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Semico’s IPI Index Points to 9% Revenue Growth in 2015

First quarter 2015 is now history, and companies will soon be reporting their Q1 earnings.  Here at Semico we’ve checked the IPI Index against our forecast and year-to-date actuals to see if the industry outlook is on track for 2015.  Here’s the critical review.

First of all, Semico’s forecast for total semiconductor sales in 2015 is $378 billion, up nearly 9% over 2014.  Units will increase to 849 billion representing a 10.5% growth over 2014.  However, there is an upside to this forecast.  DRAM pricing is expected to remain strong as demand remains healthy and more complex fabrication processes reduce wafer output per fab line, limiting the potential for an over-capacity situation.  In addition, the largest memory supplier, Samsung, is slowing its DRAM ramp, i.e. pushing out capex for DRAM capacity.  The memory market has played a major role in the growth of semiconductor revenues over the past two years. 

On a quarterly basis, Q1 2015 is expected to result in a sequential decline of 2.1% compared to Q4 2014 and a 5% year-over-year increase compared to Q1 2014. 

 

Quarterly Semiconductor Revenues and Units

(In Millions of US Dollars and Units)

Source:  SIA/WSTS and Semico Research Corp.

Full Steam Ahead For China Inc.

Were you in Shanghai last week? If not, you missed the biggest Semicon event in the world. Semicon China broke records this year. With more than 1,000 companies participating, and 570,000 square meters of exhibition space, Semicon China attracted more than 50,000 visitors, making it the largest Semicon event in the world. All the sessions we attended were standing room only.

Key areas of focus this week included IoT, the JCET/STATS ChipPac merger and the China National IC Fund. AMD CEO Lisa Su set the stage with an opening keynote highlighting the exciting possibilities still ahead for the industry. She pointed out the opportunities and challenges facing electronics as we move toward photorealistic, real-time virtual reality. New applications such as mobile VR require the processing power to transmit a million times faster than the speed that we use to transmit today. These applications will require immersive computing. The need for performance, bandwidth and low power is not subsiding.

The cocktail parties and networking breaks were buzzing over the merger of JCET/STATS ChipPac and the new government investment program, which is focusing on developing China’s IC industry. JCET’s chairman and CEO, Xinchao Wang, views the merger with STATS ChipPac as a strategic move to broaden their worldwide market, as well as improve the opportunity to expand R&D to meet advanced and specialized market needs required by the new emerging markets.

NXP and Freescale Merging

The semiconductor industry continues to consolidate. Some mergers are stronger than others.  On March 1, 2015 it was announced that NXP and Freescale plan to combine forces.  Both companies have a significant presence in automotive and microcontrollers. Following this merger the new company would be the leader in automotive semiconductors and second in MCUs.  But does bigger mean better?

According to the NXP press release “Freescale shareholders will receive $6.25 in cash and 0.3521 of an NXP ordinary share for each Freescale common share held at the close of the transaction. The purchase price implies a total equity value for Freescale of approximately $11.8 billion.” If one were to include Freescale’s net debt, the total enterprise value is $16.7 billion. The transaction is expected to be completed by 2H 2015.

Both companies have comparable revenues. NXP’s gross revenues in 2014 were $5.6 billion while Freescale had $4.6 billion. The combined revenues are $10.2 billion.

Graphene: Wonder Material?

The fact that new materials continue to be discovered and introduced into innovative electronic devices is a major feat. Semico is analyzing the challenges of new product discovery, development and commercialization. Graphene is just one of the products under investigation. This write-up is taken from a full essay in this month’s Semico IPI report.

Since 2004, when two scientists at Manchester University, Andre Geim and Konstantin Novoselov, isolated a single sheet of graphene and then performed electrical measurements and characterizations on the material, graphene has become the superstar of the material world. Today, I Googled graphene, and got 11,500,000 results, including definitions, companies, recent research findings, images and in-depth articles. And the patents are piling up. Samsung was reported as one of the leaders in this area with more than 200 patents.

Freescale Acquires Zenverge, Addresses the Video Internet of Things

On December 2, 2014 Freescale announced it had acquired Zenverge, a fabless chip vendor of advanced HD content processing.

Zenverge has transcoding technology that enables one media stream to be converted into multiple streams with different formats. This is optimized for specific internet connected devices or platforms.

Freescale has several technologies for IoT covering a broad range of applications in consumer, automotive, industrial and wearables. What has not been addressed is how the visual experience will play in IoT.

Zenverge’s technology offers a very efficient encoding and decoding scheme which offers fast response, reduced amount of memory required and power savings.  Additionally, Zenverge has proprietary security for sharing HD video content and other rich digital content.  The company has proprietary encryption/decryption technology and watermarking of data. Thus, it can validate the user, validate the data in another location and maintain this validation throughout the delivery system.

Are We Going to Kiss our Cables Goodbye?

