Wafer Shortage? Reality versus Perception

The promise of explosive growth associated with IoT has semiconductor unit forecasts growing at double-digit rates for key product categories.  Anything with the word ‘sensors’ seems to be in vogue today.  Sensors, image sensors, sensor hubs are all expected to benefit from the billions of connected devices that are forecasted to be in place by 2020.  Semico agrees.  Unit growth for key products will experience double-digit growth, but with capital expenditures flat to down this year, will the industry be able to support the huge growth?

The picture for semiconductor units by product is significantly different from the revenue picture.  Logic and memory, the main drivers of semiconductor revenue are only a fraction of analog and all the other products in terms of units.   

The “other” category consists of discretes, sensors, and optoelectronics.  Looking at this group of products, the growth opportunity is evident.  Sensors are expected to grow at a compound annual growth rate of almost 20% while CMOS image sensors will grow 10% over the next five years.  The same is true for other key categories such as automotive and microcontrollers.  

When it comes to wafer demand, the significant growth in sensor units is overshadowed by the large portion of wafers that are dedicated to memory and logic products.  But that doesn’t mean there could be an impending capacity shortage.   

In 2014 there were issues related to delivery of RF chips for front end modules in mobile devices.  There is still some debate as to whether the shortages were due to actual capacity issues or material supply.  However, this does provide an example of how production issues can catch manufacturers off guard.  There are some emerging applications that require new process technologies and packaging techniques such as automotive, MEMS, and optoelectronics.  

 
Semico believes that there is plenty of existing and planned capacity available at both 300mm and 200mm to accommodate a successful rollout of new applications targeted at IoT.  The issue will be whether the processes are appropriately matched with the applications.  

For more information on wafer demand and fab capacity contact Rick Vogelei at rickv@semico.com.