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By Jay Chittooran

U.S. Government Imposes Tariffs on $200 Billion of Goods and China Retaliates on $60 Billion of Goods

Earlier this week, the U.S. Trade Representative (USTR) released a 10 percent tariff on $200 billion in imports from China, including more than 90 tariff lines central to the semiconductor industry.

The 10 percent tariff will take effect on September 24, 2018, and rise to 25 percent on January 1. These tariff lines will cost SEMI’s 400 U.S. members tens of millions of dollars annually in additional duties. However, counting the products included in the previous rounds of tariffs, the total estimated impact exceeds $700 million annually. China has already announced that it will respond with tariffs on $60 billion worth of U.S. goods. In his notice, President Trump said the U.S. will impose tariffs on $267 billion worth of goods if China retaliates.

The U.S. government removed 279 total tariff lines, including three lines that impact our industry: silicon carbide, tungsten, and network hubs used in the manufacturing process.

As we’ve noted, intellectual property is critical to the semiconductor industry, and SEMI strongly supports efforts to better protect valuable IP. However, we believe that these tariffs will ultimately do nothing to address the concerns with China’s trade practices. This sledgehammer approach will introduce significant uncertainty, impose greater costs, and potentially lead to a trade war. This undue harm will ultimately undercut our companies’ ability to sell overseas, which will only stifle innovation and curb U.S. technological leadership.

Product Exclusion Process – List 2

USTR formally published the details for the product exclusion process for products subject to the List 2 China 301 tariffs (the $16 billion tariff list). If your company’s products are subject to tariffs, you can request an exclusion.

In evaluating product exclusion requests, the USTR will consider whether a product is available from a source outside of China, whether the additional duties would cause severe economic harm to the requestor or other U.S. interests, and whether the product is strategically important or related to Chinese industrial programs (such as “Made in China 2025”)

The request period ends on December 18, 2018, and approved exclusions will be effective for one year, applying retroactively to August 23, 2018. Because exclusions will be made on a product basis, a particular exclusion will apply to all imports of the product, regardless of whether the importer filed a request.

More information, including the process for submitting the product exclusion request and details what information should be included in your submission can be found here.

Please let me know if your company plans on filing an exclusion. SEMI has prepared a document that includes guidelines for your exclusion filing, an explainer on how to submit, and links to official government info. SEMI is glad to assist your companies file exclusion requests for your products.

SEMI will continue tracking ongoing trade developments. Any SEMI members with questions should contact Jay Chittooran, Public Policy Manager at SEMI, at [email protected].

By Christian G. Dieseldorff and Eugenia Liu

SEMI FabView update for calendar year Q3 2018

Global fab construction investment shows continuing strength, with 19 new fab projects expected to begin construction in 2019 and 2020, based on the latest data published in SEMI’s World Fab Forecast.

Fab investment is just one indicator of how growing demand in areas such as high-performance computing, data storage, artificial intelligence (AI), cloud computing, and automotive are driving the fourth consecutive year of spending growth in the semiconductor industry. Below are a few highlights* from September’s SEMI FabView:

Memory: Not fading

  • Micron plans to invest $3 billion by 2030 in Manassas, Virginia – These investments, driven by strong demand for automotive applications, are contemplated in Micron’s long-term model. The production ramp is anticipated to be in the first half of 2020.
  • SK Hynix to build new DRAM fab in Icheon (Gyeonggi Province), Korea – The construction, to be completed by the end of 2020, will adopt 1znm node (probably EUV). Total investment is estimated to exceed $13 billion.
  • Nanya Technology doubles 2018 capex plan – The increase is for additional DRAM capacity and more 20nm DRAM conversion (from 30nm).

200mm and below: Not leading edge, but continues to draw investment

  • Vanguard changes fab investment strategy – Vanguard will focus on 200 mm and has scrapped its plan for 300mm expansion.
  • Murata to invest into 150mm expansion – Murata announced a 5 billion Yen investment (US$44.6 million) in a new fab extension in Vantaa, Finland.

Investment, M&A in Analog, Logic, Power and Opto Segments

  • Texas Instruments is looking to invest $3.2 billion in new fab construction in 2019 – Texas Instruments is eyeing Richardson, Texas and also considering sites outside Texas.
  • Bosch 300mm fab in Dresden, Germany – Bosch held a groundbreaking ceremony on April 24. Equipment installation is expected in 2H19.
  • Microchip completes acquisition of Microsemi – Microchip closed its $8.45 billion acquisition of Microsemi on May 29. Microsemi has five fabs in the U.S. with a wide range of semiconductor products and system solutions.

