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Global DRAM revenue reached a new historical high in the second quarter of 2017, reports DRAMeXchange, a division of TrendForce. Compared with the first quarter, the undersupply situation was not as severe, and OEM clients in the downstream were able to gradually extend their inventories. Nevertheless, the global ASPs of PC and server DRAM products rose by more than 10% sequentially in the second quarter, while the global ASP of mobile DRAM products showed a less than 5% gain. The smaller price increase for mobile DRAM was due to Chinese smartphone brands lowering than annual shipment targets.

“The DRAM market benefitted from the upswing in ASPs and continuing progress in suppliers’ technology migrations,” said Avril Wu, research manager of DRAMeXchange. “At the same time, suppliers do not appear to have plans to expand their production capacities in a significant scale between now and the end of the year.” The global DRAM revenue has thus kept growing, registering a 16.9% sequential increase for this second quarter.

In the third quarter, the releases of new flagship devices from first-tier smartphone brands, together with the traditional peak sales season, will trigger another wave of mobile DRAM demand. DRAM prices in general will stay on an upward trend for the remainder of 2017.

DRAMQ22017

The second-quarter revenue ranking shows Samsung firmly in its first place position. Samsung’s revenue for the second quarter came to another historical high, growing by 20.7% sequentially to US$7.6 billion. Second-place SK Hynix also posted an impressive sequential increase of 11.2%, totaling US$4.5 billion. Samsung’s and SK Hynix’s global market shares for the second quarter were 46.2% and 27.3%, respectively. Together, the two South Korean suppliers accounted for 73.5% of the world’s DRAM market. Third-place Micron’s second-quarter revenue totaled US$3.6 billion, an increase of 20.2% versus the first quarter and representing 21.6% of the global market.

In terms of operating margins, Samsung had the highest in the industry for the second quarter at 59%. Samsung benefitted from rising DRAM prices and its lead in manufacturing technology. Likewise, SK Hynix raised its operating margin from 47% in the first quarter to 54% in the second. Micron too increased its operating margin from 32.5% to 44.3% between the quarters. Since DRAM prices will keep rising and the production capacity expansion will be limited in the second half of 2017, suppliers can expect further increases in their operating margins.

In the aspect of technology migration, Samsung remains focused on developing its 18nm process. With the increase and stabilization of the yield rate, Samsung expects the 18nm to represent nearly half of its total DRAM output by the end of 2017. As for SK Hynix, the supplier is raising the yield rate and output share of its 21nm process. However, SK Hynix has also arranged for the mass production its 18nm process at the end of 2017. By the first half of 2018, SK Hynix wants to significant expand the DRAM production based on its 18nm technology.

Micron’s Taiwanese subsidiaries Micron Memory Taiwan and Micron Technology Taiwan (formerly known as Inotera) are respectively on the 17nm and the 20nm technology. Micron Memory Taiwan has steadily increased the yield rate for its 17nm process and expects at least 80% of its total DRAM output by the end of this year will be based on this technology. Micron Technology Taiwan, on the other hand, has no plan to transition to a more cutting edge technology this year. However, this subsidiary has set the target of attaining at least 50% output share for the 17nm process in 2018.

Regarding the Taiwanese DRAM suppliers, Nanya’s second-quarter revenue grew by 5.9% sequentially on the back of rising prices for specialty DRAM products. Nanya has formally begun mass producing DRAM on its 20nm process and is on track to achieve a total DRAM capacity of 30,000 wafer starts per month by the end of 2017.

Powerchip’s DRAM revenue for the second quarter fell by 2.5% compared with the prior quarter because of wafer loss caused by the moving of its 25nm processing equipment.

Winbond’s second-quarter DRAM revenue rose by 3.7% sequentially as the supplier also profited from rising prices for specialty DRAM products. Winbond has no immediate plan to increase DRAM wafer starts as it is focused on meeting the strong NOR Flash demand. However, the supplier has scheduled the mass production of DRAM on its 38nm technology for the second half of 2017. The increase in output due to the ramp-up of the 38nm process will make a positive contribution to Winbond’s future DRAM revenue results.

