SEMI News and Views

Don't Miss the Future

2012-06-10T20:08:00.002Z

By Karen Savala, president, SEMI Americas

The critical path for the future runs right through San Francisco in July. Once again, SEMICON West (July 10-12) sets the stage as the place where important decisions are made and agreements reached in our industry. This year, there have never been more difficult choices and more complex uncertainties. To meet the current and next-generation challenges, leaders in sub-22nm process development, 3D IC packaging, 450 mm tools, and other areas of technical investment will meet, learn, collaborate and decide among suppliers, technologies and research options at SEMICON West. The ITRS meetings, SEMI standards activities, over new 100 product announcements, and the many company-specific product roadmap discussions will, collectively and synergistically, shape the agenda for our industry for many years to come.

SEMICON West continues to be the unrivaled focal point for the latest information on technology developments and directions, which will be reviewed in the TechXPOTs, industry meetings, and industry forums like the ITRS. On the TechXPOT stages, the latest developments in <22nm process development, lithography and 3D-IC will be featured. Each of these sessions will feature industry leaders providing the latest information and opinion on where Moore's Law is headed. Breaking news on the big topics will be heard from influential executives like Shekhar Borkar and Yan Borodovsky from Intel; Raj Jammy and Steve Wurm from SEMATECH, Aaron Thean from imec, and many more. Leading fabless companies such as Qualcomm, TI, Xilinx and Altera will share their views on the industry, as well as the top packaging and test houses. Top equipment and materials suppliers -- and emerging technology companies -- will also provide their perspectives.

And not just leading-edge wafer processing topics will be addressed at SEMICON West. Secondary equipment, 200 mm solutions, packaging and test cost reduction, new developments in materials and materials management, and green manufacturing will be addressed on the TechXPOT stages.

In addition to TechXPOTS, keynotes and standards meetings, SEMICON West will also feature many partner events where ideas are shared and deals get accelerated. Imec will hold their Technology Forum and Gartner their Market Symposium on Monday, July 9; IEEE's Components, Packaging, and Manufacturing Technology Society (CPMT) will hold a packaging workshop on Tuesday, July 10; Sokudo will hold their annual Lithography breakfast and the FlexTech Alliance will feature on workshop on metal oxide TFT devices on Wednesday, July 11. SEMI and IEEE will hold another Test Vision Conference on Wednesday and Thursday, and the ITRS will hold their annual public meeting on Thursday.
Definition about where the industry will grow and what solutions, technologies and products will win -- will be significantly affected by this unique compilation of information resources, networking, meetings and assessments.

To benefit you must participate. Of the 31,000+ in attendance at SEMICON West, approximately 20 percent are in R&D and design engineering making key, long-term decisions on platforms and subsystems; over 80 percent specify, recommend and approve key purchases. Nearly 15 percent of attendees are from non-U.S. locations. New vendor evaluations and the formal purchasing cycle of many IDMs and OEMs integrate SEMICON West into their process. Last year, 70 percent of the attendees said that West impacted their purchases.

Of particular significance this year will be the 450 mm Supply Chain forum on Thursday, July 12. The transition to 450mm wafer manufacturing has moved into the design, prototype and delivery stage representing significant opportunity for component and subsystem suppliers. Wafer processing tools will undergo a ground-up redesign requiring new technologies and components and even rethinking basic material handling, instrumentation, metrology approaches. The entire design and purchasing ecosystem in our industry is looking for solutions and innovations in next-gen 450 tools and systems.

To get the most out of our premier industry event requires you to participate on multiple levels: as an exhibitor, as a buyer or seller, as a Standards contributor, as a colleague, and collaborator. This year will be the most multifaceted SEMICON West in history so plan your week well.

For more information, visit www.semiconwest.org

SEMI Educates Policymakers on 450mm Transition

2012-04-05T21:58:00.000Z

By Jonathan Davis, president, SEMI Semiconductor Business

With estimates for the R&D cost of 450mm wafer transition running in the tens of billions of dollars, public-private partnerships will have a critical role throughout the world. Already, the State of New York is anticipating a $400 million investment in advanced chip research over the coming years and the European Union is funding research in a variety of Key Enabling Technologies including microelectronics manufacturing. Many countries around the world will see next-generation 450mm wafer tools and fabs as critical features of a national competitiveness strategy. In anticipation of the increased role in government support for advanced chip manufacturing technology, SEMI has been actively engaged in education and other efforts with policymakers around the world.

SEMI: Working with U.S. Legislators on Effect of Transition

As the topic of the transition to 450mm becomes more relevant at industry seminars, conferences, and boardrooms, SEMI has met with over 150 Federal and State government officials to discuss the likely impacts and requirements on a chip industry transition to 450mm wafers.

Along with a group of member company representatives, SEMI recently met with senior staff for California Governor Jerry Brown in the state capital of Sacramento. With 200 SEMI member companies headquartered in California, semiconductor manufacturing is high-priority issue for the Governor Brownâ�?�?s office. Gov. Brown has shown great leadership in not only understanding the needs of the semiconductor equipment industry in California, but the need for a strong domestic industry infrastructure across the nation.

On the national level, Representative Mike Honda (D-CA) has been fully engaged in learning more about the semiconductor equipment industry, as he represents a large portion of Silicon Valley in the House of Representatives. Rep. Honda sits on the powerful Appropriations Committee which writes the annual bills that directly fund the federal government. The Congressman visited SEMI headquarters in February to hear directly from SEMI members about the challenges that they are facing and meet with SEMI staff to hear their policy concerns. Rep. Honda also organized a briefing for other Members of Congress and their staffs in Washington, D.C. to hear from the President of the SEMI Semiconductor IC Business Unit Jonathan Davis about the semiconductor equipment industry overall, and about the 450mm transition in particular. Rep. Honda also penned an op-ed in The Hill, a Washington political newspaper, about the need for the U.S. government to compete with other nations in supporting the 450mm transition.

Along with Rep. Honda, SEMI has received positive support for its education efforts from Rep. Chris Gibson (R-NY) who represents a large swath of the upstate New York Capital Corridor, and whose district includes the Global Foundries Fab in Malta, NY. SEMI has also been active in working with members of both parties in the U.S. Senate including Senator Dianne Feinstein (D-CA), Senator Scott Brown (R-MA), and Senator Kirsten Gillibrand (D-NY). Each one of these Senators has significant SEMI membership in their states and has been working hard to engage on the issues surrounding the transition to 450mm.

There is much work to be done before the industry fully transitions to 450mm technology. In order to be completely prepared, policymakers must be fully informed of the issues that surround the transition, and SEMI is working to ensure that they understand the ramifications of such a massive industry undertaking.

SEMI's Washington D.C. office continues to focus on key issues and holds events such as the Washington Forum and other lobbying activities to ensure that our industryâ�?�?s collective voice is heard. Please let us know if you would like to get involved in public policy efforts in the U.S. (contact Jamie Girard at jgirard@semi.org).

In addition, the industry will learn more about the supply chain implications of 450mm at the various 450mm programs at SEMICON West 2012, which takes place on July 10-12 in San Francisco, Calif.

Europe Considers How Government Policies Could Support the 450mm Supply Chain

At the recent ISS Europe, the implications of the industry-wide transition to 450mm manufacturing technologies and the important role that European equipment and materials companies play in the global market were discussed. Malcolm Penn, CEO, of market research firm Future Horizons, noted at the conference, â�?�?If Europe doesnâ�?�?t embrace 450mm, Europe will be history.â�?�? Penn believes that the 450mm era may ultimately introduce a less adversarial business model given the intense requirements for collaboration to implement the technology.

Bas van Nooten, director European Cooperative Programs, ASM International and spokesperson for the European Equipment and Materials Initiative (EEMI) said that the European semiconductor equipment and materials industry employs more than 100,000 people and it is key for the European supply chain to be prepared for the wafer transition. He referenced the EEMI450 White Paper, which was recently presented to the European Commission and concludes that support and collaboration across all elements of the research and development operation, including National Governments, is vital to maximize 450mm European equipment and materials manufacturer readiness and subsequent market opportunity.

Imec president and CEO Luc Van den hove, said that to maintain long-term innovation leadership position in Europe, it will be imperative to set up a 450mm R&D and demonstration facility. It will be needed to support the entire European eco system including equipment and material suppliers. He believes that such 450mm R&D and demo facility will act as the primary innovation engine 5 to 10 years from now.
In addition to government programs aimed at 450mm funding support, other essential policy objectives required to sustain chip manufacturing in Europe were enumerated at the conference. Representatives from existing European fabs cited concerns about â�?�?make or breakâ�?�? decisions that pit 450mm against on-going profitable 300mm and 200mm operations.
Michael Hummel, managing director, Texas Instruments said that, â�?�?Investment alone will not sustain the industry in Europe.â�?�? He referred to a number of other policy considerations including labor laws, utility cost, and the pipeline of science and engineering talent. Hummel notes that TI wafer fabs in Europe are competitive. For the analog company, most of the challenges are economic â�?�? not technical. Therefore, compromise will be an essential policy parameter to sustain the health of some existing European manufacturing.