New fabs in China keep on coming

  • Shanghai Jita Semiconductor/Huada Semiconductor – Shanghai Jita Semiconductor, a subsidiary of Huada Semiconductor and China Electronics Corporation (CEC), announced plans earlier this month to build both 200 mm and 300 mm semiconductor fabs for analog and power semiconductors in Shanghai. The combined fab investment will total $5.18 billion.
  • Hamamatsu Photonics building 200 mm fab – Hamamatsu announced that it is building a new facility Investment of 2.8 billion Yen (US$25 million) to boost opto semiconductor capacity. Production is anticipated to start in late 2019.

*Actual FabView updates provide more detail

SEMI FabView, a mobile-friendly, interactive version of SEMI’s popular World Fab Forecast, delivers on-demand fab information such as fab spending and capacity for over 1,200 facilities, including over 60 planned facilities worldwide, across a wide range of product segments including Power, GPU, Memory, Foundry, MEMS and Sensors fabs. Fab data include region, start of construction, operation, construction and equipment spending, capacity, wafer sizes, product types and geometries. SEMI FabView subscribers receive forecast model updates through SEMI’s World Fab Database.  Click here for a trial if you want to experience SEMI FabView first hand.

Christian G. Dieseldorff is senior principal analyst and Eugenia Liu is senior product marketing manager, Industry Research and Statistics, SEMI, Milpitas, California. 

Originally published on the SEMI blog.

In its Mid-Year Update to the 2018 McClean Report, IC Insights updated its forecast of sales growth for each of the 33 major IC product categories defined by WSTS (Figure 1).  IC Insights now projects that seven product categories will exceed the 16% growth rate expected from the total IC market this year. For the second consecutive year, the DRAM market is forecast to top all IC product segments with 39% growth. Overall, 13 product categories are forecast to experience double-digit growth and 28 total IC product categories are expected to post positive growth this year, down slightly from 29 segments in 2017.

Rising average selling prices for DRAM continued to boost the DRAM market through the first half of the year and into August.  However, IC Insights believes the DRAM ASP (and subsequent market growth) is at or near its peak, as a big rise in DRAM capital expenditures for planned capacity upgrades and expansions is likely put the brakes on steep market growth beginning in 2019.

In second place with 29% growth is the Automotive—Special-Purpose Logic market, which is being lifted by the growing number of onboard electronic systems now found on new cars. Backup cameras, blind-spot (lane-departure) detectors, and other “intelligent” systems are mandated or are being added across all new vehicles—entry level to luxury—and are expected to contribute to the semiconductor content per new car growing to more than $540 per vehicle in 2018.

Wireless Comm—Application-Specific Analog is forecast to grow 23% in 2018, as the world becomes increasingly dependent on the Internet and demand for wireless connectivity continues to rise. Similarly, demand for medical/health electronics systems connectivity using the Internet will help the market for Industrial/Other Application-Specific Analog outpace total IC market growth in 2018.

Among the seven categories showing better than total IC market growth this year, three are forecast to be among the largest of all IC product categories in terms of dollar volume. DRAM (#1 with $101.6 billion in sales), NAND Flash (#2 with $62.6 billion), Computer and Peripherals—Special Purpose Logic (#4 with $27.6 billion) prove that big markets can still achieve exceptional percentage growth.

Figure 1

Amkor Technology announced on September 10th the opening of its new manufacturing and test plant at Longtan Science Park in Taiwan.

“Demand for Amkor’s advanced assembly and test services in Taiwan continues to increase. The opening of our fourth factory in Taiwan will allow us to keep pace with that demand,” said Steve Kelley, Amkor’s president and CEO. “Our new Longtan facility will focus on wafer probe and die processing, complementing the wafer-level and other advanced packaging capabilities of our other three factories.”

The new facility is Amkor’s first manufacturing plant in Longtan Science Park, which is well known for incubating Taiwanese high-tech businesses, including those in the semiconductor industry. The Science Park has strict environmental protection standards and only companies that are in full compliance are permitted. Amkor is also seeking ISO 15408 Common Site Criteria certification for the Longtan plant to ensure rigorous security protection during the manufacturing process.

“I am pleased to announce the opening of our new factory in Longtan, which enters its production phase this month,” said YongChul Park, Amkor’s executive vice president, Worldwide Manufacturing. “This expansion signifies Amkor’s ongoing commitment to invest globally and showcases our ability to leverage resources internationally.”

Below are photos taken during Monday’s opening ceremony at Amkor’s new Taiwan factory.