The global semiconductor advanced packaging market is expected to grow at a CAGR of 8.45% during the period 2017-2021, according to the “Global Semiconductor Advanced Packaging Market 2017-2021” report by Research and Markets.

The latest trend gaining momentum in the market is changes in wafer size. The semiconductor industry has seen a drastic transition in wafer size over the last five decades (1910-2016). The industry is focusing on producing larger diameter wafers, which is expected to cut down the manufacturing cost by 20%-25%.

According to the report, one of the other major drivers for this market is complex semiconductor IC designs. The number of features and functionalities offered by consumer electronic devices is on the rise as electronic device manufacturers look to differentiate their offerings from those of competitors.

Further, the report states that one of the major factors hindering the growth of this market is rapid technological changes. The rapid technological advancements in wafer processing have always been a major challenge faced by vendors in the semiconductor advanced packaging market. The semiconductor industry is continuously seeing transitions, such as the miniaturization of nodes and the increase in wafer sizes with respect to ultra-large-scale integration (ULSI) fabrication technology.

Vacuum pumps, pressure gauges and vacuum valves combined make up the biggest expense on the bill of materials for semiconductor OEMs. In 2016, just over $1.9 billion of vacuum subsystems were consumed by the semiconductor industry and more than half were supplied by European vendors, according to VLI Research.

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Vacuum subsystems sales account for one third of expenditures on all critical subsystems used on semiconductor manufacturing equipment (excluding optical subsystems). The increase in vacuum process intensity of the semiconductor industry means that by 2022, the market for vacuum subsystems could be up to 62 percent higher than today’s value of $1.9 billion, reaching a market size of $3.1 billion.

The growing number of vacuum process steps has been driven by multiple patterning and the successful introduction of 3D NAND. Both require additional deposition and etch steps and, in the case of 3D NAND, longer and more difficult etch processes. On the negative side, this has increased costs for chipmakers and is driving the adoption of Extreme Ultraviolet lithography (EUV) which reduces the reliance on multiple patterning. However, even with EUV (which is a vacuum process), the number of deposition and etch steps are still expected to increase, albeit at a lower rate. This explains why the forecast is for sales of vacuum subsystems to outgrow the market over the next five years.

Vacuum-Subsystem-image2

The top five vacuum subsystem suppliers account for 68 percent of the market and is dominated by four European based vendors. In 2016, over 58 percent of all vacuum subsystems were sold by European companies and is a reflection of the European origins of vacuum technology. The Japanese vendors as a group make up 21 percent of the total while North American vendors supply 16 percent.

There is a push for more localisation of vacuum subsystem supply especially in Korea and China but to date this has not resulted in a serious local supplier emerging to challenge the incumbents. The strong hold that Europeans and Japanese have on the technology mean that we are unlikely to see any meaningful regional shifts in supply in the foreseeable future.

The expectation is that vacuum subsystems suppliers will continue to make a valuable contribution to semiconductor manufacturing over the long-term as the trend for more vacuum process steps continues.

By Lara Chamness, SEMI

This is an exciting year to be in the semiconductor industry as Ajit Manocha, president and CEO of SEMI highlighted at SEMICON West; semiconductor-related companies are trading at all-time highs, and record device shipments and revenues as well as equipment revenues are expected (see Figure 1). This growth is primarily fueled by demand drivers such as Automotive Electronics, Medical Electronics, Mobile Phones, and Industrial Electronics. With this recent growth spurt and the proliferation of end-market applications that consume ever increasing numbers of semiconductors, it is tempting to conclude that the industry has seen the end of cycles.

VacuumSubsystem2

At the annual SEMI/Gartner, Bulls & Bears Industry Outlook symposium, Stifel’s Patrick Ho, asserted that “Gone are the days of your grandfather’s cycles.” Robert Marie of Semiconductor Advisors, maintained that “Cycle shape has changed due to demand drivers, consolidation, maturation and other factors.”

