Joanne Itow is Semico's Managing Director.  See her bio here.

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Joanne Itow's blog

SemiconWest 2010

The weather in San Francisco was beautiful and SemiconWest was a great show this year. In addition to the many new product and technology announcements, most exhibiters are well into a healthy recovery and optimistic about the next 12-18 months.
Here are just a few of our key takeaways.

Decisions, Decisions, Decisions…

Fifteen years ago fabless companies flourished because production became somewhat routine and foundries could provide more than adequate manufacturing capacity. Many IDMs also realized they no longer needed to invest in internally developed, proprietary technology. Marketing and product development was the way to gain market share. After reviewing the technology announcements and presentations from DAC and the VLSI Symposium over the past two weeks it hit me. Manufacturing is once again becoming a differentiator.

The ITRS (International Technology Roadmap for Semiconductors) has outlined a transition path for us that was adopted by a majority of manufacturers. Most advanced logic products use copper, and now high-k, metal gate. A majority of companies with advanced manufacturing capabilities have moved to immersion lithography. Many processes and materials had a way of becoming accepted as standard.

Moving into the next generation process technology, semiconductor manufacturers, both fabless and IDM, have to make a number of significant manufacturing decisions which could impact their product’s market applications and the ability to deliver timely, future products. The semiconductor manufacturing decision involves more than just a process node or cost of ownership. Manufacturing technology is becoming a major decision point with numerous options.

Solar Radiation, The Good And The Evil

Solar energy is typically viewed as a very positive resource. Not only does solar energy help produce our food, recently we’ve seen a boom in photovoltaic electrical systems because we’ve gotten much better at converting sunlight into electricity.
As we all know, the solar system operates in cycles. During the past decade the sun has been in a lower energy producing cycle which some described as the sun sleeping. It now appears that the sun is waking up and over the next few years will begin its next cycle. That means we will experience more sunspots and an increased amount of solar radiation. The solar cycles build slowly and one is currently under way. Experts expect solar radiation will peak in 2011 and 2012.
That's good news for people who have solar panels but it may wreak havoc on our high tech, mobile device society that we enjoy today. Solar storms can have a big effect and most are not positive outcomes. During a solar storm, if a plane flies over the poles, space radiation can cause radio blackouts, navigation errors and computers to reboot. Solar storms can also disable satellites that we use for weather forecasting, GPS navigation and communications. Radio bursts from solar flares can directly interfere with cell phone reception and the coronal mass ejections (CME) can cause electrical outages. In 1989 a CME caused an outage in Québec that lasted for six days.

Investing For The Next Downturn?

Although the semiconductor industry cycles are difficult to predict, one thing always rings true, over-investment creates over-capacity, lower prices and usually sluggish or declining semiconductor revenues.

The stage is being set. Two weeks ago, Samsung announced its biggest ever semiconductor capital expenditure budget, some say the biggest the industry has ever experienced from one company. A majority of the approximately $10 billion total of Samsung's 2010 semiconductor spending will be on capacity expansion for memory products.

This week, GLOBALFOUNDRIES, backed by its major shareholder ATIC, announced an additional $3 billion dollars in capital expansion projects, on top of the $6 billion already announced. Other companies have also announced larger capex projections for 2010.  Total industry capital investment in 2010 could exceed total investments made in 2000. 

During the past three years the industry has curtailed capital expenditures, which Semico believes helped to dampen the effects of the last downturn. But are we now walking into the same trap?

One could argue that the capex is more highly concentrated to fewer players. One could also say that advanced technology production is more expensive these days. However, these capacity additions are expected to come online right during the next slowdown that Semico has predicted. Coincidence?

Joanne Itow
Managing Director

450mm Wafers: More At Stake Than Just A New Wafer Size

As the semiconductor industry grows its way out of the 2008/2009 downturn, it’s inevitable that the debate over 450mm wafers will rear its head again. The major objection to 450mm wafers lies in the research and development cost, and the ability of all parties involved to benefit from the large investment.

The industry cannot stagnate at the existing 300mm wafer technology. Consumer demands for more memory will push NAND and DRAM to ever increasing product densities and increased unit volumes. Logic products will continue to move up the performance curve while offering more features in a system-on-chip or high performance multi-core product. The ability to produce chips on a more economical manufacturing process is good for the overall industry's future. It’s the availability of low cost memory and high performance and/or low power processors that enables the creation of new applications, increasing demand for electronic goods and more semiconductors, a cycle that keeps our industry ticking.

And don’t forget, it’s the availability of mature capacity that enables a plethora of new features. When DRAM vendors moved to 300mm wafers, they used their old 200mm capacity to produce cost-effective CMOS image sensors. LED, medical applications and smart grid are being enabled because of efficient 200mm capacity which is available as advanced products move on.

Tight Capacity Forces Improved Productivity

Semiconductor units are expected to increase by 24% in 2010, while wafer demand is only going to increase by 17%. Why is wafer demand growing at a slower rate?
One reason is that the industry is in a tight capacity situation. Manufacturers find ways to be more efficient when they have to. Certain product categories are tighter than others.

