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October 2010

Looking to the Future

It seems everywhere we turn, there is hype about how low 2011 will go. Our own opinion is that 2011 will be an above average growth year, rising 9.5% over 2010. Considering an average growth year for the semiconductor industry is 8% growth, 9.5% is pretty good.

Our forecast is based on our IPI (Inflection Point Indicator) which has been an accurate indicator of the industry’s ups and downs for 15 years.

For example:
The IPI declined throughout 2000 indicating the slowdown for 2001.

Beginning in the second half of 2002, the IPI increased significantly, pointing to strong growth starting in the second half of 2003.

In 2004, when the market was booming ,the IPI started to turn down, indicating a correction year in 2005.

In 2006, we saw the IPI, again, on an upward trend, which matched 2007 as a peak year.

For most of 2007 the IPI declined, pointing to a decline in the semiconductor market in 2008.

The 2008 IPI hit bottom in February 2008, which pointed to the beginning of the V-shaped recovery starting in February 2009.

So how is the IPI predicting 2011 and beyond?  Take a look at the blue line in the graph above, which predicts the pink and green line about four quarters in advance.

Extrapolating the IPI out to 2014, and we start to see that:

Microprocessor Trends Beyond 2010: Follow the Money

Phoenix, Arizona October 26, 2010 - The MPU market is projected to grow 13.6% in 2011, reaching $45.7 billion in revenue. Semico expects to see continued sustained growth into 2011. The MPU market affects a variety of different end-use segments, and to understand this above-average growth, Semico has examined the technological trends driving the market today.

The Growing Influence of China

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.

A Second Look at the ASIC / SoC / SIP Markets

Phoenix, Arizona October 19, 2010 - Semico Research continues to receive significant interest and demand for its most recent round of ASIC/SoC/SIP market research reports. Due to the high volume of inquiries, we are revisiting the headlines from these report releases. For more detailed report descriptions and Tables of Contents, click on the highlighted report titles below.

For additional information or to purchase this report, please contact us at jfeldhan@semico.com or 602-997-0337.

SoC Market to Recover Strongly in 2010

Semico's 2009 Fab Database: Closures, Consolidations, and Conservative Capex

There have been some major changes in the semiconductor industry over the past year, due to the global economic crisis. These changes have impacted the status of semiconductor fabs worldwide: capacity, capex, wafer size, closures, launches, production ramps, technology node migration, and employee count. Semico’s 2009 Fab Database study will provide key information on changes that have occurred in 2009, and what plans are in place for upcoming fab construction and closures in 2010-2012. The study includes one table and twelve figures in 17 pages.

Table of Contents: 

Low Power Color Displays Coming Soon

Right now we have two different segments for e-readers, Electronic Paper Displays, and Liquid Crystal Displays. Mainly, we can consider the two powerhouses to be the iPad with LCD and the Kindle with EPD. Personally, I’m anxiously waiting for the combo platter: the low-power color display.

The low-power screen segment has the potential to reach 1.5 billion units in 2014, up from 1 billion units in 2009.

E Ink

The main electronic paper manufacturer for E-readers is E Ink, a manufacturer of electronic paper. Since Semico released its e-reader report, there have been some updates to the market. In July, E Ink announced Pearl, the next generation in E Ink technology. While not the color E Ink screen we all want, it did provide an update with 50% greater contrast ratio than their previous screen. This lead the way for Kindle to announce their own update in August.

E ink works differently than LCDs because it relies on electrical charges to rearrange microcapsules. These microcapsules move depending on where the positive charge is, either rearranging to be on the top of the screen or bottom of the screen. This arrangement is also referred to as “shades of grey.”

E Ink

The Semico SUMMIT 2011: The New Frontier

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.

Wafer Demand: Inventories Replenishing

Phoenix, Arizona October 12, 2010 - Moore's Law continues to provide the semiconductor industry with efficiency gains as semiconductor revenues grow by 30% in 2010, units at 28%, and wafer demand up by only 21.3%.

MEMS: Small Moves Result in Big Potential

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. 

IP Subsystems: The Next IP Market Paradigm

As the semiconductor industry enters the second decade of the 21st Century, substantial changes to the System-on-a-Chip (SoC) design methodology are taking shape. These changes reflect issues the industry has been discussing for the last 5-6 years that are adversely affecting the SoC design effort to an ever-greater degree:
• Rising design costs
• Increasing design complexity
• Shrinking market windows
• Lengthening design cycle times
• Rapidly changing market requirements
• Escalating integration costs for Semiconductor

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