However, Gartner’s Bob Johnson was quick to assert, “Whenever people say that cycles are over and that the industry is going to grow forever ─ the industry is at a peak.” He noted that Gartner expects semiconductor revenues to surpass $400 billion this year, increase two percent next year, but  decline in 2019. He indicated that Memory is driving this year’s market expansion but will drag down market growth next year as pricing gains achieved will be lost beginning in the fourth quarter of this year. The softness in 2018 is expected to have a detrimental impact on the industry’s spending plans. Gartner predicts that capital spending will shrink to just under one percent next year and contract 7 percent in 2019.

In addition to softer memory pricing in the near term, Gartner does not anticipate that China will invest significant amounts until 2020/2021. SEMI on the other hand is currently modeling an increase of 9 percent in fab equipment expenditures in 2018, which is largely driven by China. China is expected to have an even greater impact on global fab capital expenditures, claiming the top position in 2019, according to SEMI.

Looking at demand drivers, more specifically the “Internet of Things”, it is clear that the explosion of connected “things” is fundamentally reshaping our industry. The fragmented nature of these markets require niche applications and device architectures with the majority of these devices being commoditized MEMS and other solid-state sensors. Growing market revenue does not necessarily translate into industry profitability as the declining average selling price in Figure 2 shows.

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So how can the industry benefit from all of this connectivity? Dr. Sam Wang from Gartner discussed how the Internet of Things has made AI practical, and how artificial intelligence brings out the value of IoT. He noted that AI:

  • Drives the demand for advanced wafer process technologies
  • Encourages the adoption of HMC, HBM, eDRAM, ReRAM, PCM, STT-MRAM, memristors processing in memory
  • Incorporates ADC within sensors and computing in sensors
  • Increases the use of 2.5D, 3D, TSV and SiP technologies
  • Enables chip design flow optimization in EDA
  • Fuels the need of new ATE testers for testing complex AI chips
  • Prompts more start-ups and M&A opportunities

The overwhelming majority of semiconductor devices used in IoT are commodities, creating a renaissance for smaller wafer diameter fabs (200mm and smaller; see related 200mm article). The value of the IoT will come from the ecosystem that supports it, such as data centers and networks that enable connectivity. There are also opportunities for the adoption of new processor technologies, as Gartner’s Werner Goertz pointed out. He stated that the current processors used in IoT processing were designed for very different use cases, and that conditions are now ripe for a disruptive processor supply chain to optimize edge-based AI.

2017 is indeed going to be a great year for the semiconductor industry: device average selling prices have improved dramatically, device manufacturers are investing in new capacity, while stock prices of suppliers throughout the supply chain are trading at elevated levels. 2018 is anticipated by many industry pundits to be another growth year, albeit at more conservative growth levels. Although the Internet of Things literally offers the industry billions of applications, its full impact on the industry remains to be seen. And we’ll definitely keep a close eye on developments in China.

Microsemi Corporation, a  provider of semiconductor solutions differentiated by power, security, reliability and performance, today announced its collaboration with Mellanox Technologies, Ltd. (Nasdaq: MLNX), a supplier of high-performance end-to-end smart interconnect solutions for data center servers and storage systems, and Celestica, a provider of the delivery of end-to-end product lifecycle solutions, to develop a unique reference architecture for NVM express over Fabrics (NVMe-oF) applications as part of Microsemi’s Accelerate Ecosystem Program.

Microsemi’s Accelerate Ecosystem speeds development efforts for customers and collaborators through technology alignment, joint marketing and sales acceleration. Collaborating with Microsemi allows companies like Mellanox and Celestica to leverage Microsemi’s peer-to-peer (P2P) memory architecture, which is supported by its Switchtec PCIe switches in combination with its Flashtec NVRAM cards and NVMe controllers to enable large data streams to transfer between NVMe-oF applications without the central processing unit (CPU) in the data plane. This leads to the development of highly optimized NVMe-oF storage subsystems with better throughput, latency and quality of service (QoS). It also enables customers’ data center storage applications such as rack scale architecture, which disaggregates flash and shareable pools of NVMe memory to operate at faster rates.