By Richard Allen

The arrival of Fan-Out Panel Level Packaging (FO-PLP) appears to be at a perfect time: This technology will leverage processes developed for Three Dimensional Stacked Integrated Circuits (3DS-IC) as well as panel processing technologies developed for industries such as solar panels and large-screen TVs.  In this combination, FO-PLP promised the improved performance of 3DS-IC, without the expense. There was just one problem…

That problem is the size of the panels to be processed. As different companies developed FO-PLP processes, they chose panels sized to meet certain technical or business goals, or chose a size based on familiarity. So, processes were being developed for more than ten sizes, each of which had one or more companies championing them.

For people in the wider semiconductor industry, the development of many processes, each with a unique panel size brought a feeling of déjà vu, reminding them of the 1970s, when each device manufacturer created their own specification for wafer size, forcing them to manufacture their own wafer processing equipment since no external manufacturer was willing to produce tools usable only by a single customer.

SEMI responded by developing an industry consensus silicon wafer standard – which described basic parameters, including diameter and thickness – to resolve the issue. Almost overnight the landscape changed, and new tool manufacturers sprung up, enabling the incredible growth that has persisted over more than 40 years.

Recently, Cristina Chu (TEL NEXX) presented the state of FO-PLP to the North America Chapter of the SEMI Three-Dimensional Packaging and Integration (3DP&I) Technical Committee, suggesting that the Committee develop a single standard dimension that would enable the technology to move into high-volume manufacturing.

The Committee began by surveying the industry to determine the interest level in such a standard as well as its contents.  A key finding came in response to the question “Would you support a standardized panel size?” Overwhelmingly, over 70 percent of the respondents supporting the idea for the standard, with less than 2 percent opposed. The survey also asked if other parameters should be standardized and, if so, which parameters. Majority responses pointed to edge profile, flatness, and warp, prompting the 3DP&I Committee to immediately form the FO-PLP Panel Task Force (TF) to develop such a standard. Chu and Richard Allen (NIST) agreed to chair the TF and respondents to the survey were asked to participate as TF members.

The TF initially decided to follow the model of SEMI M1, Specification for Polished Single Crystal Silicon Wafers, and write the document as a purchase specification. The purchase specification would indicate a limited number of mandatory parameters, identified as those that serve as bottlenecks to the development of a FO-PLP ecosystem. Parameters that were not perceived as bottlenecks but might be useful for implementing a FO-PLP process would be included as optional.

Working under the SEMI Standards umbrella allowed the TF to take advantage of work done in the development of other standards, without having to recreate it from scratch. In particular, Flatness and Shape were repurposed from SEMI M1, ensuring consistent definitions of these parameters.

The TF could not come to consensus on how the other parameters should be categorized, so the decision was made to move the ordering table to a new Appendix as optional.

The TF will be balloting its first specification for panel substrate in the upcoming cycle, which opens September 5, 2018 (Cycle 7). The voting is open to all industry experts. Based on the feedback, the task force will continue to refine and otherwise improve the specification by incorporating other parameters that are critical to making FO-PLP a reality.

SEMI Standards development activities take place throughout the year in all major manufacturing regions. To get involved, join the SEMI International Standards Program at: www.semi.org/standardsmembership.

For more information regarding FO-PLP Panel Task Force activities, please contact Laura Nguyen at [email protected].

Richard Allen is a physicist in the Nanoscale Metrology Group in the Engineering Physics Division of the Physical Measurement Laboratory (PML) at the National Institute of Standards and Technology (NIST). 

Originally published on the SEMI blog.

IC Insights forecasts total semiconductor capital expenditures will rise to $102.0 billion this year, marking the first time that the industry has spent more than $100 billion on capital expenditures in one year.  The $102.0 billion spending level represents a 9% increase over $93.3 billion spent in 2017, which was a 38% surge over 2016.

Figure 1 shows that more than half of industry capital spending is forecast for memory production—primarily DRAM and flash memory—including upgrades to existing wafer fab lines and brand new manufacturing facilities. Collectively, memory is forecast to account for 53% of semiconductor capital expenditures this year. The share of capital spending for memory devices has increase substantially in six years, nearly doubling from 27% ($14.7 billion) in 2013 to a forecast of 53% ($54.0 billion) of total industry capex in 2018, which amounts to a 2013-2018 CAGR of 30%.

Figure 1

Of the major product categories shown, DRAM/SRAM is forecast to show the largest increase in spending, but flash memory is expected to account for the largest share of capex spending this year (Figure 2).  Capital spending for the DRAM/SRAM segment is forecast to show a 41% surge in 2018 after a strong 82% increase in 2017.  Capital spending for flash memory is forecast to rise 13% in 2018 after a 91% increase in 2017.