Keyssa recently announced a new wireless technology:  Kiss Connectivity.  Kiss is a point-to-point technology (as in one centimeter apart) that enables devices to transfer or stream data at 6Gb/sec, which is faster than USB 3.0 5Gb/sec speed.  Keyssa promises the transfer of entire movies in seconds.  Picture NFC on some serious steroids and you’ve got it.  The table below shows where Kiss sits on the speed spectrum compared to some other popular connectivity technologies.

Connectivity comparison.png

Some big names in the electronics industries are behind this company.  The Chairman of the Board of Keyssa is Nest’s CEO Tony Fadell.  Keyssa is backed by Intel and Samsung, among other companies. 

If Kiss takes off, it will squash TransferJet’s chances of making much of a splash in the market; it has been struggling to make headway already.  Depending on how much it costs, and the security level it brings, it may make a dent in NFC’s market as well, but NFC is really suited for enabling things like smart cards, tickets, and hotel keys where small bits of data is being transferred, so the overlap there is not as great.  Pricing has not been announced yet for Kiss.

Sensor Fusion and New Sensor Interface Developments Open Up Innovation

Last week at the MEMS Executive Congress in Scottsdale, Arizona (Nov. 5-7, 2014) two separate announcements were made that will have long term impact on sensors. The MEMS Industry Group announced the first open source algorithm community for sensor fusion and the MIPI Alliance introduced a new sensor interface specification.

MIPI I3C

The I2C, also known as I Squared C, standard has been used extensively for sensor interface.  Many sensor hub controllers, mostly microcontrollers, use I2C for connecting to sensors.  But I2C has its limitations in terms of power, speed and scalability. SPI is another interface standard that is used for sensors, but this requires more pins. 

MIPI is addressing the interface fragmentation and scalability issues with a new sensor interface specification, MIPI I3C. As that name implies it is backward compatible with I2C. But the new standard provides data throughput capabilities comparable to SPI. According to MIPI “the name MIPI SenseWire℠ will be used to describe the application of I3C℠ in mobile devices and the use of the I3C interface for mobile devices connecting to a set of sensors, directly or indirectly.”

This new standard has been developed because of the steadily growing proliferation of sensors in smartphones. A new standard was needed that could be scalable. MIPI has developed I3C with the participation of sensor vendors and other companies in the mobile ecosystem.

Semiconductors are Key to Better 3D Printing

The 3D printing world is an exciting place to be right now.  For do-it-yourselfers with an artistic or engineering bent, 3D printing delivers a whole new toolbox, enabling designs that were not possible before with exciting new materials.  These DIYers will often build their own 3D printers from scratch.  The RepRap movement was formed with the goal of creating a self-replicating manufacturing machine. 

The first self-replicating 3D printer was built in 2008 by mechanical engineers at the University of Bath. Since then, the hobbyist 3D printer movement has blossomed from a grad school project to thriving hobbyist community. A 3D printer can be built from scratch using almost any building material (plywood, laser cut acrylic, machined aluminum, LEGO bricks, etc.), however all printers need at least one type of commercially manufactured hardware: electronics. 

Example of a RepRap Printer

Source: www.reprap.org

Printing Your Own Semiconductors

Much of the look and feel of today's PCs, tablets and smartphones was developed at PARC (Xerox's Palo Alto Research Center).  Is PARC now on the track of an innovation that could revolutionize semiconductor manufacturing?

With financing from DARPA (Defense Advanced Research Projects), PARC has developed a method of programmable electrostatic assembly, inspired by xerography.  Tiny chiplets are produced and mixed into a solution-based “ink.”  The chiplets, which have an electrical charge pattern on them, are subjected to dynamic electric fields which are used to orient and position them with micron-level accuracy.  Once assembled, the chips are put onto a final substrate with interconnects.  The technology used is similar to laser printer technology, which is essentially the assembly of large numbers of micron-sized toner particles, a Xerox development from the 1970s.    The resulting circuits can be microprocessors, memory or any other desired semiconductor chip.  Although production quantities will not be feasible for several years, could this be leading to desktop printing of almost any semiconductor?

FinFET Ramp: Changing Market Dynamics?

Rolling out a new semiconductor technology always has its share of challenges, but it seems like the 14nm finFET process node is starting off with more than its share of delays and speculation.

This week Intel revealed some of the details for its new microarchitecture, Broadwell, and their first product, the Intel Core M processor, to be manufactured using their second-generation finFET, 14nm technology.

Plagued by rumors of yield issues and a slow computing market in 2013, Intel delayed the release of their newest 14nm product line by almost one year.

Back on July 16, during the TSMC Q2 2014 financial conference call, the company reported that their 16nm finFET process would not begin ramping until 2H 2015. That is a delay of approximately six months from the original Q4 2014 ramp target.

There have been some technology issues, but Semico believes these delays are also market-driven. In the past, new products could be released for the early adopters willing to pay a premium just to get in on the higher performance. Huge volumes were not required from day one. Today, the ramp to high volume occurs much faster and the products require high efficiency and low cost to support huge consumer driven mobile markets.

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