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IC Insights is in the process of completing its forecast and analysis of the IC industry and will present its new findings in The McClean Report 2019, which will be published later this month.  Among the semiconductor industry data included in the new 400+ page report is an analysis of semiconductor merger and acquisition agreements.

The historic flood of merger and acquisition agreements that swept through the semiconductor industry in 2015 and 2016 slowed significantly in 2017 and then eased back further in 2018, but the total value of M&A deals reached in the last year was still nearly more than twice the annual average during the first half of this decade.  Acquisition agreements reached in 2018 for semiconductor companies, business units, product lines, and related assets had a combined value of $23.2 billion compared to $28.1 billion in 2017, based on data compiled by IC Insights.  The values of M&A deals struck in these years were significantly less than the record-high $107.3 billion set in 2015 (Figure 1).

Figure 1

The original 2016 M&A total of $100.4 billion was lowered by $41.1 billion to $59.3 billion because several major acquisition agreements were not completed, including the largest proposed deal ever in semiconductor history—Qualcomm’s planned purchase of NXP Semiconductor for $39 billion, which was raised to $44 billion before being canceled in July 2018.  Prior to the explosion of semiconductor acquisitions that erupted four years ago, M&A agreements in the chip industry had a total annual average value of $12.6 billion in the 2010-2014 timeperiod.

The two largest acquisition agreements in 2018 accounted for about 65% of the M&A total in the year.  In March 2018, fabless mixed-signal IC and power discrete semiconductor supplier Microsemi agreed to be acquired by Microchip Technology for $8.35 billion in cash.  Microchip said the purchase of Microsemi would boost its position in computing, communications, and wireless systems applications.  The transaction was completed in May 2018.  Fabless mixed-signal IC supplier Integrated Device Technology (IDT) agreed in September 2018 to be purchased by Renesas Electronics for $6.7 billion in cash.  Renesas believes the IDT acquisition will strengthen its position in automotive ICs for advanced driver-assistance systems and autonomous vehicles.  The IDT purchase is expected to be completed by June 2019.

Just two other semiconductor acquisition announcements in 2018 had values of more than $1 billion.  In October 2018, memory maker Micron Technology said it would exercise an option to acquire full ownership of its IM Flash Technology joint venture from Intel for about $1.5 billion in cash. Micron has started the process of buying Intel’s non-controlling interest in the non-volatile memory manufacturing and development joint venture, located in Lehi, Utah.  The transaction is expected to be completed in 2H19.  In September 2018, China’s largest contract manufacturer of smartphones, Wingtech Technology, began acquiring shares of Nexperia, a Dutch-based supplier of standard logic and discrete semiconductors that was spun out of NXP in 2017 with the financial backing of Chinese investors.   Wingtech launched two rounds of share purchases from the Chinese owners of Nexperia with a combined value of nearly $3.8 billion.  The company hopes to take majority ownership of Nexperia (about 76% of the shares) in 2019.

Worldwide PC shipments totaled 68.6 million units in the fourth quarter of 2018, a 4.3 percent decline from the fourth quarter of 2017, according to preliminary results by Gartner, Inc. For the year, 2018 PC shipments surpassed 259.4 million units, a 1.3 percent decline from 2017. Gartner analysts said there were signs for optimism in 2018, but the industry was impacted by two key trends.

“Just when demand in the PC market started seeing positive results, a shortage of CPUs (central processing units) created supply chain issues. After two quarters of growth in 2Q18 and 3Q18, PC shipments declined in the fourth quarter,” said Mikako Kitagawa, senior principal analyst at Gartner. “The impact from the CPU shortage affected vendors’ ability to fulfill demand created by business PC upgrades. We expect this demand will be pushed forward into 2019 if CPU availability improves.”

“Political and economic uncertainties in some countries dampened PC demand,” Ms. Kitagawa said. “There was even uncertainty in the U.S. — where the overall economy has been strong — among vulnerable buyer groups, such as small and midsize businesses (SMBs). Consumer demand remained weak in the holiday season. Holiday sales are no longer a major factor driving consumer demand for PCs.”

The top 3 vendors boosted their share of the global PC market as Lenovo, HP Inc. and Dell accounted for 63 percent of PC shipments in the fourth quarter of 2018, up from 59 percent in the fourth quarter of 2017 (see Table 1).

Lenovo surpassed HP Inc. to move into the No. 1 position in the global PC market in the fourth quarter of 2018. A major factor for Lenovo’s share gain was credited to a joint venture with Fujitsu formed in May 2018. Lenovo also had a strong quarter in the U.S. The company has recorded three consecutive quarters of double-digit year-over-year shipment growth, despite the stagnant overall market.