“With customers designing their next-generation applications around NVMe-oF today, Microsemi has created a strong ecosystem of industry leaders to put together tested and validated solutions for their specific needs,” said Amr Elashmawi, Microsemi’s vice president of corporate and vertical marketing. “The growth potential in this market makes this the perfect time to pair Celestica’s and Mellanox’s expertise with Microsemi’s unique value-add to showcase the NVMe-oF P2P reference architecture accelerating data center and cloud applications.”

The data center market continues to see NVMe storage devices increasingly being moved outside the server to centralized locations in order to share NVMe-based storage across multiple servers and CPUs. This enables better utilization in terms of capacity, rack space and power. According to industry research and marketing firm G2M, Inc., the NVMe market will be more than $57 billion by 2020 and nearly 40 percent of all-flash arrays will be NVMe-based by 2020. The firm also expects NVMe-oF adapter shipments will climb to 740,000 units by 2020.

“Working together with Microsemi through its Accelerate Ecosystem Program allows our team to leverage its performance storage tier, including Switchtec PSX switches, to develop innovative hardware platforms that can be customized for our customers,” said Jason Phillips, senior vice president, Enterprise Solutions at Celestica. “As a result of this important relationship, Celestica successfully launched the first commercially available NVMe dual-port All Flash Array platform, and is preparing to launch our first NVMe-oF solution, powered by Microsemi technology.”

While other companies have seen the benefits of Microsemi’s reference architecture, Microsemi also benefits from these cooperative efforts. With remote direct memory access (RDMA) a key technology in the NVMe-oF ecosystem, working closely with RDMA network interface card (NIC) providers like Mellanox enhances Microsemi’s ability to further serve the needs of its data center, cloud, hyperscale and enterprise original equipment manufacturer (OEM) customers. Such collaborations will enable Microsemi to gain market share for NVMe-oF applications, positioning Microsemi as a key player in the storage revolution.

“Mellanox is excited to collaborate with Microsemi as part of the Accelerate Ecosystem Program, which is delivering solutions with Microsemi’s Switchtec and Flashtec products for NVMe-oF applications,” said Rob Davis, vice president of storage technology at Mellanox Technologies. “Mellanox’s market leading ConnectX Network Adapters, including ConnectX-5 and our new BlueField SOC, combined with Microsemi’s P2P CPU memory offload capabilities, offer a comprehensive reference platform for high performance data plane applications and JBOF implementations.”

Covalent Metrology announced today that it has consolidated operations in a larger facility located in Santa Clara, CA. The new facility is positioned near Highway 101 and just off the San Tomas Expressway, reducing travel time for customers on the Peninsula or in the East Bay wishing to be present during measurement sessions. With more than 3,000 ft2 of available space, the facility allows co-location of the Covalent team and existing tools and provides ample room for further growth.

Consolidating operations will help the company better serve its customers, facilitating smoother communication and providing easier access to the tools. This is of particular importance because Covalent encourages Analytical Service customers to attend measurement sessions when possible. Being present during measurements offers customers the opportunity to provide dynamic feedback, tending to lead to more relevant results and better understanding of those results.

The new location includes a room dedicated to AFM operations, as well as a large open area that will welcome new tools as the company expands and more metrology techniques are added to the portfolio. Covalent Metrology was founded by Craig Hunter, previously founding general manager of both the thin film solar business at Applied Materials and the Clean Energy Group at Intermolecular. Mr. Hunter commented, “It is an exciting time at Covalent as we move into a new and larger facility, having the team all together and focused on growing our offerings and improving our services. There is a real “start-up” energy about the place as we strive to make a dent on the materials innovation ecosystem. We are still small but our ambition—to improve R&D efficiency by providing customers better data, faster and cheaper—is large.”

Toshiba Corporation (TOKYO:6502) today announced that Toshiba Memory Corporation (TMC), a wholly-owned subsidiary that manufactures Flash memory, will unilaterally invest in manufacturing equipment for the Fab 6 clean room at Yokkaichi Operations.