ISS Europe conference attendees heard opinions about diverse strategies that recognize the 450mm, 300mm and 200mm interests as well as the critical role that R&D and the equipment and materials supply chain plays â�?�? not only for Europe, but around the world. It is increasingly apparent that a thoughtful public policy support is needed to sustain innovation, jobs and critical manufacturing in Europe.

In Europe, the discussion will continue at the sixth SEMI Brussels Forum, which is coming up soon on May 22. The SEMI Brussels Forum gathers 200 policy influencers from 20 countries to discuss the issues. About 25 percent of the participants are European Commission representatives, while 25 percent are from EU institutions. Participants represent 20 countries. Please let us know if you would like to get involved in public policy efforts in Europe (contact Stephan Raithel at sraithel@semi.org).

In the U.S., the industry will learn more about the supply chain implications of 450mm at the various 450mm programs at SEMICON West 2012 which takes place in San Francisco, Calif. on July 10-12.

In conclusion, SEMI is driving collaborative dialog through a number of activities including international standards development, industry information programs, expositions and conferences, and increasingly, a strong public policy education program.

April 3, 2012

Stampede of the Giants: Equipment Spending Growth Flat in 2012; Record Fab Equipment Spending Expected for 2013

2012-03-09T18:07:00.000Z

Stampede of the Giants: Equipment Spending Growth Flat in 2012; Record Fab Equipment Spending Expected for 2013

By Christian Gregor Dieseldorff, SEMI Industry Research and Statistics
San Jose, California, March 1, 2012

In January, SEMI analyzed fab spending and capacity growth for 2012 and 2013 (see article â�?�?Fearless into a â�?�?Doomsdayâ�?�? Yearâ�?�?). At that time, fab equipment spending was expected to improve from -11 percent year-over-year (YoY) to -4 percent depending on announcements from key spenders. This analysis assumed more spending by Samsung and less by TSMC; at the time, it was uncertain whether Hynix would increase or decrease spending. In fact, Hynix increased spending in 2012 by 23 percent to about US$ 3.75 billion, while UMC increased spending from$1.6 billion to $2.0 billion. More surprisingly, Intel increased spending much more than expected, to a historic high of about $12.5 billion.

SEMIâ�?�?s data forecast that in 2012, eight companies will keep their spending level above $2 billion (versus seven big spenders in 2011). These eight include the giants Samsung and Intel. The stampede of these giants continues, causing equipment spending to improve from a negative outlook in December to 0 percent (flat) â�?�? for 2012 (see Figure 1). If macroeconomic factors improve and other companies adjust their capex plans, then equipment spending could even cross into positive territory.

Figure 1: Source: SEMI World Fab Forecast February 28, 2012 edition

The spending trend is expected to continue into 2013, as companies compete for market share in the Foundry, System LSI, MPU and NAND sectors. Companies continue to invest in upgrades and leading edge technologies, and ramping up fab capacity. SEMIâ�?�?s latest World Fab Forecast (February 28, 2012) lists 192 facilities with equipment spending in 2012. Eight of those will spend more than $1 billion. In contrast, in 2013, only 162 facilities will equip, but almost twice as many will spend over $1 billion.
The recent released fab database reports by SEMI give a detailed picture fab by fab, by region, and by product type.

Construction Projects: Decline after Peak

2010 was a good year for fab construction; 2011 was even better with a 24 percent increase YoY to $6.4 billion. For 2012, spending on construction is expected to decline by about 28 percent to $4.5 billion; in 2013, it will fall even further by 38 percent reaching $2.8 billion. The number of facilities planning construction spending will also drop: from 79 facilities in 2011 to 39 facilities in 2012, and only 21 in 2013.
Most construction projects in recent years were for new LED fabs, but even this area is projected to decline rapidly, mainly due to changes in government incentives in China. In 2011, about 60 percent of construction projects were for LED fabs; in 2012, LED projects make up just under half of the announced projects; while in 2013, only three construction projects are expected to be for LED fabs.

SEMIâ�?�?s World Fab Forecast lists six potential new fab construction projects in 2012 (three for LED fabs and three for memory fabs). In 2013, the report lists eight new fab construction projects. Most construction money spent in 2012 will be for MPU, followed by Memory and Foundry. In 2013, Memory increases spending on construction projects, while foundries decrease.

Overall Growth Rate for Installed Capacity is Slowing, but Not for All Segments

Before the last economic downturn, installed capacity grew between 10-23 percent every year from 2003 to 2007. Coming out of the downturn from 2010 on, yearly capacity growth has been a more sedate 5 to 10 percent and is expected to stay modest for the foreseeable future.
In February 2012, SanDisk stated that demand for Flash memory will increase about 7.5X by 2015 to about 30GB (gigabyte). SEMIâ�?�?s fab data shows rapid increases in fab equipment spending for NAND related fabs began in 2010 in anticipation of this demand growth and resulted in strong capacity growth in the Flash sector. See Figure 2.

Figure 2: Source SEMI World Fab Forecast February 2012

While installed capacity for DRAM is expected to level out, Flash capacity is growing rapidly between 2010 and 2013. There are not many new Flash fabs, but some of the existing ones are huge megafabs with capacities of over 200K 300mm wafers per month: Flash Alliance continues ramping their new Fab 5 Phase 1, Samsung ramps Line 16, IM Flash keeps ramping in Singapore, and Hynix is expected to begin ramping M12 in the second half of 2012.

The dedicated foundry sector will also undergo growth in installed capacity. Main contributors are TSMC, Globalfoundries, and UMC. TSMC is ramping two fabs at the same time in 2012: Fab 12 Phase 5 and Fab 15, Phase 1. In addition, TSMC began construction on two new fabs last year: Fab 15 Phase 2 mid of 2011 and on 15 Phase 3 at the end of 2011. Meanwhile, Globalfoundries is adding capacity at its Dresden plant with the new addition Fab 1 Module 3; and also continues its Fab 8 investments in Malta, New York. UMCâ�?�?s spending is on-going for its Fab 12A Phase3/Phase 4 300mm fab. Samsung has dramatically boosted investment in System LSI fab, increasing installed capacity for System LSI to over 980,000 wafers per month, or a 90% increase between 2009- 2013. (SEMIâ�?�?s recent released Fab database reports enable data analysis by technology node, product type, region, company and fab by fab.)

The stampede of the giants Intel and Samsung makes the start of this year look much better for fab equipment spending. We expect other companies to join in the stampede for next year and data for 2013 promise another record year. Many companies continue to invest in technology upgrades of existing fabs. Lower construction spending compared to recent years, especially on new fabs, raises some concern about available capacity beyond 2013. Overall, the industry has tried to control installed capacity at more reasonable levels since coming out of the 2009 downturn. Now due to increasing demand, some segments, such as for Flash, Foundry, and System LSI, is experiencing a boost in installed capacity.

For more information, visit: http://www.semi.org/en/MarketInfo

ISS 2012 Recap: Roadmap to Profitability Threatened

2012-02-09T21:39:00.000Z

By Tom Morrow, EVP, SEMI Emerging Markets

Industry leaders at the 35th annual SEMI Industry Strategy Symposium (ISS) described a perfect storm of cost, complexity and uncertainty as the industry struggles with process engineering complexity at sub-28nm nodes, hazy EUV installation schedules, 3D-IC challenges, and planning for a 450mm wafer transition. At no time have industry executives faced more strategic uncertainty or greater doubt about the future effectiveness of past competitive and collaboration models. Complicating the investment and unprecedented R&D challenges were conflicting forecasts on materials and capex spending for 2011-2012 and universal concerns on the European debt crisis that threaten to afflict global markets. On the positive side, the long-term growth in semiconductor demand that underlies the industry's strength is strong with cloud computing, life sciences, smart grids and cleantech creating new applications to energize global chip demand.

William Holt, senior VP and GM at Intel, and Bernard S. Meyerson, an IBM Fellow and VP at IBM, described the industry's successes at overcome leading-edge semiconductor technology barriers. Recent nodes have required advanced technical solutions such as strained silicon, high-K metal gates, new material sets and tri-gate transistors that have escalated the complexity and cost of keeping pace with Moore's Law. In lithography, optical correction, alternating phase shift masks, double patterning and immersion have been required to supplement traditional geometric scaling efforts. Complicated, costly transition interconnect technology from copper, low K, lead-free, self-aligned vias, and ultra-low k solutions have also increased the challenges to leading-edge chip technology. Every node now presents an increasing set of technical barriers that need to be "surmounted, circumvented or tunneled through," summarized Bill Holt. Bernie Myerson described the new scaling challenges as requiring "mitigating innovations," or having "new knobs to turn after the small knobs broke."Virtually all presenters and panelists emphasized the critical need for synchronized timing on 450 deployment to avert the mistakes of the 300mm wafer transition of the last decade. While there are fewer leading-edge chip makers today than were present when the 300mm transition start-stopped out of the gates, the uncertainty of EUV and other technical barriers and the unproven coordination among the hyper-competitive consortium players, indicate insertion timing will be a tough decision with certain risk.