Memory is one of those categories that when capacity is squeezed manufacturers find ways to improve yields and/or switch to higher densities. DRAM units are expected to grow by 17%, while wafer demand will only grow by 15%. NAND units are expected to grow by almost 16%, while wafer demand will only increase by 13.5%.

Semico data shows that the biggest area for silicon savings in 2010 is in the communication Micro Logic categories. Units are expected to grow by almost 27%, while silicon demand will only grow by 19%. More efficient production on 45nm/40nm is one of the main reasons for the more efficient use of silicon.

In addition to the tight capacity situation, silicon usage continues to be influenced by the transition to more advanced technology. Intel introduced 32nm production in late 2009. In 2009, almost 28% of all silicon was processed on 65nm technology or finer. By 2014 over 40% of all wafers will require technologies in that category.

Indonesia: A Sleeping Giant?

Now that China is well established as a powerhouse in the electronics arena and India as a haven for design activity, at the last Semico staff meeting we asked the question, which country will be the next emerging economy? Growth may come in a number of different forms. China took on semiconductor manufacturing with great enthusiasm. Although India tried, their efforts to attract semiconductor manufacturing didn’t materialize. But cell phone sales to the area have been a real boost for semiconductors.  Semico has observed that in today’s market, copying the economic development successes of the last region doesn’t seem to work. The growing regions must make a mark through some unique offering. Along with China and India, Brazil and Russia have already been identified (BRIC). Which location will be next? Morry Marshall says Nigeria or South Africa. Tony Massimini says SE Asia, i.e. Vietnam or Indonesia. In the April 3-9th issue of The Economist, there’s a blog assessing Indonesia’s global impact. Indonesia has a population of 231.3 million. That puts the country in fourth place after China, India and the U.S. Brazil, who ranks fifth has a population of 193.7 million. Indonesia’s population is relatively young and well educated. In June, President Obama is expected to get a huge welcome home to this area where he spent four years growing up. I suspect the country will attract a lot more attention after that. What do you think? Nigeria? Indonesia?

Higher Margins For Foundries and Fabs

On March 17th, 2010, SEMI released its 2009 semiconductor material market statistics.  While the headline pegged worldwide semiconductor material sales at $34.6 billion, that was reportedly a 19% decline in sales compared to 2008.

Although SEMI stated that was not as bad as the 26% decline suffered by material suppliers in the devastating 2001 down cycle, the numbers aren’t easy to swallow.

Table 1:  Semiconductor Revenues, Units, Wafers, Materials


Source:  SEMI, SIA/WSTS and Semico Research Corp. SIA/WSTS reports that total semiconductor units dropped by 5.6%.  Semico Research's analysis determined wafer demand only dropped by 2.7%.  How did the materials going into the making of these chips and wafers decline by 19%?  Even total semiconductor revenues only declined by 9%. Here are some possible reasons.

GlobalFoundries: Solid Ground, Not Loose Sand

The recent news regarding Dubai’s ominous financial situation may have caused some uncertainty and confusion about the impact on GlobalFoundries. It is well known that a significant portion of GlobalFoundries is funded by ATIC (Advanced Technology Investment Company) of Abu Dhabi. ATIC’s sole shareholder is the Government of the Emirate of Abu Dhabi.

Dubai is one of the seven members of the United Arab Emirates, just as Abu Dhabi. Abu Dhabi is the largest city in terms of land area and maintains the largest oil and gas reserves. Abu Dhabi is also considered the strongest member in terms of financial stability. Dubai is the largest city measured in terms of population but is now finding itself in a financial crisis. In its attempt to diversify its economy away from its heavy dependence on oil reserves, the Dubai government invested heavily in real estate projects, construction and tourism. The value of their debt obligations is estimated to be in the range of $60-$80 billion. Abu Dhabi has indicated an intent to assist in the bail out of Dubai. Some may think that any assistance Abu Dhabi provides could put ATIC at some risk, however, to put the whole thing in perspective, Dubai’s debt is in the $60-$80 billion range while the U.S. government financial bailout was in the $900 billion range, quite a difference.

Automotive Semiconductor, Still a Promising Market.

Typically when we think of advanced electronics in cars most of us think that the new technology is only in the high-end cars like the Mercedes S-Class. This is changing and Ford Motor Company is pushing the envelope with the new 2010 Taurus.

The 2010 model has added a bundle of nifty electronics for safety that one might expect on much higher end cars. CMOS image sensors provide blind spot detection on both the left and right sides of the vehicle. The mirrors have displays that indicate an object has entered the blind spot.

The car has a rear video camera which displays on the navigation screen in the dash for added safety when parking or backing up.

Voice activation is available for the navigation, phone and music systems. The in-car voice-activated communications system allows you to operate the most popular MP3 players, Bluetooth®-enabled phones and flash drives with simple voice commands. The car also features Sync powered by Microsoft and includes 911 emergency assistance, vehicle health report, real-time traffic conditions, turn-by-turn directions and other information