As Toshiba announced in its June 28, 2017 release, “Toshiba Memory Corporation to Invest in Manufacturing Facilities for Fab 6 at Yokkaichi Operations,” the company negotiated with SanDisk on a joint investment in the manufacturing equipment, but failed to reach agreement. Accordingly, TMC will move forward with a unilateral investment in Phase-1 of Fab 6 that will equip the clean room to handle TMC’s next-generation 96-layer BiCS FLASH memory, and allow TMC to meet demand growth in coming years.

TMC will invest approximately 195 billion yen in Fab 6 in FY2017, covering the installation of manufacturing equipment for 96-layer BiCS FLASH memory in the Phase-1 clean room, and the construction of Phase-2. TMC calculates that proceeding unilaterally with the installation of manufacturing equipment in Fab 6 will require it to increase its funding by 15 billion yen against its initial estimate. Installation is expected to begin as early as December, 2017.

Demand for TMC’s next generation BiCS memory devices is expected to increase significantly due to growing demand for enterprise SSDs in datacenters, SSDs for PCs, and memory for smartphones; TMC expects this strong market growth to continue in 2018. TMC’s investment timing will position it to capture this growth and to expand its business. TMC intends to increase the output of 3D NAND at Yokkaichi to approximately 90% of its capacity in FY2018, and will continue to make timely investments to expand operations.

This decision to move forward with a unilateral investment in Fab 6 does not impact production for the memory business, as Toshiba Memory produces the memory. Nor does it impact the various contracts related to development.

 

The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing, design, and research, today announced retired Gen. Keith Alexander, former Director of the National Security Agency (NSA) and Commander of U.S. Cyber Command, will deliver the keynote address at SIA’s 40th Anniversary Award Dinner, taking place on Tuesday, Nov. 14 in San Jose, Calif. Alexander, who currently serves as CEO and President of IronNet Cybersecurity, will offer insight on how America’s national security depends heavily on maintaining global leadership in the technologies that are crucial to the functioning of the U.S. military, including semiconductors. He will also discuss the importance of promoting next-generation technologies in order to tackle America’s future cybersecurity challenges.

“Gen. Keith Alexander knows what it takes to maintain and strengthen U.S. defense and cybersecurity, including the importance of advancing America’s global technology leadership,” said John Neuffer, president and CEO, Semiconductor Industry Association. “Semiconductors enable our military’s critical communications, navigation, weapons, and intelligence systems, as well as emergent applications like high-performance computing, data analytics, artificial intelligence, autonomous vehicles, robotics, and others that are central to our national security. A vibrant commercial sector is needed to advance these defense technologies and to ensure robust U.S. cybersecurity. Given Gen. Alexander’s wide-ranging national security knowledge and experience, we look forward to hearing his perspectives on these matters as the keynote presenter at SIA’s 40th Anniversary Award Dinner.”

Alexander is a four-star general with an impressive 40-year military career. His tenure as NSA Director (2005-2014) was longer than any other director. While serving in that role, Alexander was appointed by Congress to be the first Commander to lead the U.S. Cyber Command. He held this role from 2010-2014, establishing and defining how our nation is protected against cyber attacks. Serving as a member of the President’s Commission on Enhancing National Cybersecurity, Alexander developed key recommendations to create a defensible national cyber architecture to protect national security by promoting rapid innovation and close public-private collaboration while preserving privacy and civil liberties.

The SIA Award Dinner also will feature the presentation of the semiconductor industry’s highest honor, the Robert N. Noyce Award, to former Micron CEO Mark Durcan. The Noyce Award is named in honor of semiconductor industry pioneer Robert N. Noyce, co-founder of Fairchild Semiconductor and Intel.

IC Insights has revised its outlook and analysis of the IC industry and presented its new findings in the Mid-Year Update to The McClean Report 2017, which originally was published in January 2017.  Entering the second half of the year, it is clear the IC industry is on course for a much stronger upturn than was initially forecast in January.  IC Insights now expects the IC market to increase 16% in 2017 due to exceptional growth in the DRAM and NAND flash memory markets. The DRAM market is now forecast to grow 55% and the NAND flash market is now expected to rise 35% this year—in both cases, almost entirely due to fast-rising prices rather than unit growth.  Excluding these two markets, the overall IC market growth is forecast to show just 6% year-over-year growth (Figure 1).  The expected 16% increase would be the first double-digit gain for the IC market since it expanded by 33% in 2010—the recession-recovery year—and the fifth double-digit increase for the IC market since 2000.