Fortunately, both Holt and Myerson were optimistic that future scaling challenges will similarly be overcome with ingenuity, deep technical resources and sheer force of will. The escalating scale of technical barriers accompanying each node, however, left some in the audience wondering if past success in meeting the dictates of Moore's Law will remain a good indicator of the future. Clearly, considerable advance work is being done on carbon nano tubes, graphene, photonics and other areas that may be ready for sub-10 nm - "the innovation pipeline is full for the next ten years," said Holt - but the audience also learned about the growing need for "mitigating innovations," and the new need to turn unexpected knobs every 18-24 months.

Of course, the big knob that turns in our industry is lithography and the ISS audience benefitted from a thorough description of the EUV roadmap from James Koonmen, senior VP at ASML and GM at Brion. Significant accomplishments have been achieved in litho for a decade and EUV is no exception. ASML now has six pre-production machines in the field for research, testing and development - an essential stage in the "industrialization" of EUV. Two suppliers are addressing the critical power source issues, but EUV productivity is still "a factor of 5 to 10 from where we want to be." ASML hopes to "reach 125 wafers per hour within two years" with stable performance on resolution and overlay.

With this backdrop of uncertainty on scaling (not to mention the concurrent efforts in 3D chip stacking), discussions on the 450mm wafer transition took center stage on Day 2. Dan Hutcheson, CEO of VLSI Research and winner of the 2012 Bob Graham Award, moderated a panel comprised of key players: John Chen, VP of Technology for Nvidia, Paolo Gargini, director of Technology Strategy at Intel and ITRS chairman, Randir Thakur, executive VP and general manager of Applied Materials Silicon Systems Group, Kazuo Ushida, president of Precision Equipment for Nikon, and Takahashi Abe, executive vice president of Sumco.
Nvidia's Chen began the discussion with data that suggested that transistor cost is not scaling with recent node shrinks, a point echoed by Handel Jones, president of IBS. Beset with the diminishing returns of Moore's Law and the inability to charge premium prices for advanced products, Chen is desperate for 450mm.

While vertical device structures, new material sets, and still-challenging EUV and 3D IC present unprecedented technical challenges and R&D costs on both suppliers and device manufacturers, the compound effect of 450mm wafer transition generated divergent opinions about the need for R&D efficiency and "new models" of industry collaboration. Applied's Thakur compared the positive economic and technical environment of the 300mm transition with today's financial outlook and R&D cost structure. He explained the challenges of working on stacking 450 mm development on top of three different nodes and cited concerns about the health of his suppliers saying, "The whole infrastructure needs to be ready." Gargini is confident the industry can meet the challenge: "if we want to do it, we can do it." He is confident that 450mm equipment development will take place in 2012-2014 and begin to move into production in 2015, while acknowledging," the tipping point will come when litho production equipment is available."

Fortunately for the industry, Hutcheson believes the 450mm transition will not be as costly overall as the 300mm transition. He estimates that 450mm development has been $0.5B so far, with another $7.6B needed by 2020 if all goes right. Unfortunately for the industry, that amount alone would overwhelm the total R&D spending by wafer equipment companies for the time period and represents only a half to a third of what other observers believe is necessary to fund 450mm R&D. 300mm development cost was $12 billion over a decade ago.

Several presentations during ISS addressed for need for new R&D funding industry collaboration models. Stephen G. Newberry, vice chairman of the Board, Lam Research Corporation, offering the automotive industry as a useful model where the industry has been able to raise prices for improved features and performance, and a few key suppliers embarked on critical R&D efforts jointly-funded by manufacturers. Michael R. Splinter, chairman and CEO, Applied Materials, also emphasized the need for "collaboration, coordination and consolidation" to solve the nexus of technical and economic challenges facing the industry. Even Intel fellow Paolo Gargini admitted, "This is going to be coordinated effort. The level of communication must go to a higher level."

Yet for all the talk of collaboration and coordination, it was apparent that there are many different opinions about what level and form of collaboration is really required. Clearly the industry is at a crossroads where economic forces are pressuring profitability and accelerating consolidation, and new R&D funding methods will have to arise for the industry to advance as it has in the past.

To see ISS Video Coverage, click here.

To see selected Presentations from ISS 2012, click here (SEMI Members only)

Fearless into a "Doomsday" Year: Examining Fab Spending and Capacity into 2012 and Beyond

2012-01-13T23:23:00.000Z

By Christian Gregor Dieseldorff, SEMI Industry Research and Statistics, San Jose,
California, January 6, 2012

The Mayans were highly skilled astronomers, whose "Long Count" calendar marks the end of a 5,126-year era. According to some interpretations of the ancient Mayan calendar, the world is going to end on December 21, 2012 of the Gregorian calendar (used in many countries such as Americas and Europe) because a series of events may lead us to "doomsday." Some in the media are gearing up for a countdown to this mysterious prophecy. Could the ancient calendar really influence our modern digital world?
The worldwide economy and, therefore, the semiconductor industry depend more upon consumer sentiment and confidence. Will a new "fear factor" affect 2012? Natural and human-made disasters have certainly affected 2011.

How much companies invest in Fab spending depends on their revenue outlook, which in turn is dependent on the consumer. Economic uncertainties and political situations will influence consumer confidence and therefore any revenue outlook. In addition, natural disasters can interrupt supply chain at any economic situation with consumer confidence high or low. This could affect the price and availability of consumer goods.

Economic and Political Situation Affecting Consumer Confidence

The housing/debt crisis continues to drag into 2012, while the European debt crisis may worsen in 2012. The European Central Bank warned on December 19, 2011 that a perilous year is ahead. The interdependency of the global economy becomes apparent as world stock markets react sensitively to the recent developments in Europe. In addition, analysts expect the annual price for Brent crude oil to reached $111 per barrel in 2011, the highest annual price in 150 years. It looks like oil prices may stay high: in mid-December, OPEC oil ministers met in Vienna and decided to keep oil production at current level of 30 million barrels per day. Also, according to the Bureau of Labor Statistics, the average annual unemployment rate in the US was 9.2 percent in 2009. Two years later (2011), annual average unemployment is still about 9 percent in the US (8.99 percent at the end of November 2011). Unemployment worldwide is still at high levels. In 2012, many countries are facing elections such as U.S., China, Russia, France, India, Mexico and Finland.

Natural Disasters

Japanâ�?�?s devastating earthquake and tsunami, and then flooding in Thailand affected the semiconductor industry. Thailand produces about half of the worldâ�?�?s supply of hard disk drives (HDDs). Flooding interrupted factories, and HDD shortages had an unexpectedly strong impact on some industry segments. Most computers sold for December were already built before the flood, so the full impact will not be seen until the first quarter of 2012. Some companies (such as Intel) have already warned of lower revenue in the fourth quarter of 2011, blaming HDD supply shortage. The more-expensive alternative to HDD is the SSD (solid state hard drives using Flash memory chips); however, short lead-time orders of SSDs were not enough to revive the NAND Flash market.

Impact of Economic Uncertainties on Fab Spending

Typically, the first quarter of each year brings seasonal decline in semiconductor industry revenues and a drop in capital expenditure. Given the current economic uncertainties and the potential impact on the consumer, we expect fab equipment spending to decline by about 11 percent in 2012.
Chart 1 (below) compares the quarterly change rate for fab equipment spending, for the three years of 2007 to 2009, to the three years of 2010 to 2012.

Chart 1: Fab Equipment Spending by Quarter

The declines in the first half of 2009 and the first half of 2012 appear to follow the same trend, with both years showing positive growth in the second half. However, the change rates for 2012 are not as sharply negative and growth will be much higher in the second half.

This similarity is even more apparent when comparing absolute values for fab equipment spending. See chart 2:

Chart 2: Comparison Fab Equipment Spending by Quarter (Absolute Values)

Spending on Fab equipment is expected to drop in the first half of 2012, but will sharply increase in second half of the year to approach $10 billion by the fourth quarter. Total equipment spending for 2012 is forecasted to decline by about 11 percent, though 2012 spending will be at a much higher level than three years ago.

2012 Fab Equipment Spending Still Third Largest in 10 Years
Spending in 2011 was so high that even with next year's projected decline of 10.6 percent to $35 billion, 2012 will be the third highest spending in the last ten years.

