor serves a large, diverse customer base of marquee systems companies and IC/semiconductors companies with over 14,000 global accounts across communications, computer, consumer electronics, semiconductor, networking, aerospace, multimedia, and transportation industries. Mentor is viewed as a global leader in strategic industry segments including IC design, test and manufacturing; electronic systems design and analysis; and emerging markets including automotive electronics.

“Combining Mentor’s technology leadership and deep customer relationships with Siemens’ global scale and resources will better enable us to serve the growing needs of our customers, and unlock additional significant opportunities for our employees,” said Walden C. Rhines, chairman and CEO of Mentor. “Siemens is an ideal partner with financial depth and stability, and their resources and additional investment will allow us to innovate even faster and accelerate our vision of creating top-to-bottom automated design solutions for electronic systems. We are excited to join the Siemens family, as it is clear they share the same values and focus on customer success, and are pleased that this transaction provides immediate and certain value to our stockholders.”

Siemens expects to achieve synergies through a combination of revenue growth and anticipated margin expansion, with a total EBIT impact of over €100 million within 4 years from closing the transaction. Additionally, the transaction is expected to be EPS accretive within three years from closing. Closing of the transaction is subject to customary closing conditions and is expected in Q2 of calendar 2017. Mentor will be part of the PLM software business of Siemens’ DF Division. DF is the industry leader in automation technology and a leading provider of PLM software.

“By adding Mentor’s electronic design automation solutions and talented experts to our team, we’re greatly enhancing our core competencies for product design that creates a very precise digital twin of any smart product and production line,” noted Helmrich.

Shares in Mentor Graphics jumped 18.5 percent to $36.37 in early U.S. trading, while Siemens was 1.1 percent higher by 1435 GMT.

The deal will boost its software revenue by about a third from 3.3 billion euros, to around 6 percent of group revenue.

Deutsche Bank and JP Morgan advised Siemens on the transaction, which is expected to close in the second quarter of 2017. Bank of America advised Mentor Graphics.

IC Insights will release the 2017 edition of its IC Market Drivers Report later this month.  The newly updated report reviews many of the end-use system applications that are presently impacting and that are forecast to help propel the IC market through 2020. IC Market Drivers 2017 shows that the market for automotive electronic systems is expected to display the strongest cumulative average growth rate (CAGR) through 2020, at 4.9%, highest among the six main electronic system categories (Figure 1). Safety and convenience systems are essential features that consumers look for and want in their new car.  Automatic emergency braking, lane departure/blind spot detection systems, and backup cameras are among the most desired systems.  For semiconductor suppliers, this is good news as analog ICs, MCUs, and a great number of sensors will be required for these and other automotive systems throughout the forecast.

Figure 1

Figure 1

Other electronic system and IC market highlights from the 2017 IC Market Drivers Report include the following.

•    Although the automotive segment is forecast to be the fastest growing electronic system market through 2020, its share of the total IC market was only 7.9% in 2016 and is forecast to remain less than 10% throughout the forecast period.

•    Industrial/Medical/Other electronic systems are forecast to enjoy the second-fastest growth rate (4.3%) through 2020 as wearable health devices, home health diagnostics, robotics, and systems promoting the Internet of Things help drive growth in this segment.  Analog ICs are forecast to hold 49% of the industrial/medical/other IC market in 2016.

•    Communications became the largest end-use market for ICs in 2013, surpassing the computer IC market.  Asia-Pacific is forecast to represent 67% of the total communications IC market in 2016; 70% in 2020.

•    The consumer electronics system market is forecast to display 2.8% CAGR through 2020.  The logic segment is forecast to be the largest consumer IC market throughout the forecast.  In total, the consumer IC market is expected to register a 2.3% CAGR through this same time period.

•    The worldwide government/military IC market is forecast to be $2.5 billion in 2016, but represent only 0.8% of the total IC market ($290.0 billion).  The Americas region is the largest regional market for military ICs, accounting for 63% of the worldwide military IC market this year.

•    Hit by slowing demand for personal computing devices (desktops, notebooks, tablets), the market for computer systems is forecast to show the weakest growth through 2020.  The total computer IC market is forecast to decline 2% in 2016 following a 3% drop in 2015.  Asia-Pacific is forecast to hold a 66% share of the computer IC market in 2016 and a 71% share in 2020.

In 2015, more than US$1 billion was invested in China’s advanced packaging ecosystem, announces Yole Développement (Yole) in its report Status and Prospects for the Advanced Packaging Industry. And right now, more than 100 companies are involved in assembly & packaging activities in China. Almost all key global IDMs and OSATs have a packaging facility in China to take advantage of low costs.

But what are the strategies of these companies? How do they ensure their market positioning and their development in the Chinese advanced packaging industry? Is there a specific approach according to their business model?

advanced packaging china

“Global OSATs are working on their strategies to thwart challenges and exploit opportunities in China’s advanced packaging market,” details for example, Santosh Kumar, Senior, Technology & Market Analyst, Advanced Packaging & Semiconductor Manufacturing at Yole. And in parallel, Chinese players may acquire or invest in others with complimentary packaging technology/services/customers.