Figure 2

After two years of big increases in capital expenditures, a major question looming is whether high levels of spending will lead to overcapacity and a softening of prices.  Historical precedent in the memory market shows that too much spending usually leads to overcapacity and subsequent pricing weakness.  With Samsung, SK Hynix, Micron, Intel, Toshiba/Western Digital/SanDisk, and XMC/Yangtze River Storage Technology all planning to significantly ramp up 3D NAND flash capacity over the next couple of years (and new Chinese memory startup companies entering the market), IC Insights believes that the future risk for overshooting 3D NAND flash market demand is high and growing.

Global semiconductor industry revenue grew 4.4 percent, quarter over quarter, in the second quarter of 2018, reaching a record $120.8 billion. Semiconductor growth occurred in all application markets and world regions, according to IHS Markit (Nasdaq: INFO).

“The explosive growth in enterprise and storage drove the market to new heights in the second quarter,” said Ron Ellwanger, senior analyst and component landscape tool manager, IHS Markit. “This growth contributed to record application revenue in data processing and wired communication markets as well as in the microcomponent and memory categories.”

Due to the ongoing growth in the enterprise and storage markets, sequential microcomponent sales grew 6.5 percent in the second quarter, while memory semiconductor revenue increased 6.4 percent. “Broadcom Limited experienced exceptional growth in its wired communication division, due to increased cloud and data-center demand,” Ellwanger said.

Memory component revenue continued to rise in the second quarter, compared to the previous quarter, reaching $42.0 billion dollars. “This is the ninth consecutive quarter of rising revenue from memory components, and growth in the second quarter of 2018 was driven by higher density in enterprise and storage,” Ellwanger said. “This latest uptick comes at a time of softening prices for NAND flash memory. However, more attractive pricing for NAND memory is pushing SSD demand and revenue higher.”

Semiconductor market share

Samsung Electronics continued to lead the overall semiconductor industry in the second quarter with 15.9 percent of the market, followed by Intel at 13.9 percent and SK Hynix at 7.9 percent. Quarter-over-quarter market shares were relatively flat, with no change in the top-three ranking. SK Hynix achieved the highest growth rate and record quarterly sales among the top three companies, recording 16.4 percent growth in the second quarter.

IC Insights recently released its Mid-Year Update to The McClean Report 2018.  The update includes a revised forecast of the largest and fastest-growing IC product categories this year.  Sales and unit growth rates are shown for each of the 33 IC product categories defined by the World Semiconductor Trade Statistics (WSTS) organization in the Mid-Year Update.

The five largest IC product categories in terms of sales revenue and unit shipments are shown in Figure 1.  With forecast sales of $101.6 billion, (39% growth) the DRAM market is expected to be the largest of all IC product categories in 2018, repeating the ranking it held last year.  If the sales level is achieved, it would mark the first time an individual IC product category has surpassed $100.0 billion in annual sales. The DRAM market is forecast to account for 24% of IC sales in 2018.  The NAND flash market is expected to achieve the second-largest revenue level with total sales of $62.6 billion this year. Taken together, the two memory categories are forecast to account for 38% of the total $428.0 billion IC market in 2018.

Figure 1

For many years, the standard PC/server MPU category topped the list of largest IC product segments, but with ongoing increases in memory average selling prices, the MPU category is expected to slip to the third position in 2018.  In the Mid-Year Update, IC Insights slightly raises its forecast for 2018 sales in the MPU category to show revenues increasing 5% to an all-time high of $50.8 billion, after a 6% increase in 2017 to the current record high of $48.5 billion.  Helping drive sales this year are AI-controlled systems and data-sharing applications over the Internet of Things.  Cloud computing, machine learning, and the expected tidal wave of data traffic coming from connected systems and sensors is also fueling MPU sales growth this year.

Two special purpose logic categories—computer and peripherals, and wireless communications—are forecast to round out the top five largest product categories for 2018.

Four of the five largest categories in terms of unit shipments are forecast to be some type of analog device.  Total analog units are expected to account for 54% of the total 318.1 billion IC shipments forecast to ship this year.  Power management analog devices are projected to account for 22% of total IC units and are forecast to exceed the combined unit shipment total of the next three categories on the list.  As the name implies, power management analog ICs help regulate power usage and to keep ICs and systems running cooler, to manage power usage, and ultimately to help extend battery life—essential qualities for an increasingly mobile and battery-powered world of devices.