Chart 3: Fab Equipment Spending Over Time

Chart 3: 2012 is the third largest spending year in 10 years.

SEMIâ�?�?s historic fab data shows total fab spending for 2011 to be about $39 billion. The next highest year was 2007 with $38 billion, so 2012, at about $35 billion, should reach third place. This "decline" scenario is still about $2 billion higher than 2010 spending.

Worldwide, Korea is the only region expected to show growth in fab equipment spending in 2012, mainly due to expected spending by Samsung (see Table 1)

Table 1: Fab Equipment Spending

Table 1: Source: SEMI World Fab Forecast November 2011 edition

Wild Cards: Samsung, Hynix

The current forecast of about 11 percent decline in fab equipment spending for 2012 depends largely on the investment of the largest spenders. Most of companies have not published their plans for 2012 yet, though some companies such as GlobalFoundries have already outlined their strategies. However, Samsung, Hynix, and maybe Intel and TSMC are the wild cards. If their investment plans increase larger than anticipated, fab spending for 2012 may improve and the overall spending decline may be about 4 percent according to our analysis.

Samsung is expected to spend more in 2012 than in 2011 - fitting with its atypical spending history, spending more when other companies spend less. The company is gearing up for increased demand for iPad, iPhone, and other mobile electronics. Samsung has also allocated much more spending for System LSI/Foundry-business, more than ever seen before. Samsung is expected to increase installed capacity for its System LSI and Foundry business by over 30 percent in 2012, up from about 530,000 wafers per month (in 200 mm equivalents) at end of 2011 to about 700,000 by the end of 2012. Installed capacity for memory is expected to increase by about 10 percent in 2012.Samsung also announced a new Mega fab in China, which could break ground in 2Q12, meaning that expenditure for fab equipment will be seen in mid-2013.

The first expectation for Hynix was that their spending would drop about 10 to 15 percent (YoY), or will it? There is some expectation that Hynix may actually increase spending by up to 18 percent, mainly to boost its NAND production. At the end of November 2011, SK Telecom signed an agreement to purchase 21.1 percent of Hynix share (effective 1Q12) worth about $3 billion, which may enable Hynix to increase its production and gain more market share.

Intel's revenue for 4Q11 was below expectations, due to HDD supply shortage, but still spectacular at US$13.7 billion. Looking back over recent years, Intel reduced capex from $5.2 billion in 2008 to $4.5 billion in 2009 in response to market conditions. In 2010, capex increased again to $5.2 billion; and in 2011, the company spent at an all-time record of $10.2 billion. Most of this expenditure will go into upgrading existing fabs. Intel's profit in 2010 and 2011 was phenomenal, so even though 2012 will slow down, Intel may still look good. The company plans to ramp its 22nm fabs with tri-gate transistors, and targets 14nm production for 2014. Intel began construction of 450mm-ready fabs (D1X (D1E), and Fab 42). No major fab equipment spending for 450mm is expected in 2012 or 2013. It is likely that capex in 2012 will be lower than in 2011, but still be very high. We understand that Intel will make its next quarterly announcement on January 19, 2012, so its 2012 capex plan should be available at that time.

TSMC showed an enormous capex increase in 2011a historic high of $7.3 billion. TSMC just broke ground on the third phase of Fab 15 and, and in mid-December 2011, purchased new land in Taiwan for the next generation of leading edge fabs. TSMC is expected to cut capex for 2012, mostly in the second quarter. TSMC is also pursuing 450mm fabs very aggressively; however, we do not expect any major fab equipment spending for 450mm until after 2013.

Chart 4: System LSI spending surpasses DRAM spending

Due to rapidly declining average selling prices, DRAM makers cut capex in 2011. Reduced capacity caused a better control on supply, stabilizing the spot price. In addition DRAM makers continue to upgrade to leading edge technology nodes. We expect fab spending for DRAM to pick up in second half of 2012. The NAND market also sees an over supply. It was hoped that rush orders for SSDs would lift the NAND contract price, but they were not high enough. However, we expect steady spending on Flash fabs though spending in second quarter of 2012 will decline some.

After a year of spending sprees, foundries have also cut capex, beginning in the second half of 2011 and expected to into the first half of 2012. Spending has picked up for System LSI /Foundry fabs surpassing spending for DRAM the first time, mainly due to investments by Samsung. We expect fab equipment spending for System LSI/Foundry to be in the $5-6B range for Front End Fabs in 2012. Counting GlobalFoundries as a Foundry/Dedicated, spending for MPU is mainly driven by Intel, who will most likely adapt their spending to the demand, a seasonal slowing in the first half of the year.

Who Adds More Capacity?

The SEMI World Fab Forecast tracks installed capacity by fab, showing changes when fabs close and when product type or wafer size change.

Despite the economic situation, 300mm installed capacity is expected to keep growing at a steady pace in 2012. In 2011, the installed for 300mm grew by about 13 percent (YoY), we expect a small slow down to about 11 percent in 2012 and increasing to about 12-14 percent in 2013.

Chart 5: Installed Capacity by Wafer Size (Change Rate)

Chart 6: Installed capacity for Flash surpasses DRAM first time:

System LSI capacity will increase most by end of 2012 with about 19 percent (YoY) and we expect System LSI to surpass Analog by 2013. The increase of System LSI capacity is led mainly by Samsungâ�?�?s push into this segment. Memory/Flash is the segment expected to show the second largest capacity increase in 2012 with about 14 percent, followed by Foundry with over 8 percent. Discrete/Power is in fourth place with almost 6%. The largest contributors to the increase for Discrete/Power are STMicroelectronics followed by Infineon. DRAM is expected to growth by about 3-4 percent in 2012. DRAM capacity is currently higher than NAND capacity, though by mid-2012, installed capacity for NAND will surpass DRAM for the first time. Most equipment spending for DRAM goes into technology migration; in NAND, spending goes for both capacity expansion and technology upgrades.

Summary: A Rosy Second Half of 2012

Compared to three years ago, spending and capacity are much higher. After a dip in the first half of 2012, the industry spending should pick up by mid-2012. Spring induces warmer weather and more construction work and other economic activity. Politicians working elections in the

and in other countries will promise a better future, perhaps lifting consumer confidence and sentiment. By the second half of 2012, everything may look rosy again - unless Doomsday, December 21, 2012, looms larger than expected. We wonâ�?�?t be factoring a Doomsday scenario into our forecast, and a bit later this year, look for our 2013 forecast.

Semiconductor Equipment Sales to Reach $41.8 Billion in 2011

2011-12-07T02:30:00.000Z

By Lara Chamness, SEMI Industry Research and Statistics

SEMI projects that worldwide sales of new semiconductor manufacturing equipment will reach $41.8 billion in 2011, according to the year-end edition of the SEMI Capital Equipment Forecast, released here today by SEMI at the annual SEMICON Japan exposition.

The forecast indicates that, following a 151 percent market increase in 2010, the equipment market will expand by 4.7 percent in 2011. However, it is forecast to decline about 10.8 percent in 2012 before resuming growth in 2013. Equipment revenues of $41.8 billion are roughly equivalent with 2007 investment levels.

"Given the exceptional growth in the market from 2009 to 2010, the lower growth rate in 2011 is expected, not surprising," said Denny McGuirk, president and CEO of SEMI. "The industry experiences highly cyclical markets, with the rebound likely to occur in 2013."

Wafer processing equipment, the largest product segment by dollar value, is expected to increase 9.3 percent in 2011 to almost $32.7 billion. The forecast predicts that the market for assembly and packaging equipment will decline by 12.5 percent to $3.4 billion in 2011. The market for semiconductor test equipment is forecasted to decline by 10.3 percent, reaching $3.7 billion this year.

Growth is expected in four regions in 2011â�?�? Europe (66.9 percent increase over 2010), North America (53.0 percent), Japan (31.2 percent), and China (2.3 percent). In 2011, North America becomes the largest market for equipment with $8.8 billion, followed by Taiwan ($8.1 billion), South Korea ($8.0 billion) and Japan ($5.8 billion). Taiwan, South Korea, and Rest of World experienced negative growth rates in 2011.

In 2012, only South Korea is expected to have positive growth (7.5 percent). In 2013, the market is expected to rebound for all regions except South Korea, due to high growth in 2012.

