May 6, 2011 - Total wafer demand will increase 11.2% to 185.3M wafers (200mm equivalent), with a number of factors driving growth above average rates, according to a recent Semico Research report. That's about halfway between projected growth in total semiconductor revenues (8.3%) and total semi units (13.5%).

Demand for wafers processed at ≤45nm will increase to 24.2% of total wafer demand, up from 16.6% in 2010. Foundries are now giving their 32nm/28nm production ramps a "red carpet treatment" (Intel's soon to start 22nm), and chipmakers are pushing more capital expenditures to ease tight capacity, and increase productivity through process technology transitions, die shrinks, and wafer-size transitions -- nearly half of total silicon processed (47.2%) will be on 300mm wafers this year. There shouldn't be the same problem with yields at these nodes as was seen at 40nm, Semico adds.

But demand for wafers isn't just from the leading edge, Semico points out. MEMS and sensors will help push wafer demand at ≥1μm technology nodes. Also driving growth to varying degrees: microcontroller units (>10%) and NAND flash memory (double-digit growth, better than DRAM's 4%-5% growth).

The situation in Japan is slowly improving -- some key silicon wafer-making facilities are struggling to recover, and though most key chipmaking facilities escaped damage, reliable infrastructure i.e. power needed for fabs (and silicon wafer making) is an ongoing challenge. However, "most companies have managed their production, foundry and supplier relationships in order to cover customer demand," so the lull in markets such as automotive will be temporary, even if domestic production in Japan doesn't fully back online until 3Q11, Semico notes. Wafer demand in 3Q11 should rev up again, up 10% from 2Q11.

The data comes from Semico's new "Q1 2011 Wafer Demand Report," which breaks down annual wafer demand by product by technology from 2002-2015 (DRAM to comm to discretes), and a summary detailing the major assumptions behind the forecast and changes from the previous quarter. For more info, contact Sam Caldwell, 602-214-9697, samc@semico.com.