Status and Prospects for the Advanced Packaging Industry in China report presents the Chinese semiconductor market outlook as well as the advanced packaging ecosystem in China. This analysis details the global and local players as well as the Chinese backend equipment & materials suppliers. It also covers supply chain evolution, OSAT strategy and business opportunities for local and global players in China’s advanced packaging space. Some results will be presented by Santosh Kumar at the China International Semiconductor Executive Summit taking place from November 1 to 2, 2016 in Shanghai, China.

The advanced packaging market in China is reaching about US$2.5 billion in 2016. And Yole’s analysts expect an impressive 16% CAGR between 2016 and 2020, scoring US$4.6 billion at the end of this period. Under this imposing growth, advanced packaging companies are deploying complex strategies to ensure their business and develop their activities. For example, some companies collaborate with local IC design & foundries and invest in R&D and manufacturing capacity in China. Others invest in Chinese capital.

Technical innovation is also a priority for all China-based companies. Companies are investing a lot to secure important R&D activities and develop disruptive technologies. In parallel, advanced packaging players protect their IP and company’s core value. From a human resources point of view, they reserve key employees through incentives and educate employees to not release confidential information.

China’s advanced packaging industry took a giant leap when JCET acquired STATSChipPAC in 2015 for US$780 million. This deal propelled JCET into 4th place amongst OSAT companies. “JCET-STATS ChipPAC is clearly the game changer in China AP ecosystem,” comments Santosh Kumar from Yole. And he adds: “JCET-STATS ChipPAC results in operational, revenue & capex synergy”.
Other notable acquisitions are:

•  Huatian acquiring FCI
•  Nantong Fujitsu acquiring AMD backend facilities in China and Malaysia.

While Chinese OSATs and foundries are rapidly acquiring advanced packaging capabilities, the local equipment and materials supply chains are still far behind compared to global players, who still dominate the advanced packaging equipment and materials space.

Will this remain true over the next five years? Do global suppliers see China’s advanced packaging market as an opportunity or a threat from local supplier)? In Yole’s report’s equipment/materials section, the advanced packaging team addresses these questions as well as other issues.

The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing, design, and research, today announced worldwide sales of semiconductors reached $88.3 billion for the third quarter of 2016, marking the industry’s highest-ever quarterly sales and an increase of 11.5 percent compared to the previous quarter. Sales for the month of September 2016 were $29.4 billion, an increase of 3.6 percent over the September 2015 total of $28.4 billion and 4.2 percent more than the previous month’s total of $28.2 billion. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.

“The global semiconductor market has rebounded markedly in recent months, with September showing the clearest evidence yet of resurgent sales,” said John Neuffer, president and CEO, Semiconductor Industry Association. “The industry posted its highest-ever quarterly sales total, with most regional markets and semiconductor product categories contributing to the gains. Indications are positive for increased sales in the coming months, but it remains to be seen whether the global market will surpass annual sales from last year.”

Regionally, month-to-month sales increased in September across all markets: China (5.4 percent), the Americas (4.6 percent), Asia Pacific/All Other (4.2 percent), Japan (2.3 percent), and Europe (1.6 percent). Compared to the same month last year, sales in September increased in China (12.0 percent), Japan (4.2 percent), and Asia Pacific/All Other (1.7 percent), but decreased in the Americas (-2.4 percent) and Europe (-4.0 percent).

“China stood out in September, leading all regional markets with growth of 5 percent month-to-month and 12 percent year-to-year,” Neuffer said. “Standouts among semiconductor product categories included NAND flash and microprocessors, both of which posted solid month-to-month growth in September.”

September 2016

Billions

Month-to-Month Sales                               

Market

Last Month

Current Month

% Change

Americas

5.43

5.68

4.6%

Europe

2.71

2.76

1.6%

Japan

2.74

2.80

2.3%

China

8.99

9.47

5.4%

Asia Pacific/All Other

8.37

8.73

4.2%

Total

28.24

29.43

4.2%

Year-to-Year Sales                          

Market

Last Year

Current Month

% Change

Americas

5.82

5.68

-2.4%

Europe

2.87

2.76

-4.0%

Japan

2.69

2.80

4.2%

China

8.45

9.47

12.0%

Asia Pacific/All Other

8.58

8.73

1.7%

Total

28.41

29.43

3.6%

Three-Month-Moving Average Sales

Market

Apr/May/Jun

Jul/Aug/Sept

% Change

Americas

4.94

5.68

15.0%

Europe

2.68

2.76

3.0%

Japan

2.53

2.80

10.8%

China

8.29

9.47

14.2%

Asia Pacific/All Other

7.97

8.73

9.5%

Total

26.41

29.43

11.5%