The following results are given in terms of market size in billions of U.S. dollars and percentage growth over the prior year:

Forecast by Equipment Segment

Equipment Type	2010**	2011 Forecast	% Chg	2012 Forecast	% Chg	2013 Forecast	% Chg
Wafer Processing	29.91	32.68	9.3%	28.90	-11.6%	31.27	8.2%
Test	4.15	3.72	-10.3%	3.56	-4.4%	3.58	0.5%
Assembly & Packaging	3.88	3.39	-12.5%	3.04	-10.4%	3.25	6.8%
Other*	1.99	2.00	0.8%	1.78	-11.0%	1.96	9.8%
Total	$39.93	$41.80	4.7%	$37.28	-10.8%	$40.05	7.4%

Forecast by Region

Region	2010**	2011 Forecast	% Chg	2012 Forecast	% Chg	2013 Forecast	% Chg
Taiwan	11.25	8.05	-28.4%	6.88	-14.6%	8.33	21.1%
South Korea	8.63	7.99	-7.5%	8.59	7.5%	8.36	-2.7%
N. America	5.75	8.80	53.0%	6.77	-23.1%	7.20	6.3%
Japan	4.44	5.82	31.2%	5.23	-10.2%	5.69	8.8%
Rest of World	3.84	3.47	-9.7%	2.93	-15.5%	3.15	7.5%
China	3.68	3.77	2.3%	3.53	-6.2%	3.80	7.7%
Europe	2.34	3.90	66.9%	3.35	-14.1%	3.52	4.9%
Total	$39.93	$41.80	4.7%	$37.28	-10.8%	$40.05	7.4%

Source: SEMI November 2011

* Totals and percentages may differ due to rounding of numbers
** 2010 data was revised upwards about one percent. The revision is due to the addition of missing company data and corrected input.

For more The Equipment Market Data Subscription (EMDS) from SEMI provides comprehensive market data for the global semiconductor equipment market. A subscription includes three reports: the monthly SEMI Book-to-Bill Report, which offers an early perspective of the trends in the equipment market; the monthly Worldwide Semiconductor Equipment Market Statistics (SEMS), a detailed report of semiconductor equipment bookings and billings for seven regions and over 22 market segments; and the SEMI Semiconductor Equipment Consensus Forecast, which provides an outlook for the semiconductor equipment market. For more information or to subscribe, please contact SEMI customer service at 1.877.746.7788 (toll free in the U.S.) or 1.408.943.6901 (International Callers).

450 mm Development Cost: $25 to $40 Billion

2011-11-10T19:08:00.000Z

G450C Consortium Gears Up for Global Control of 450 Development Efforts

By Tom Morrow, EVP, SEMI Emerging Markets

In the most complete, public discussion to date on the scope and character of the 450 mm wafer transition, representatives of SEMATECH, policy-makers from the European Commission, industry consortia, and technology suppliers met to discuss the implications of 450 mm transition at SEMICON Europa on October 13-14, in Dresden, Germany. Among the highlights of the 2-day session was the 450 transition price tag estimated by speakers at $25-$40 billion, much of it centered at the Global 450 Consortium (G450C), perhaps with little room for other industry consortia or non-G450C participants.

According to Tom Jefferson, 450 program manager at SEMATECH, by mid-2013 to early 2014, a complete 450 mm production line will be established in New York containing 50 different tool types. The objective of the pilot line will be to develop data to support the purchase of production-line tools and it is unlikely that non-participants in G450C will be favorably considered for 450 production lines. According to many speakers--like the case with 200 mm tools during the 300 mm transition--when 450 mm reaches production, significant 300 mm development will cease.

What 450 Means for Europe and 300mm

The 450mm Progress Review at SEMICON Europa was organized by Lothar Pfitzner, Fraunhofer IISB, and included sessions on R&D and Planning, Facilities, Silicon and Metrology, FEOL Equipment and Automation, and Technology and Device Issues. Georg Kelm, head of the European Commissionâ�?�?s Nanoelectronics sector, discussed the preliminary results of a draft study, due by yearâ�?�?s end, which seeks to clarify policy options and support considerations for the European semiconductor industry. Preliminary conclusions of the study claim that once 450mm enters full production, further 300mm node development will cease for tool suppliers due to limited resources and poor return on investment. Some equipment suppliers may choose to stay off 450mm and focus on specialty development on 300mm platforms, but the 8nm node is likely to be the 450mm equivalent of 65nmâ�?�?s â�?�?300mm onlyâ�?�? moment. Furthermore, the â�?�?Post CMOSâ�?�? era will likely be exclusively on 450mm wafers.

Once 450mm is fully developed, spare capacity in 300mm will emerge, encouraging a migration from 200 mm production, impacting the viability and competitiveness of both 200 mm and 300 mm fabs in Europe and the world. In 15-20 years, even low volume, mature technologies in MEMS, power and analog could migrate to 450 mm fabs.

How the EU chooses to support the semiconductor industry through the coming years is being evaluated by the study, industry players and policymakers throughout the region. There are clear divergences of interests across the industry: European IC manufacturers are currently not planning 450 mm investments; many equipment and materials suppliers see an opportunity, but many suppliers see the 450 R&D draw threatening long-term profitability and current customers. Similarly, European consortia and R&D organizations see both an opportunity and a threat as--unlike current 300 mm process development which occurs at multiple locations around the globe--near-term 450 development seems likely to be exclusively conducted at the G450C site in New York.

Kelm acknowledged the prominence of different views on government support for More-Than Moore, and More Moore programs and the challenges 450 will make on current semiconductor and high-tech policy. With $2-3 billion necessary for a stake in a 450 development fab capability, it is unclear whether both wafer size transition, next node scaling, new transistor technology, and 3D IC could be simultaneously be funded. With 450 demanding such a large resource commitment, it is also unclear how semiconductor industry support will fare among all European Key Enabling Technologies (biotechnology, advanced materials, photonics, etc.).

Michel Brillouet, Senior Advisor, CEA-LETI, who estimated the total cost for 450 wafer size conversion to reach as high as $40 billion, summarized the EU options: help develop 450 and forget all More-than-Moore projects; forget 450 and concentrate on other process technologies such as 3D, EUV, etc,; and support R&D by equipment and material suppliers without a European production or pilot development lab.

Effective Migration: Affordable and On-Time?

Hans Lebon, VP Fab & Process Step Development at IMEC, began his presentation with the statement that â�?�?wafer size transition accelerates industry consolidation.â�?�? Estimating the cost of the transition at $25 billion, Lebon said the 300 mm wafer size transition â�?�?wasnâ�?�?t cost effective.â�?�? One of the ways to manage costs will be through â�?�?fewer equipment platforms.â�?�? Imec is still trying to formulate a role in 450, and claimed there â�?�?still was a long journey to go.â�?�?

ï»¿

Tom Jefferson from SEMATECH, however, sees a clear timeline, schedule and participation process in place for 450. He stated that over 40 companies are participating in the program, defects per wafer have been reduced from more than 3000 to less than 200, and that effective SEMI standards have been developed to enable development. Jefferson reiterated the key details of the September announcement that IBM, Intel, TSMC, GlobalFoundries, and Samsung, along with the College of Nanoscale Science and Engineering, University of Albany, State University of New York, have committed $4.4 billion to next-generation chip research, including 450 mm wafer processing. How much of the announced $4.4 billion was already-committed IBM money for other (non-450) advanced chip design and technology development was not verified. The new fab site has been prepared and walls are going up on the fast-track project. Nanoimprint technology from EV Group will be used as the â�?�?stopgap measureâ�?�? in lieu of a workable EUV solution.

On Day 2 of the Session, Jefferson returned to clarify that the pilot line will include 50 types of tools, many with more than one supplier contributing. The goal of the pilot line will be to develop a database that will be used to support production tool purchasing. Participants in the program will benefit from access to patterned and non-patterned wafers, shared metrology and Multi Application Carriers (MACs), shared consortium staff resources, data sharing, and â�?�?financially leveraged business partnershipsâ�?�? with consortium partners. Suppliers who do not participate in the program will be lower on the priority for access to test wafers. The impression left was that not participating in the program will lower the probability of participation in production line rollouts by consortium partners.

Jefferson also clarified the intercept point of the pilot line. The consortium is expected to have different intercept points for logic and DRAM, but the â�?�?expectation should be for 10 nm and beyond,â�?�? and the timing for the second half of 2013-early 2014.

New Requirements, Solutions and Technologies for 450 Fabs

Other presentations during the 2-day program addressed many unique fab, tool and technology requirements for larger wafers. These diverse presentations demonstrated that while 450 mm pilot plans are sharpening around firm schedules and requirements, considerable engineering and science work has yet to be completed.

Peter Csatary, Head of Group Technologies, M+W Group, highlighted the utility, construction, material handling requirements for a 450 fab. Ines Stolberg, Manager Strategic Marketing Litho, Vistec, discussed their concept for a direct write, variable beam (rather than single beam) approach to maskless lithography. Guilhem Delpu from Recif discussed work being funded by the EU on improving vibration, cleanliness and substrate affects on wafer handling.