Table 1. Preliminary Worldwide PC Vendor Unit Shipment Estimates for 4Q18 (Thousands of Units)

Company 4Q18 Shipments 4Q18 Market Share (%) 4Q17 Shipments 4Q17 Market Share (%) 4Q18-4Q17 Growth (%)
Lenovo 16,628 24.2 15,697 21.9 5.9
HP Inc. 15,380 22.4 16,092 22.4 -4.4
Dell 10,915 15.9 10,763 15.0 1.4
Apple 4,920 7.2 5,112 7.1 -3.8
ASUS 4,211 6.1 4,716 6.6 -10.7
Acer Group 3,861 5.6 4,726 6.6 -18.3
Others 12,710 18.5 14,590 20.3 -12.9
Total 68,626 100.0 71,696 100.0 -4.3

Notes: Data includes desk-based PCs, notebook PCs and ultramobile premiums (such as Microsoft Surface), but not Chromebooks or iPads (see “Market Definitions and Methodology: PCs, Ultramobiles and Mobile Phones”). All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels.
Numbers may not add up to totals shown due to rounding.
*Lenovo’s results include Fujitsu units starting in 2Q18 to reflect the joint venture that closed in May 2018.

Source: Gartner (January 2019)

The fourth quarter of 2018 was a challenging one for HP Inc. The company experienced a shipment decline after four consecutive quarters of growth. HP Inc.’s shipments declined in most key regions, except Asia/Pacific and Japan. Dell registered positive growth as the company outperformed in EMEA and Japan, but it experienced a decline in Asia/Pacific and Latin America.

In the U.S., PC shipments totaled 14.2 million units in the fourth quarter of 2018, a 4.5 percent decline from the fourth quarter of 2017 (see Table 2). Four of the top six vendors experienced a decline in U.S. PC shipments in the fourth quarter of 2018. Lenovo’s growth was well above the U.S. average while Dell’s shipments increased slightly compared with a year ago. The overall decline in the U.S. was attributed to weak consumer demand despite holiday season sales as well as SMBs.

“The fourth quarter is typically a buying season for small office/home office (SOHO) and small business buyers in the U.S. as they want to use up the untouched budget before the tax year ends,” said Ms. Kitagawa. “Our early indicator showed that SOHO and small business buyers held off on some new PC purchases due to uncertainties around the political and economic conditions.”

Table 2. Preliminary U.S. PC Vendor Unit Shipment Estimates for 4Q18 (Thousands of Units)

Company 4Q18 Shipments 4Q18 Market Share (%) 4Q17 Shipments 4Q17 Market Share (%) 4Q18-4Q17 Growth (%)
HP Inc. 4,738 33.4 5,130 34.6 -7.6
Dell 3,645 25.7 3,613 24.3 0.9
Lenovo 2,150 15.2 1,743 11.7 23.4
Apple 1,762 12.4 1,800 12.1 -2.1
Microsoft 472 3.3 542 3.7 -12.9
Acer Group 458 3.2 587 4.0 -21.9
Others 953 6.7 1,430 9.6 -33.3
Total 14,178 100.0 14,843 100.0 -4.5

Notes: Data includes desk-based PCs, notebook PCs and ultramobile premiums (such as Microsoft Surface), but not Chromebooks or iPads. All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels.

Source: Gartner (January 2019)

PC shipments in EMEA totaled 20.9 million units in the fourth quarter of 2018, a 3.8 percent decline year over year. There were some positive signs, such as in Western Europe’s demand for desktops and ultramobiles that fueled SMB shipments, while the government sector also benefited from further Windows 10 renewals. Demand in Russia continued to recover, and some parts of Eastern Europe, such as the Czech Republic and Hungary. However, demand was not strong enough to offset declining shipments to consumers.

The Asia/Pacific PC market totaled 24.2 million units in the fourth quarter of 2018, a 4.6 percent decline from the fourth quarter of 2017. Due to uncertainties of the U.S.-China trade relations, and the volatile equity market, there was cautionary demand, especially among consumers and the SMB segment. In the fourth quarter of 2018, PC shipments in China declined 2.5 percent year over year, but shipments grew 5.6 percent sequentially.

Seventh Consecutive Year of Worldwide PC Shipment Decline

For the year, worldwide PC shipments totaled 259.4 million units in 2018, a 1.3 percent decrease from 2017 (see Table 3). This was the seventh consecutive year of global PC shipment decline, but it was less steep compared with the past three years.

“The majority of the PC shipment decline in 2018 was due to weak consumer PC shipments. Consumer shipments accounted for approximately 40 percent of PC shipments in 2018 compared with representing 49 percent of shipments in 2014,” Kitagawa said. “The market stabilization in 2018 was attributed to consistent business PC growth, driven by Windows 10 upgrade.”