By Laith Altimime

In a bid to reinvigorate Europe’s electronics strategy and strengthen the region’s position in key emerging technologies, European electronics industry CEOs in June called on public and private actors to accelerate collaboration at the European Union and national levels. The CEO’s proposed new strategic actions include creating a European Design Alliance to pool the expertise of design houses and forming an electronics education and skills task force consisting of representatives from industry, research, European institutions, member states and SEMI.

The business executive’s calls – embodied in “Boosting Electronics Value Chain in Europe,” a report submitted to Mariya Gabriel, Commissioner for Digital Economy and Society, of the European Commission – come as global competition in the electronics industry intensifies. The document highlights Europe’s need to buttress its position amongst others in artificial intelligence (AI), autonomous driving and personalized healthcare – applications that rely on new semiconductor architectures, materials, equipment and design methodologies.

The European semiconductor industry plans to pour more than 50 billion EUR into technology development and innovation by 2025, deepening its investments in research, innovation and manufacturing to help drive Europe’s digital transformation.

For its part, SEMI, as the industry association connecting the electronics value chain, is well-positioned to bring together member companies and public actors to address key challenges facing the sector. This year in April, SEMI announced that Electronics System Design Alliance (ESD Alliance) will join SEMI, adding key electronics design companies to SEMI membership and unlocking the full potential of collaboration between electronics design and manufacturing.  With the ESD Alliance, SEMI adds the product design segment to the electronics supply chain, streamlining and connecting the full ecosystem. The integration also promises to support the industry coordination required to develop specialized (AI) chips used in various smart applications.

SEMI Europe is also accelerating its education and workforce development activities. SEMI Europe this year created its Workforce Development Council Europe, chaired by Emir Demircan, SEMI Europe’s senior manager of public policy, based in Brussels. The council is designed to connect electronics industry human resources representatives with members to evolve best practices in hiring that help Europe gain, train and retain world-class talent.

Other SEMI Europe workforce development activities include the following:

  • SEMI member forums across Europe are helping young talent with career opportunities in the semiconductor industry.
  • In November, SEMICON Europa will host a Career Café where STEM students will explore careers in electronics design and manufacturing.
  • With the participation of representatives from the European Commission, SEMI Europe’s Industry Strategy Symposium in April focused on strategies for attracting more skilled workers into electronics design and manufacturing.

Looking ahead, semiconductor sales is forecast to reach USD 1 trillion by 2030. The global semiconductor industry is at the heart of a new era of connectivity, developing breakthrough solutions for ascendant data-driven technologies such as AI and Internet of Things (IoT). SEMI Europe’s role in strengthening the region’s position in the global electronics industry to help drive this extraordinary growth is critical. SEMI Europe will continue to foster public-private partnerships to tackle industry challenges that are too big, too risky and too costly for companies and government institutions to address alone.

Contact: Laith Altimime, President, SEMI Europe, [email protected] ; Emir Demircan, Sr Manager Public Policy, [email protected]

Originally published on the SEMI blog.

The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing, design, and research, today announced worldwide sales of semiconductors reached $117.9 billion during the second quarter of 2018, an increase of 6.0 percent over the previous quarter and 20.5 percent more than the second quarter of 2017. Global sales for the month of June 2018 reached $39.3 billion, an uptick of 1.5 percent over last month’s total of $38.7 billion, and a surge of 20.5 percent compared to the June 2017 total of $32.6 billion. Cumulatively, year-to-date sales during the first half of 2018 were 20.4 percent higher than they were at the same point in 2017. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.

“Halfway through 2018, the global semiconductor industry continues to post impressive sales totals, notching its highest-ever quarterly sales in Q2 and record monthly sales in June,” said John Neuffer, president and CEO, Semiconductor Industry Association. “Global sales have increased year-to-year by more than 20 percent for 15 consecutive months, and sales of every major product category increased year-to-year in June. Sales into the Americas market continue to be strong, with year-to-date totals more than 30 percent higher than at the same point last year.”

Regionally, sales increased compared to June 2017 in China (30.7 percent), the Americas (26.7 percent), Europe (15.9 percent), Japan (14.0 percent), and Asia Pacific/All Other (8.6 percent). Sales also were up compared to last month in China (3.2 percent), Japan (1.3 percent), the Americas (1.2 percent), and Asia Pacific/All Other (0.5 percent), but down slightly in Europe (-0.8 percent).

For comprehensive monthly semiconductor sales data and detailed WSTS Forecasts, consider purchasing the WSTS Subscription Package. For detailed data on the global and U.S. semiconductor industry and market, consider purchasing the 2018 SIA Databook.