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As seen in the figure, the DRAM market has had a notable impact on total IC market growth in recent years. With market surges of 32% and 34% in 2013 and 2014, respectively, the DRAM market alone boosted the worldwide IC market growth rate by three percentage points in 2013 and four percentage points in 2014.

At $64.2 billion, the DRAM market is forecast to be by far the largest single product category in the IC industry in 2017, exceeding the expected second-ranked MPU market for standard PCs and servers ($47.1 billion) by $17.1 billion this year.

Overall, IC Insights’ global economic outlook remains on course with initial projections covered in The McClean Report. Electronic system production, capital spending as a percent of sales, and IC wafer capacity added were unchanged from the original outlook.  However, other factors and conditions that contribute to the forecast were upgraded slightly in the Mid-Year Update. For example, the worldwide GDP forecast was upgraded by 0.1 point to 2.7% for 2017, marginally ahead of what is considered to be the global recession threshold of 2.5% growth.  IC Insights believes that through the forecast period, annual IC market growth rates will closely track with the performance of worldwide GDP growth.

Following a fairly strong first half of growth, China’s 2017 GDP was raised to 6.8% for 2017 from the original forecast of 6.3%.  Also, IC Insights upgraded its U.S GDP forecast to 2.1% in the Mid-Year Updatefrom 2.0% in January. While the U.S. economy is far from perfect, it is currently one of the most significant positive driving forces in the worldwide economy.  A falling unemployment rate, PMI figures of 57.0 and 55.8 in the first and second quarters of this year, and relatively low oil prices should help the U.S. economy sustain its modest growth in the second half of this year. Growth rates for IC unit shipments, IC average selling price, and semiconductor capital spending were also revised slightly higher.

Additional details and commentary regarding the updated IC forecasts for the 2017-2021 timeperiod are covered in IC Insights’ Mid-Year Update to The McClean Report 2017.

North America-based manufacturers of semiconductor equipment posted $2.29 billion in billings worldwide in June 2017 (three-month average basis), according to the June Equipment Market Data Subscription (EMDS) Billings Report published today by SEMI.

SEMI reports that the three-month average of worldwide billings of North American equipment manufacturers in June 2017 was $2.29 billion. The billings figure is 0.8 percent higher than the final May 2017 level of $2.27 billion, and is 33.4 percent higher than the June 2016 billings level of $1.72 billion.

“Through the first half of the year, 2017 equipment billings are 50 percent above the same period last year,” said Dan Tracy, senior director, Industry Research & Statistics, SEMI.  “While month-to-month growth is slowing, 2017 will be a remarkable growth year for the semiconductor capital equipment industry.”

The SEMI Billings report uses three-month moving averages of worldwide billings for North American-based semiconductor equipment manufacturers. Billings figures are in millions of U.S. dollars.
Billings
(3-mo. avg)
Year-Over-Year
January 2017
$1,859.4
52.3%
February 2017
$1,974.0
63.9%
March 2017
$2,079.7
73.7%
April 2017
$2,136.4
46.3%
May 2017 (final)
$2,270.5
41.8%
June 2017 (prelim)
$2,288.9
33.4%

Source: SEMI (www.semi.org), July 2017
SEMI publishes a monthly North American Billings report and issues the Worldwide Semiconductor Equipment Market Statistics (WWSEMS) report in collaboration with the Semiconductor Equipment Association of Japan (SEAJ). The WWSEMS report currently reports billings by 24 equipment segments and by seven end market regions. SEMI also has a long history of tracking semiconductor industry fab investments in detail on a company-by-company and fab-by-fab basis in its World Fab Forecast and SEMI FabView databases. These powerful tools provide access to spending forecasts, capacity ramp, technology transitions, and other information for over 1,000 fabs worldwide. For an overview of available SEMI market data, please visit www.semi.org/en/MarketInfo.