Table 3. Preliminary Worldwide PC Vendor Unit Shipment Estimates for 2018 (Thousands of Units)

Company 2018

Shipments

 2018 Market

Share (%)

 2017

Shipments

 2017 Market Share (%) 2018-2017 Growth (%)
Lenovo 58,467 22.5 54,669 20.8 6.9
HP Inc. 56,332 21.7 55,179 21.0 2.1
Dell 41,911 16.2 39,793 15.1 5.3
Apple 18,016 6.9 18,963 7.2 -5.0
Acer Group 15,729 6.1 17,087 6.5 -7.9
ASUS 15,537 6.0 17,952 6.8 -13.5
Others 53,393 20.6 59,034 22.5 -9.6
Total 259,385 100.0 262,676 100.0 -1.3

Notes: Data includes desk-based PCs, notebook PCs and ultramobile premiums (such as Microsoft Surface), but not Chromebooks or iPads. All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels.

Source: Gartner (January 2019)

These results are preliminary. Final statistics will be available soon to clients of Gartner’s PC Quarterly Statistics Worldwide by Region program. This program offers a comprehensive and timely picture of the worldwide PC market, allowing product planning, distribution, marketing and sales organizations to keep abreast of key issues and their future implications around the globe.

It’s chilly!


January 16, 2019

By Walt Custer

4Q’18 World Electronic Supply Chain – Slowing Electronic Equipment Growth

Custer Consulting Group has its first estimate of global electronic equipment growth in 4Q’18 vs. 4Q’17. Chart 1 compares the combined sales of a 213-company OEM composite to regional electronic equipment shipments. The composite is based on individual company financial reports. While fourth-quarter results for this group won’t be available until February, the regional model (driven by early reported Taiwan/China results) points to world electronic end market growth declining from +10% in 3Q’18 vs. 3Q’17 to +2% in 4Q’18 vs. 4Q’17.

These results are still preliminary, but Chart 1 gives an early indication of the magnitude and trajectory of slowing electronic equipment growth.

Chart 2 shows consolidated monthly sales from our regional electronic equipment model where December 2018 global revenues declined 1.8% vs. December 2017 and were down 0.9% sequentially vs. November 2018. Note the very predictable seasonality and the apparent “peaking” of 2018 sales in November – with a likely sharp drop in early 2019.

Sources: Company financial reports and USA, Europe, Japan, China/Taiwan and South Korea regional data as analyzed by Custer Consulting Group.

Wafer Foundry Sales – Leading Indicator for Semiconductors and Semiconductor Equipment

December monthly sales have been reported by Taiwan-listed wafer fabs.

  • Wafer foundry revenues dropped in December, suggesting a coming decline in global semiconductor and semiconductor equipment shipments (Chart 3). Foundry sales have historically been a leading indicator for both chips and semiconductor equipment.

  • Taiwan wafer foundry revenues, world semiconductor sales and the Global Purchasing Managers Index 3/12 growth rates all point to further slowing ahead (Chart 4).

Source: Company financial reports

Semiconductor Industry Business Cycles

Semiconductor shipment growth (although still positive) peaked in early 2018 (Chart 5).  Globally it was up only 4.6% in November 2018 versus the same month a year earlier and its trajectory is pointing down. This compares to +23.7% growth in December 2017.

Semiconductor equipment shipments (Chart 6) actually contracted 0.6% globally for just the month of November 2018 vs. November 2017. They are traditionally more volatile than semiconductor sales.

The normal winter seasonal industry slowdown is upon us and it is being overlaid with economic softness, political uncertainty, product (memory) shifts and general industry weakening.

Walt Custer of Custer Consulting Group is an analyst focused on the global electronics industry. He can be reached at [email protected].

IC Insights is in the process of completing its forecast and analysis of the IC industry and will present its new findings in The McClean Report 2019, which will be published later this month.  Among the semiconductor industry data included in the new 400+ page report is an analysis of the top-50 semiconductor suppliers.

Research included in the new McClean Report shows that the world’s leading semiconductor suppliers significantly increased their marketshare over the past decade.  The top 5 semiconductor suppliers accounted for 47% of the world’s semiconductor sales in 2018, an increase of 14 percentage points from 10 years earlier (Figure 1).  In total, the 2018 top 50 suppliers represented 89% of the total $514.0 billion worldwide semiconductor market last year, up seven percentage points from the 82% share the top 50 companies held in 2008.

As shown, the top 5, top 10, and top 25 companies’ share of the 2018 worldwide semiconductor market increased 14, 15, and 11 percentage points, respectively, as compared to 10 years earlier in 2008.  With additional mergers and acquisitions expected over the next few years, IC Insights believes that the consolidation could raise the shares of the top suppliers to even loftier levels.