Geert van der Zalm of Bosch Rexroth also discussed alternative material handling approaches and control strategies for 450 mm wafers to manage vibration with heavier loads and longer arms. â�?�?We may need to rethink tool architecture, such as using inverted linear motor to enable inline vacuum transport that has been proven useful in the solar industry.â�?�? Michael Schilp, Zimmermann & Schilp Handhabungstechnik, also discussed a radically alternative approach to non-contact 450 mm wafer handling using ultrasound.

Results from another European funded project on etch process development illustrated the challenges in 450 mm process development. Mike Cooke from Oxford Instruments indicated the first tests on 450 PECVD SiO2 processing have so far yielded only a 4.2% uniformity across all points. In induction coupled etch plasma, a +/- 10% uniformity across a 450 wafer has been achieved (half of the non-uniformity at the wafer edge), that according to Cooke was â�?�?not good enough, but a useful start.â�?�?

November 2011

Fab Equipment Spending up 23% in 2011 - Still Highest on Record

2011-09-12T22:01:00.000Z

By Christian Gregor Dieseldorff, SEMI Industry Research and Statistics

Changes in the global economy affect the semiconductor industry, as the industry depends more on the consumer market. Economic developments in recent months decreased consumer confidence and spending, and the semiconductor industry has reacted to this slowdown.

The SEMI World Fab Forecast uses a bottom-up methodology, tracking over 250 on-going construction and equipping projects by fab and company. At the end of May 2011, the report predicted 31% growth for fab equipment spending for the year. The prediction is now revised downwards to 23%, as some companies have adjusted plans due to the broader economic conditions.

Fab Equipment Spending (new and used)

The Americas Lead Fab Equipment Spending for the First Time since 2002

The $41 billion in fab equipment spending in 2011 will be the highest on record. Although 2012 spending will decline, the total for 2012 may still be the second highest on record.

In 2011, SEMI counts 223 facilities spending on equipment. Of these, 77 projects are for LED dedicated facilities. Next year, 190 facilities will start or continue equipping, with 72 LED projects.

The highest spending in 2011 occurs in the Americas with about $10 billion, followed by Taiwan with about $9 billion. The Americas region last led spending in 2002. Although Intel spends the most, another key reason for Americaâ�?�?s lead is Samsungâ�?�?s spending of about $2.5 to $3 billion in their Austin fab, dubbed the â�?�?S2-line.â�?�?

In 2012, Korea is predicted to step ahead of the Americas, with over $10 billion in fab equipment spending, followed by Taiwan at $9.2 billion.

Some Cut, while Some Still plan to Increase Spending

Over the last few months, some companies announced cuts in capex for 2011, but for a number of companies, capex plans remain unchanged. Some announced even slight increases though caution is becoming more apparent in the market.

TSMC reduced its capex plan slightly, from $7.8 billion to $7.4 billion. SMIC cut capex from $1 billion to $800 million. Micron just closed their fiscal year with spending of $2.9 billion. Their new fiscal year 2012, beginning September 1st, includes capex plans of only $2 billion.

Intel increased capex plans by about $500 million to pave the way for the 7nm node, enhance its 14nm fabs under construction, and fuel its efforts in hot consumer areas such as servers, notebooks, tablets, and smart phones.

Samsung total capex remains unchanged. However, resources may be reallocated to increase semiconductor and reduce LCD business.

Infineon increased its capex twice this year from 550 million Euros (about US$ 770 million) to 850 million Euro (about $1.19 billion) in May 2011 and then again in July to be slightly above the 850 million Euro.

Winbond increased capex slightly from about $190 million to about $210 million. UMC capex remains unchanged. Hynix also plans to spend the same amount, but may reduce the speed of ramping capacity.

Worldwide Capacity: Steady as She Goes!

As the semiconductor industry adjusts to the market with some spending cuts, the SEMI World Fab Forecast report also predicts that the capacity ramp will slow. 2011 growth of 9.3% (predicted in May 2011) will slow to 6.8%.

In 2011, capacity for about 970-thousand wafers per month (in 200mm EQs) is expected to be added. More than half of this new capacity is for Memory (57%), 15% for Logic and 11% for Foundries. In 2012, SEMI predicts capacity increase for more than 1M wafers per month, a growth rate of about 7%. Currently, 2013 is also expected to show 7% growth in capacity.

Before the economic downturn in 2008, growth rate for installed capacity (2004-2007) was consistently in double digits. Subsequent years show less than 10% growth every year (2010-2013). This may be explained by the fear of building up too much capacity, resulting a much more controlled and conservative approach of the industry. However, there are also concerns that the industry may not be able to meet rapid increasing demand.

Construction Increases in 2011, but More Slowly; even a New 200mm Fab

In the previous SEMI Worldwide Fab Forecasts articles, the â�?�?fab-tightâ�?�? era was described. Trends show construction projects decreasing at rates which call for concern. Fabs are larger and fewer, and technology nodes are shrinking. Looking ahead, the industry may need to react soon to rapidly increasing demand, for example in the NAND Flash market. It takes about 1.5 years to bring a fab from ground breaking to volume production, so in order to see capacity ramp increase in 2012 or 2013, construction projects need to start pretty much now.

The SEMI data closely track construction activity, especially for new facilities. Since the May 2011 edition of the Worldwide Fab Forecast, 2011 fab construction project spending (including Discretes and LEDs) have increased from about $4.8 billion to $5.6 billion. In May 2011, 61 construction projects were counted; now, 72 are under way. Most of the increase is due to more LED fabs in China. Only 40 construction projects are predicted for 2012, less than half of the activity seen before the economic downturn.

Construction spending for 2011 is expected to increase 7%, or $5.6 billion. In 2012, spending will drop 25% to only $4.2 billion. In 2011, 23 new volume fabs began or will begin construction; only 10 such projects are currently foreseen for 2012.

In a blast from the past, new 200mm fabs are still being built. Infineon began construction of their new 200mm fab in Kulim, Malaysia.

The Future Still Looks Good

2011 will be a record year for total spending. In response to the last recession, the industry has become leaner and proven that it can react quickly to global economic fluctuations.

As we may approach some more volatile times ahead, we expect the industry to react as quickly as we saw in 2009. For as long as there is a positive growth rate for equipment spending, 2011 remains to be a record year. At this point of time, we expect a negative growth rate for next year but the absolute numbers are still very high, keeping 2012 in top three in terms of equipment spending.

SEMI

Since the last fab database publication in May 2011, SEMIâ�?�?s worldwide dedicated analysis team has made over 330 updates on more than 250 fab facilities in the database. Fifteen new facilities have been added to the database, 10 of these LED fabs. The latest edition of the World Fab Forecast (published August 30, 2011), lists over 1,100 facilities, with more than 65 facilities starting volume production beginning next year and into the future.

The SEMI World Fab Forecast uses a bottom-up approach methodology, providing high-level summaries and graphs; and in-depth analyses of capital expenditures, capacities, technology and products by fab. Additionally, the database provides forecasts for the next 18 months by quarter. These tools are invaluable for understanding how the semiconductor manufacturing will look in 2011, 2012 and 2013, and learning more about capex for construction projects, fab equipping, technology levels, and products.

Learn more about the SEMI fab databases at: http://www.semi.org/MarketInfo/FabDatabase and

http://www.youtube.com/user/SEMImktstats

Strong 2011 Equipment Market Forecast Complicated by Buying Pause

2011-08-12T20:38:00.001Z

By Dan Tracy, senior director, SEMI Industry Research and Statistics

During SEMICON West, the mid-year edition of the SEMI Capital Equipment Forecast was released that estimates 2011 semiconductor equipment sales to reach $44.33 billion, a 12.1 percent increase over 2011. Following last year's 148% market increase, this year's market growth will likely result in 2011 being the second highest spending year in history (after 2000) and the highest spending year ever for Wafer Processing equipment.

While the outlook remains positive, there may be a very brief interval of lower equipment sales, as some device manufacturers temporarily postpone orders due to worldwide financial uncertainty. At SEMICON West (July 12-14), Novellus Systems CEO Rick Hill portrayed the order postponements as a "pause" in an otherwise robust semiconductor environment. During the Executive Summit at West, Rick Wallace, CEO of KLA-Tencor, and Steve Newberry, president and CEO of Lam Research, mentioned a softening of the market in the next couple of quarters, then resumed growth in 2012.

"My view: we are in the midst of a multi-year growth cycle, but given the rate of growth we've had over the past 18 months, it's only natural there would be a period of consolidation," said Wallace at SEMICON West.

In the face of some weakness in IC sales, some foundries are currently experiencing lower utilization rates and some memory makers are a bit wary of adding capacity. The worldwide semiconductor industry growth forecast for 2011 has been lowered from 10% to 5%, according to IC Insights. Two of the world's leading foundries, TSMC and UMC posted declines in sales for several consecutive months due to weaker global demand. In a conference call to investors on July 28, TSMC chairman and CEO Morris Chang said that capital spending for 2011 will be US$7.4 billion, down from the $7.8 billion projected earlier in the year.

