October 2010

October has been a big month for China announcements. Texas Instruments announced the purchase of Cension Semiconductor, a 200mm fab previously operated by SMIC in Chengdu, China. This week Intel announced the grand opening of their first 300mm fab in Dalian.

China is becoming a more powerful force in the world economic and technology arena. In August 2010 it was reported that China’s GDP reached $1.337 trillion surpassing Japan and making China the second largest economy. With China’s economic growth rates in the 10% range and the U.S. growing at only 2-3%, it’s been predicted that China will overtake the U.S. in 5-10 years. China already surpassed the U.S. in the automotive market.

China also made the news last week regarding their control over rare earths, the 17 elements in the periodic table that are vital ingredients to a number of electronic gadgets and components. China is the largest producer of rare earths. The Economist noted that China is trying to control the rare earths market in a similar manner as OPEC controls oil. China is cutting exports of rare earths 5-10% a year. In July, the export quota was cut by 40% and prices soared. The Economist further speculates that China is curbing exports to persuade foreign firms to move manufacturing to China. That’s probably not the only reason but it may be one of the reasons behind Intel and TI’s recent moves into China.

Over the past two years the semiconductor industry experienced one of the most dramatic business cycle swings in the history of the industry. Through the ups and downs, semiconductor technology continued to advance on a two-year cycle. But it’s more than just the electronics. We are changing the way we work, socialize and entertain.

Essentially, we are changing the way we live. In order to provide the functionality that consumers want, new electronic devices are smart, connected, and always on. We are demanding more bandwidth and more storage. This ‘connected’ phenomenon is driving a new round of upgrades to the Internet infrastructure. This includes server farms and fiber-optic highways. In addition to the tsunami of consumer electronics, businesses are finding ways to use these products to make business operations more efficient.

Semico Research sees the semiconductor industry entering a new frontier. But it’s not just the semiconductor industry that will benefit. The entire supply chain can reap the benefits of the last several years of research and development. The Semico SUMMIT is the industry's premier executive level conference that will focus on this changing electronics landscape and how to take advantage of the change. A company’s ability to understand and prepare for the upcoming ‘new frontier’ may result in its viability and profitability as the frontier reveals itself. This is an event no executive should miss.

MEMS (Micro Electro Mechanical Systems) are perceived as being simple mechanical devices manufactured on 6-inch wafers or smaller, utilizing mature semiconductor fab technology.  Recently MEMS devices have experienced high growth rates as they revolutionized the smart phone screen orientation and game controllers for motion detection. Now the foundries and EDA/IP vendors are salivating over the revenue growth potential for MEMS development.

Just like CMOS image sensors filled the mature, unused fab capacity in 2003, MEMS is now expected to be the fab filler for this decade.  CMOS image sensors experienced quick adoption as it penetrated the consumer digital camera market but it grew from millions of units to billions when almost every cell phone integrated a camera into its handset.  That is one example of a success story.  But what about RFID?  RFID was suppose to be on every retail product tracking sales and inventory at Walmart and on every passport and drivers license for personal identification and security.  Those units have not materialized.  

MEMS has the potential to be much more than just a fab-filler.  For years MEMS have been used in hard disc drives and airbags for automotive markets.  They are now making inroads into other safety and engine control sensors in automotive applications.  MEMS are now gaining more recognition as they make their way into consumer devices even beyond smart phones and game controllers.