There was a wide 66-percentage point range of year-over-year growth rates among the top 50 semiconductor suppliers last year, from +56% for Nanya to -10% for Fujitsu.  Nanya rode a surge of demand for its DRAM devices to post its great full-year results.  However, evidence of a cool down in the memory market last year was evident in the company’s quarterly sales results, which saw its sales drop from $826 million in 2Q18 to $550 million in 4Q18 (a 33% plunge).  Overall, four of the top seven growth companies last year—Nanya, SK Hynix, Micron, and Samsung—were major memory suppliers.  Although Nanya registered the highest percentage increase, Samsung had the largest dollar volume semiconductor sales increase, a whopping one-year jump of $17.0 billion!

In total, only nine of the top 50 companies registered better growth as compared to the 2018 worldwide semiconductor market increase of 16%, with five companies logging increases of ≥30%.  In contrast, only three of the top 50 semiconductor companies logged a decline in sales last year, with Fujitsu being the only company to register a double-digit sales drop.

Figure 1

By Christian G. Dieseldorff

This year, SEMI ISS covered it all – from a high-level semiconductor market and global geopolitical overview down to the neuro morphic and quantum level. Here are key takeaways from the Day 1 keynote and Economic Trends and Market Perspectives presentations.

In the opening keynote, Anne Kelleher from Intel pointed to the huge growth of data, with fabs collecting more than 5 billion sensor data points each day. The challenge, Kelleher noted, is to turn massive amounts of data into valuable information. Moore’s law is not dead. New models of computing benefit still from Moore’s law and advances in Si/CMOS technologies for conventional, deep learning, neuro morphic and quantum computing.

With customers expecting continual improvements in applications, the question is whether the chip industry is moving fast enough to meet these expectations, Kelleher said. A broad supply chain, equipment and materials innovations, and attracting the “best of the best” college graduates to fuel innovation is key, she said.

In the economic trends session, Nicholas Burns (ambassador ret.) from Harvard University pointed out that we will see a major shift in power. The U.S. will remain the major world power over the next 10 years, but we will see a major shift in power in the next coming decades as the gap with countries like China, Russia and India continues to narrow.

Duncan Meldrum from Hilltop Economics said that we are passing the peak growth of economic cycle. He warns that a more likely outlook is that a global growth recession is developing. Although semiconductor MSI growth will see a noticeable slowdown in 2019 and 2020, the semiconductor industry is still healthy over the longer term.

Bob Johnson from Gartner sees demand shifting from consumer to commercial applications with higher ROIs and budgets. AI, IoT and 5D are the major enablers. He sees structural changes in the semiconductor industry especially for memory but also for Moore’s law with increasing costs and fewer players.

The DRAM markets shows volatility and NAND market may be negative in 2019 but non-memory are expected to accelerate mainly because of increasing content and some price hikes.

Overall Gartner expects good long-term growth with a CAGR (2017 to 2022) of 5.1%, outpacing 2011 to 2016 CAGR of 2.6%. After a strong 2018 with 13.4% revenue, he forecasts a slower 2019 with 2.6% growth followed by a 8% growth in 2020 and negative growth rate in 2021.

Andrea Lati of VLSI went “Back to fundamentals” in his presentation about the industry. VLSI sees a downside bias due to slowing global economy, tariffs, and trade wars. Future drivers are data economy, cloud, AI and automotive.

As memory leads the 2019 slowdown, analog, power, logic and other sectors remain in positive territory. VLSI lowered its semiconductor equipment forecast for 2018 from 20% (Jan. 2018) to 14% (Dec. 2018) but increased its sales outlook from 8% to 15% in 2018. VLSI expects revenue to slow into the first half of 2019 but increase to over 4% in the second half of the year, resulting in total 2019 drop of 2.7%. Semiconductor equipment sales are expected to drop from 14% in 2018 to -10% in 2019.

Michael Corbett of Linz Consulting, covering wafer fab materials in the years of 3D scaling, sees these as good times for the industry. His outlook for wafer fab materials is bullish based on strong MSI and because wafer fab materials suppliers are getting bigger because of M&As.

In the Market Perspective session, Sujeet Chand of Rockwell Automation pointed out that as more and more data is generated, the problem is how to get value of all the data collected. There is a need to create the right architecture for machine learning and AI and big data is increasingly being replaced by contextual/structured data. He expects Industry 4.0 to drive foundries to become smaller, more flexible and more productive.