Semiconductor Equipment Sales Forecast for 2011
In 2011, new semiconductor equipment sales are expected to reach $44.3 billion, placing equipment sales at 14% of forecasted semiconductor revenues. The forecast indicates that, following a 148% market increase in 2010, the equipment market will expand by 12% in 2011. The year 2011 is likely to be the second highest spending year in history, finally surpassing the last peak set in 2007. 2011 is also anticipated to be the highest spending year ever for Wafer Processing equipment.

Year-to-date billings for semiconductor equipment reached about $24 billion globally through June, while the three-month average bookings remained relatively stable, around $3.8 billion, over the first six months of the year. Driving equipment investments are primarily technology upgrades, with incremental investments in capacity expansions at existing facilities. Another interesting trend is the increasing dominance of a relatively small number of device manufacturers to the new equipment market. Nine companies spent over one billion dollars in 2010; only four device manufacturers spent over a billion dollars in 2009. Eight companies are expected to spend over a billion dollars in 2011, compared to the 17 that spent over a billion dollars in 2007.

Equipment Sales: Segment and Region Breakdowns
The mid-year edition of the SEMI Capital Equipment Forecast is based on analysis of capex announcements, year-to-date data, and inputs from semiconductor equipment suppliers around the world. According to the forecast, Wafer Processing equipment, the largest product segment by dollar value, is expected to increase 19% in 2011 to $35.1 billion. The forecast predicts that the market for both Test and Assembly equipment will contract in 2011, with semiconductor Test equipment forecasted to decline by almost 6% (to $3.9 billion) and Assembly and Packaging forecasted to decline by 18% (to $3.2 billion). Even with the decline in spending forecasted for this year, the amount of spending on Assembly and Packaging equipment is expected to remain above the average spent (~$2.4 billion/year) from 2004 through 2007.The following results are given in terms of market size in billions of U.S. dollars and percentage growth over the prior year:

Forecast by Equipment Segment and by Region. Source: Equipment Market Data Subscription (EMDS), SEMI

Growth is forecasted for all regions in 2011. Taiwan is expected to be the largest market for equipment spending in both 2011 and 2012. In 2011, North America will be the second largest market in equipment spending ($9.3 billion), with an almost 61% increase in spending over the previous year. Forecasted spending increases in 2011 will be particularly dramatic in North America and Europe owing to Intel's and GlobalFoundries' aggressive CAPEX plans. Additional projects driving the North American market include IBM Microelectronics investments in Building 323, while Micron/IM Flash Lehi and Manassas fabs and Samsung's Austin's fabs are all equipping this year. In addition, ST Micro is investing in Crolles 2, France. Korea will be the third largest market in terms of equipment spending ($8.0 billion) due to significant investments by Samsung and Hynix.

In 2012, the new equipment market is expected to experience a slight decrease of about 1%, with Wafer Processing equipment spending declining 2%. However, low single-digit growth in both the Test and Assembly equipment markets is expected.

The SEMI Industry Research and Statistics group provides timely market and trend information for market research, competitive analysis, and sales forecasting. We focus on the global semiconductor capital equipment, selected materials markets and fab forecasting data. Please visit http://www.semi.org/marketinfo for additional information.

August 2, 2011

The Big Picture

2011-07-08T01:37:00.000Z

By Jonathan Davis, president of SEMI Semiconductor Business

SEMICON West is around the corner and there will be plenty of information and insight to help shape your industry view. The event boasts of more than 100 hours of technical and business programs, 50 hours of free TechXPOT session content, thousands of fellow industry participants, and numerous product announcements and unveilings.

Attendees will hear from colleagues, customers, suppliers, analysts and investors about the multi-faceted and dynamic trends that are propelling the hyper-high-tech silicon-driven industries.

Want to hear about the status of the potential wafer size transition? Then be at the 450mm Forum at the North Hall TechXPOT mid-morning on July 14. But get there early if you want a seat, because our pre-registration figures show that several hundred others are planning to be there.

Want to hear about other technology advancements in areas such as 3D-IC, lithography challenges, test, packaging, materials or market analysis? Then check out the Event Calendar and pick from the many program topics.

What if you want to hear about everythingâ�?�?all in one place? That's right, the BIG picture. Then, I invite you to join me in hearing industry perspective from the captains of innovationâ�?�?the chief executives driving some of the most advanced technology enterprises anywhere in the world.

On Wednesday, July 13, we are fortunate to have a select group of equipment and materials sector leaders to discuss their perspectives on the industry's hottest topics at the annual SEMICON West Executive Summit.

Joining me on the stage will be:
-Terry Brewer, founder and president of Brewer Science
-Doug Neugold, chairman of the Board, CEO, president of ATMI
-Steve Newberry, CEO and vice chairman, Lam Research
-Rick Wallace, president and CEO, KLA-Tencor.

The Executive Summit is one of the most popular events at SEMICON West, because these supply chain leaders have to struggle with complexity and contradiction every day. They have a distinct vantage on the key trends, market forces, application drivers, technology trends, business opportunities and research and development strategies, in addition to well-informed views about the future of our industry.

What makes the Executive Summit so unique is the open, unvarnished discussion on many of the most challenging and controversial topics that seem to be at the forefront in our industry. Even with their customers, investors, competitors and employees in the audience, these executives won't be relying on spin doctors or have their technical staff nearby to ensure a pitch-perfect answer.

This year's panel should be commended for taking the time (and risk) to share their insights in the current situation and future of the industry.

The Executive Summit is from 1:00-3:00pm on Wednesday, July 13, on the Keynote Stage in Esplanade Hall at Moscone Center in San Francisco.

If you want the "big picture," join me there.

Rock & Roll Continues: 2011 Rocks with 31% Growth Rate for Equipment, 9% Capacity

2011-06-17T00:46:00.000Z

By Christian Gregor Dieseldorff, SEMI Industry Research and Statistics

Recently, I was listening to an old "Rock 'n' Roll" record by "Bill Haley and his Comets" that included the song "Whole Lotta Shakin Goin On." It got me thinking about our industry (metaphorically). Taking a look at what's happening in our industry, there really is a "whole lot of shaking going on."

Since SEMI's last publication at the end of February 2011, SEMI's World Fab Database research team has made over 280 updates on more than 230 facilities (from volume to R&D fabs). This includes 20 new records, 11 of which are for LED dedicated facilities.

SEMI's data show increasing capital expenditure for 2011 with more companies spending US$1 billion or more in 2011 compared to 2010 (13 to 14 in 2011 versus 12 in 2010).

SEMI's World Fab Database is tracking fab projects for you. The World Fab Forecast lists 1,139 facilities, including 59 future facilities. For 2011, the database is tracking over 200 equipment projects and over 60 construction projects.

Consolidation and Fab Sales

Since the last publication of our Fab Database reports in February, the industry has experienced more consolidation. Renesas sold its 8-inch fab in Roseville to German-based Telefunken; TowerJazz offered to acquire the Micron fab in Japan for $140 million; and in April, Texas Instruments made an enormous $6.5 billion take-over bid for National Semiconductor, which may be effective by the end of the year. In May 2011, Infineon acquired Qimonda's 300mm facilities in Dresden for 100.6 million Euro. Promos sold its 8-inch fab in Chongqing, surprisingly to a player not associated as a semiconductor company: AVIC Systems, a subsidiary of Chinas state-owned enterprise, Aviation Industry Corporation of China (AVIC).

Far-flung New Fab Projects

In Russia, news resurfaced about a 300 mm fab, this time with MRAM chips by a newly formed company Crocus Nano Electronics, created by Russnano and Crocus Technology. This $300 million funded project plans to be in operation within two years. Advanced Technology Investment Co. (ATIC) of Abu Dhabi, with Globalfoundries, is quite serious about its intrepid plans to invest $6-8 billion. This may also include investment for a complete new infrastructure and a technology center. The Singapore Polytechnic Institute recently agreed to train workers for the new facility, and construction is planned to start in 2012.

Also, semiconductor fabs in India are back in the news as reports surface about possible fab plans there. With help of our office in India, SEMI's World Fab Forecast currently lists five active facilities including one LED facility in construction. We have followed developments in India closely in the past and will continue to do so.

These events reflect some of the data behind SEMI's World Fab Database, which tracks spending, capacity and technology node projects for every fab per company.