In the Technology and Manufacturing session, Aki Sekiguchi of TEL addressed process challenges in the age of co-optimization. The semiconductor industry continues to expand, driven by massive growth of interconnected devices, with heavy demand for processing power and storage. He expects an exponential increase of data from about 40ZB in 2018 to 50ZB in 2020 to 163 ZB in 2026.

Major technologies such as DRAM, 3D NAND and logic are dealing with scaling challenges. The density of DRAM (Mb/chip) is plateauing according to 2015 to 2020 trend data, with DRAM is in need of EUV. Memory capacity demand is leading to increasing layers and higher aspect ratios that is concern for 3D NAND and mainly for plasma etch. With Logic already implementing 3D structures, it appears to be in a solid position.

Buddy Nicoson of Micron talked about his 50 years in the industry and looked ahead to the next 50. The anchors – quality, cost, scale and speed – won’t change. It has been a great journey so far with unprecedented opportunities and challenges ahead of us. We are getting into a convergence (specialization, integration) and solution-based phase. We will see some inflection points in the coming years, with the best yet to come.

Christian G. Dieseldorff is senior principal analyst in the Industry Research and Analysis group at SEMI in California.

This story first appeared on the SEMI blog.

IC Insights is in the process of completing its forecast and analysis of the IC industry and will present its new findings in The McClean Report 2019, which will be published later this month.  Among the semiconductor industry data included in the new 400+ page report is an in-depth analysis of semiconductor capital spending.

The semiconductor industry is expected to allocate the largest portion of its capex spending for flash memory again in 2019, marking the third consecutive year that flash has led all other segments in spending (Figure 1).  Flash memory trailed the foundry segment in capex in 2016, but took an extra-large jump in 2017, growing 92% to $27.6 billion and increased another 16% to $31.9 billion in 2018 as manufacturers expanded and upgraded their production lines for 3D NAND to meet growing demand.  With much of the expansion now completed or expected to be wrapped up in 2019, flash capex is forecast to decline 18% this year to $26.0 billion, which still is a very healthy spending level.

Figure 1

•    In 2018, SK Hynix completed and opened M15 its new wafer fab facility in Cheongju, South Korea.  First devices produced from the factory were 72-layer 3D NAND flash.

•    Micron allocated significant resources to upgrade its two existing flash fabs in Singapore and broke ground on construction of a third NAND wafer fab there.

•    Toshiba Memory completed construction of a new 300mm wafer plant (Fab 6) at its Yokkaichi site in 1H18.  Operations at Phase 1 of the facility are expected to begin in early 2019.  Also, Toshiba announced that its next flash memory fab after Fab 6 would be located in Kitakami, Iwate.  The company broke ground on this fab in July 2018.

•    XMC/Yangtze River Storage Technology (YMTC), which is owned by Tsinghua Unigroup, completed construction of its new fab, installed equipment, and began small-volume production of 32-layer 3D NAND flash.

•    Samsung and all of the other “legacy” flash suppliers are well aware of the big plans that China has to be a player in the 3D NAND flash market.  Samsung will continue to invest heavily to stay far ahead of existing competitors or new startups and maintain its competitive edge against any who think they can wrestle marketshare away.  Samsung spent $13.0 billion on flash capex in 2017 and $9.0 billion in 2018, accounting for 28% of the total $31.9 billion in flash memory capital spending last year.  IC Insights estimates Samsung will spend another $7.0 billion for flash capex in 2019.

SEMI met with Dr. Jose Pozo, director of Technology and Innovation at EPIC (European Photonics Industry Consortium), to discuss how 3D packaging applications and heterogeneous integration trends are shaping the European technology landscape. The two spoke ahead of his presentation at the 3D & Systems Summit, 28-30 January, 2019, in Dresden, Germany. To register for the event, please click here.

SEMI: What is the EPIC mission and vision?

Pozo: EPIC is an industry association with 418 corporate members that promotes the sustainable development of organisations working in the field of photonics in Europe. Our main goal is to increase the growth of photonics companies. To do so, we organize around 30 business-to-business events every year and provide market reports to our members.

SEMI: Who are EPIC members and what is your role within the association?

Pozo: Our members encompass the entire value chain, from LED lighting, photovoltaic solar energy, photonics integrated circuits and optical components to lasers, sensors, imaging, displays, projectors, optic fiber, and other photonic-related technologies. In my role as CTO, I like to describe myself as the “Geek” of photonics. Thanks to my technical understanding of the industry, I constantly travel and visit our members to understand their needs, which are very specific to their businesses. Ruring 2018, EPIC visited 142 companies. My role is to understand the industry trends and provide what I call “constant access to network” and market intelligence.

SEMI: What particularly exciting initiative are you driving?

Pozo: The interconnection with the European Commission is playing a big role for us, and we are currently cooperating with the European Commission to enable manufacturing of photonics in Europe. We have been working with our members to identify themes that hold the greatest interest with the European Commission. The Commission has funding available for the development of technologies it believes will enhance the European manufacturing landscape – the so called “Pilot Lines” – and enhance our everyday lives.

SEMI: Which pilot lines are of the greatest interest?

Pozo: There are three main directions for improvement:

  • Reduce costs
  • Enable the manufacturing of new photonic technologies in Europe, such as novel concepts for additive manufacturing, silicon photonics, freeform optics and biosensors
  • Enable volume production

One example of an EU-funded pilot line is “MIRPHAB,” which focuses on Mid-IR sensor manufacturing. Another, PIXAPP, enables the volume production of packaged Photonic Integrated Circuits (PICs) for established industries such as chemicals, telecommunications and medical.

SEMI: Your 3D & Systems Summit presentation will focus on European demand of new laser systems and processes, application markets and innovative laser technologies. What’s the future of these technologies?

Pozo: Europe should focus on networking because connectivity will help Europe become a leader in manufacturing. The constant development of laser material processing leads to process improvements for modifying materials at the sub-microscale level such as cutting, engraving, drilling and welding. At the core of laser is the so-called beam shape (or beam converter), an optical device that reshapes a light beam. Today, technological innovations based on laser materials processing enable the development of several applications that involve a precise control of the shape, power, and dynamics of the light beam.

SEMI: You have mentioned numerous company visits with industry leaders and experts. What did they say? Where is Europe going?

Pozo: Every company is a unique universe. Every company is so different. Two companies might belong to photonics and still develop different products and technologies – lasers can be the size of building or of a human hair! But there are some aspects of photonics that are much broader in scope. Take the automotive industry. The autonomous car of the future will be driven by photonics and lighting. How often do we hear about LiDAR? While automotive is a key markets for photonics, the technology is also important in driving advances in areas such as “environmental monitoring” and even “urban landscaping.”

SEMI: What are some key trends in photonics?

Pozo: One important trend is that high-powered lasers are required more and more in manufacturing. We are moving from 3 KW to 15 KW lasers, and many companies are now working hard to noto only increase power but to control the laser beam shape.

Another key trend is that MedTech is enabling early stage cancer diagnosis and reducing the number of related deaths, though there is so much room for improvement here!

A third trend is the rising adoption AR/VR solutions in gaming, medical, communication, transportation and many other industries as the technologies mature.

Photonics is also being used more in imaging cameras, microscopy, photography, SMART lighting and lasers and in antibacterial environments.

Come to Dresden to learn more and discuss trends during a coffee break!

SEMI: What are your expectations for 2019 3D & Systems Summit in Dresden, and why do you recommend your members and other industry leaders to attend?

Pozo: Laser-based manufacturing companies in the semiconductor industry should attend the summit. A wide variety of laser technologies that enable the development of innovative semiconductor manufacturing processes is available today. According to Yole Développement (Yole), the laser equipment market will grow at a 15 percent CAGR between 2016 and 2022 and should reach more than US$4 billion by 2022. Those figures are showing the massive adoption of laser technologies for semiconductor manufacturing processes.

Serena Brischetto is a marketing and communications manager at SEMI Europe.

The SEMI Industry Strategy Symposium (ISS) opened this week with the theme “Golden Age of Semiconductor: Enabling the Next Industrial Revolution.” The annual three-day conference of C-level executives gives the year’s first comprehensive outlook of the global electronics manufacturing industry.

For ISS 2019’s nearly 300 attendees, opening day highlighted market and technology opportunities and the high-water mark for semiconductor manufacturing supply chain investments in 2018. Deep discussions on applications, disruptions and Industrial Revolution 4.0 will mark today, Day 2. Day 3 will feature presentations on industry workforce development and the evolving U.S.-China relationship and convene an expert panel on “The Next Semiconductor Revolution: Filling the Gap Between Smart Speakers and Autonomous Vehicles” to culminate SEMI‘s business leader annual kick-off event.

Opening keynote speaker Ann Kellehere, Senior Vice President and General Manager of the Technology and Manufacturing Group at Intel, observed that data is powering the fourth industry revolution and the expansion of compute markets. Excellent customer experience and new technologies including Internet of Things (IoT), artificial intelligence (AI) and autonomous vehicles are key drivers of data growth.

Today, fabs collect more than 5 billion sensor data points each day. The challenge, Kellehere noted, is to turn massive amounts of data into valuable information. With customers expecting continual improvements in applications, the question is whether the chip industry is moving fast enough to meet these expectations. A broad supply chain, equipment and materials innovations, and attracting the “best of the best” college graduates to fuel innovation is key, she said.

In the Economic Trends session, presenters took on macroeconomic trends and detailed industry-specific forecasts:

Ambassador (Ret.) Nicholas Burns, Harvard Kennedy School of Government, noted the United States is trailing China in a battle for technological supremacy. By 2050, Indo-Pacific could become the world’s locus of economic power, potentially leading to conflict and instability. The rise of nationalism in China, India, Japan, Russia and the U.S. is a major trend, and the power gap between the U.S. and China, Russia and India is narrowing. From 1979 through last, China and the U.S. came together to solve big problems, he noted. The world has shifted ominously from strategic engagement to outright strategic competition.

Duncan Meldrum, Hilltop Economics, noted the world has passed the peak of its current economic expansion, with GDP peaking in 2018 and gradually slowing to 2.7 percent trend growth. The consensus outlook is for strong global economic growth. While an alternate outlook holds that a global recession will develop, a deep growth recession isn’t expected. The problem today is that global economic uncertainty is at an all-time high, suppressing investment and growth.

Bob Johnson, Gartner, forecasts businesses will get $5 trillion of value from AI by 2025 as businesses explore ways to implement AI to tap its tremendous potential. AI, IoT and 5G are major enablers of new value, with market demand shifting from consumer to commercial applications offering higher returns on investments, Johnson said. Future semiconductor market drivers include augmented analytics, digital twins, AI, autonomous things, blockchain, smart spaces and quantum computing.

Andrea Lati, VLSI Research, expects the semiconductor slowdown to continue into the first half of 2019 and said it could face a decline of as much as 35 percent. The strategic question for industry leaders is how to transition from a commodity provider to a value provider. In 2019, both semiconductor equipment and assembly sales are forecast to drop 13 percent, ending equipment’s strong run since 2016.

Michael Corbett, Linx Consulting, provided an upbeat outlook for the materials industry, which is enjoying a record expansion with MSI a key driver and record levels of capital expenditures reflecting very high utilization across both 200mm and 300mm. Materials market trends include a wafer fab materials CAGR of 6.9 percent from 2017 to 2022 and industry growth of $26 billion in 2018 to $33 billion in 2022.

The afternoon session focused on Market Perspectives, including smart manufacturing, human health, AI and 5G.

Sujeet Chand, Rockwell Automation, outlined Smart manufacturing best practices for semiconductor production. He envisions big data being increasingly replaced by data structured based on target factory outcomes that dictate whether to run analytics on the edge or in the cloud. Semiconductor fab productivity driven by digitization will grow faster in the next 10 years than in the past 50 as information and operational technology converge to speed the optimization of semiconductor fabs and supply networks, he said.

Igor Fisch, Selexis, focused on how the current golden age of semiconductors is shaping human health. He pointed to the critical importance of chips in biotechnology as big data becomes key to the analytics that will give rise to personalized diagnostics and therapies. Drug discovery and development will rely on massive computing power and data storage, with semiconductor and supercomputer technologies key enablers of precision medicine.

Eric Jones, Enthought, noted that semiconductor manufacturers must reimagine themselves over the next decade to power their own digital transformation. Data consolidation, automation and simulation will enable the predictive power – key to digital transformation – of AI and machine learning, he said. However, the greatest challenge is related to changing company culture, philosophy and organizational design.

Sree Koratala, Ericsson, forecasts 5G will evolve from initial use cases to mainstream adoption in 2024. Connectivity has reached an inflection point, with the focus shifting from consumers to businesses including the immersive experiences of virtual and augmented reality (AR/VR), autonomous control and cloud robotics. 4G and 5G will co-exist to deliver a much larger impact to people and businesses, she noted.

Sarah Cooper, Amazon Web Services, highlighting IoT trends, offered a vision of products learning from collected data to personalize functionality. Product differentiation is not about the specifications but about the customer experience. Coupling device data with machine learning can create a product that adapts to changing customer needs, eliminating the need to develop separate SKUs, she noted.

Days 2 and 3 at ISS will delve deeper into the industry with presentations by: Tokyo Electron Limited,Xperi, Micron Technology, Google, Applied Materials, McKinsey & Company, Brewer Science, DECA Technologies, Carbon, Bank of America Merrill Lynch and SEMI. 

The SEMI Industry Strategy Symposium (ISS) examines global economic, technology, market, business and geo-political developments influencing the global electronics manufacturing industry along with their implications for your strategic business decisions. For more than 35 years, ISS has been the premier semiconductor conference for senior executives to acquire the latest trend data, technology highlights and industry perspective to support business decisions, customer strategies and the pursuit of greater profitability.

IC Insights is in the process of completing its forecast and analysis of the IC industry and will present its new findings in The McClean Report 2019, which will be published later this month.  Among the semiconductor industry data included in the new 400+ page report is an in-depth analysis of the IC foundry market and its suppliers.

With the recent rise of the fabless IC companies in China, the demand for foundry services has also risen in that country.  In total, pure-play foundry sales in China jumped by 30% in 2017 to $7.6 billion, triple the 9% increase for the total pure-play foundry market that year.  Moreover, in 2018, pure-play foundry sales to China surged by an amazing 41%, over 8x the 5% increase for the total pure-play foundry market last year.

As a result of a 41% increase in the China pure-play foundry market last year, China’s total share of the 2018 pure-play foundry market jumped by five percentage points to 19% as compared to 2017, exceeding the share held by the rest of the Asia-Pacific region (Figure 1).  Overall, China was responsible for essentially all of the total pure-play foundry market increase in 2018!

All of the major pure-play foundries registered double-digit sales increases to China last year, but the biggest increase by far came from pure-play foundry giant TSMC.  Following a 44% jump in 2017, TSMC’s sales into China surged by another 61% in 2018 to $6.0 billion.  The China market was responsible for essentially all of TSMC’s sales increase last year with China’s share of the company’s sales doubling from 9% in 2016 to 18% in 2018.

A great deal of TSMC’s sales surge into China in 2018 was driven by increased demand for custom devices going into the cryptocurrency market.  While TSMC enjoyed a great ramp up in sales for its cryptocurrency business through 2Q18, the company encountered a slowdown for this business in the second half of last year, which was apparent in its slower sales to China in 3Q18 and 4Q18.  The 2018 plunge in the price of Bitcoins (from over $15K per Bitcoin in January of 2018 to less than $4K in December of 2018) and other cryptocurrencies lowered the demand for these ICs.

Figure 1

With China’s share of the pure-play foundry market quickly growing (going from representing 11% of the total pure-play foundry market in 2015 to a 19% share in 2018) it comes as no surprise that many of the pure-play foundries are planning to locate or expand IC production in Mainland China.  Notably, each of the top seven pure-play foundries has plans for increasing China-based wafer fabrication production, including the five non-Chinese foundries of TSMC, GlobalFoundries, UMC, Powerchip, and TowerJazz

By Cherry Sun

“We are living in a digital world where semiconductors are taken for granted, AI is bringing semiconductors back into the deserved spotlight, and now we are witnessing the dawn of the Cognitive Era enabled by semiconductors,” SEMI president and CEO Ajit Manocha said to an audience of more than 500 during his presentation – Rebirth of the Semiconductor Industry – at the First Global IC Entrepreneur Conference.

Speaking at the Shanghai event in mid-December, Manocha recalled how, when he first entered the semiconductor industry in the 1980s, semiconductors revenue topped out at about $10 billion. Now, with sales having swelled to a staggering $450 billion, the industry is on a much faster growth track. Revenue could reach $500 billion by the end of 2020 and trillions of dollars by 2030.

Over the past two decades, chips have given rise to social media and e-commerce powerhouses such as Google, Facebook, and Alibaba. All rely on heavily on chips, the engines of data centers across all industries. Wave after wave of technology innovation have been powered by semiconductors – from mainframe computers in the 1970s, personal computers in the 1980s, the Internet in the 1990s, and mobile and social networking in the early 20th century, to the current shining stars of technology such as IoT, big data, new memory, virtual reality, autonomous driving and artificial intelligence, Manocha said. New applications across areas such as smart manufacturing and digital healthcare are stoking the latest round of semiconductor growth.

The rise of AI, like all the technologies before it, has renewed the semiconductor industry once again with its promise to drive growth of all industries worldwide, Manocha said. Five years ago, IoT was but a gleam in a technologist’s eye, more hype than reality with doubt about its viability running deep. Today, with about 60 percent of people in the world connected to the Internet, the enormous promise and potential of IoT is flowering.

Industry growth will explode as the melding of AI and IoT birth countless applications and innovations in SMART transportation (0 emissions; 0 fatalities; 0 congestion), smart sensors (agriculture, infrastructure, healthcare) and SMART “Everything” (people, devices, homes, cities, industries, and the list goes on). Indeed, AI is now widely recognized as a chief growth driver of the semiconductor industry well into the future, with semiconductor technology at the core of AI innovation, he said.

Semiconductors are thrusting the fifth industrial revolution into the fast lane. China’s much-anticipated rise as an industry powerhouse over the next few years will only accelerate industry growth, turning current disruptions into future opportunities as SEMI China continues to cultivate connection, collaboration and innovation in China’s fast-growing semiconductor sector.

Cherry Sun is a marketing manager at SEMI China.