Increasing Capex Plans

Since our last report end of February 2011, some companies increased capex plans: Intel's capex is growing from about $9 billion to $10.2 billion and Infineon's from 550 million Euro to 850 million Euro (about $1.2 billion). Rexchip also revised their 2011 capex, more than doubling to about $300 million from $130 million, as more is budget for the continued ramp of a second DRAM fab shell and upgrading to 30 nm-class node. According to SMIC's ambitious five-year business plan, they are targeting to become a $5 billion foundry company. SMIC recently announced $1 billion investment in their 300mm fab in Wuhan, and most of this is expected to materialize next year.

Fab Equipment Spending (New and Used)

As the year 2010 rocked upwards with about 134% growth in equipment spending to reach $33.6 billion, spending this year slows though keeps on rolling with about 31% growth. With this, fab equipment spending will reach an all-time high of about $44 billion ($40.8 billion without Discretes). The spending pace is currently expected to decline -6% for 2012. Despite the 2012 decline, equipment spending will be an impressive $41 billion, the second highest level ever (See table 1). Included in the 2012 spending will be some equipment expenditures for 450mm pilot development.

Table 1: Equipment Spending (new and used) including Discretes by Wafer Size

Source: SEMI World Fab Forecast May 2011

New Fabs Starting Construction and Construction Spending

An early indicator of future fab equipment spending is fab construction spending and the number of new volume fabs beginning construction. The construction phase for a new volume fab takes about a year until equipment move-in begins. After that it takes about 3-6 months until volume production can commence. The number of new volume fabs starting construction shows an alarming drop for 2011 and continues into 2012. The last time the industry saw a drop of new fab construction projects was during the last economic crisis. See Graph 1.

Graph 1

This year, SEMI's data show that only 17 new volume fabs have a high probability (>60%) of beginning construction, including 13 LED fabs. Excluding LED fabs, SEMI predicts only four volume fabs to begin construction this year, and four in 2012. Over the last 15 years, the semiconductor industry has seen only one year with this low count of volume fabs starting construction and that was during the distressing 2009 downturn. In most other years, the number of new fabs starting construction was in the double-digits. As a result, fab construction spending slows down this year and in 2012. See Table 2:

Table 2: Construction spending

* number rounded

Source: SEMI World Fab Forecast May 2011

Capacity Trends

The earthquake in Japan on March 11 may have some short-term effect on utilization rates and capacity output, but will not have a significant impact on installed capacity.

Recent Fab Capacity (without Discretes) growth seems to have leveled to just below 10% growth annually. This trend is unusual as SEMI's historical data showed yearly growth in double-digits from 2003 to 2007. Slower growth, under 10%, is projected to continue into 2012. At this point, our data shows that the growth rate of capacity will remain under the 10% mark into 2014. This may be explained because most existing fabs ramped up to full capacity by about end of 2012 and by the low number of new fabs starting construction the years before. See graph 2.

Graph 2

Source: SEMI World Fab Forecast, May 2011

In 2010, the growth rate in capacity of Foundry fabs surpassed Memory fabs, with 13% versus 7%. This trend is expected to continue in 2011 as Foundry capacity will increase by 13% while Memory capacity will increase by 8%. Growth of LED dedicated fab capacity remains in the double-digits with over 40% estimated in 2011 while a lower capacity growth forecasted in 2012.

Memory dominates the worldwide installed fab capacity with a 38% share of the capacity this year, followed by foundries with about a 29% share. This share trend is expected to continue into 2012.

SEMI's fab database now shows a few potential candidates for 450 mm wafer size. Construction of the first 450 mm ready facilities began last year, and more will begin construction this year.

Summary

In summary, the Rock 'n' Roll continues... 2010 rocked; 2011 is expected to keep rolling to reach a record year for fab equipment spending. In 2012, although negative growth is expected for equipment spending, the total spending amount will still reach the second highest level in the history of SEMI's fab database. The count of new volume fabs starting construction is historically low, giving reason for concern when looking at industry capacity plans for 2012 and beyond.

Because it takes about a year and a half to start a new fab from scratch to volume ramp, will capacity be able to meet future demand? Double-digit growth rates for installed capacities, as seen between 2003 and 2007, seem to have faded into the past. Capacity growth has matured to below the 10% mark, perhaps because of industry consolidation (fewer players) or perhaps companies still feel the shock of the last downturn and are currently more cautious about new investments.

SEMI's worldwide team keeps tracking any changes and keeps you up-to-date.

SEMI's World Fab Forecast report uses a bottom-up approach methodology, providing high-level summaries and graphs; in-depth analyses of capital expenditures, capacities, technology and products by fab. Additionally, the database provides forecasts for the next 18 months by quarter. These tools are invaluable for understanding semiconductor manufacturing in 2011 and 2012 will look, and learning more about capex for construction projects, fab equipping, technology levels, and products.

Check out also the New Opto/LED Fab Forecast!

Learn more about the SEMI fab databases at: www.semi.org/fabs and
www.youtube.com/user/SEMImktstats.

SEMI's Worldwide Semiconductor Equipment Market Subscription (WWSEMS) data tracks only new equipment for fabs and test and assembly and packaging houses. The SEMI World Fab Forecast and its related Fab Database reports track any equipment needed to ramp fabs, upgrade technology nodes, and expand or change wafer size, including new equipment, used equipment, or in-house equipment.

Semiconductor Photomask Market Forecast: $3.2 billion in 2012

2011-04-07T23:57:00.000Z

By SEMI Industry Research and Statistics (April 5, 2011)

The worldwide semiconductor photomask market was $3.0 billion in 2010 and is forecasted to reach $3.2 billion in 2012. After contracting for two consecutive years in 2008 and 2009, the semiconductor photomask market grew 10 percent in 2010. The mask market is expected to grow 7 percent and 2 percent over the next two years. Key drivers in this market continue to be advanced technology feature sizes (less than 65 nm) and increase manufacturing in Asia-Pacific. Captive photomask shops accounted for 40 percent of the total mask market in 2010, compared to 30 percent in 2006.

Figure 1: 2010 Regional Photomask Market

Source: Photomask Characterization Summary Report â�?�? March 2011

Traditional optical lithography continues to push out next generation lithography schemes, including extreme ultraviolet (EUV), maskless lithography, and nano-imprint. Immersion lithography is the technology of choice for 45-nm processing. Source mask optimization is being used to extend single-exposure processes for sub 45-nm processing, while double patterning is being deployed in other instances as well.

To extend optical lithography to 22-nm feature sizes device manufacturers are utilizing computational lithography, in addition to double-patterning and source mask optimization. EUV has been pushed out to at least 16-nm; when and if EUV is adopted will be determined by cost and developing a new supply chain for this revolutionary technology. However, progress has been made in key areas such inspection, source power, masks and resists. While there has been much incremental progress in the EUV field, there is increasing discussion to use EUV as a complement with 193-nm immersion to shrink devices further.

This raises perhaps the most daunting challenge faced by merchant photomask suppliers: economic uncertainty outweighing technical issues. As lines shrink, more advanced photomask tools and materials will be required, but due to limited customers migrating to smaller geometries and the increasing reliance on captive shops, the merchant photomask industry must balance a shrinking market with escalating development and capital costs.

A recently SEMI published report, Photomask Characterization Summary, provides details on the 2010 Photomask Market for seven regions of world including North America, Japan, Europe, Taiwan, Korea, China, and Rest of World. The report also includes data for each of these regions from 2005 to 2012. For more information on this new report, please click here.

Record Capex Leads to Fab Equipment Increase of 28% in 2011

2011-03-12T01:27:00.000Z

Exciting Times Ahead â�?�? and Is the 450 mm Era Beginning?

By Christian Gregor Dieseldorff, SEMI Industry Research and Statistics

Exciting times loom ahead for the industry: 2011 promises record spending levels; there are inklings that the 450 mm era is beginning to take shape; feature sizes will break into 20nm-class; and fabs are showing up in unlikely places. Some companies have surpassed their record investments in 2010 to set new spending records in 2011.

SEMIâ�?�?s internal analysis of semiconductor manufacturersâ�?�? capital expenditure (capex) announcements used to update the fab database predicts that total semiconductor capex will grow between 15 and 20% in 2011. While this is not the highest spending level on record, a significant portion of this aggressive spending is promising to result in record investments in new and used fab equipment. Table 1 compares investments on fab equipment and construction, and how those rates compare to the record high levels set in 2007.

Table 1: Front End Fab Spending over Time

In US$ Million	2007	2008	2009	2010	2011 F	2012 F
Fab construction projects	$8,282	$4,412	$1,947	$5,334	$4,637	$4,208
Change %	10%	-46%	-57%	174%	-13%	-9%
Fab equipment spending (new&used)	$38,111	$25,942	$14,311	$33,308	$42,577	$40,877
Change %	13%	-32%	-45%	133%	28%	-4%
Total Fab spending	$46,393	$30,308	$16,201	$38,644	$47,214	$45,085
Change %	21%	-35%	-47%	139%	22%	-5%

Source: SEMI World Fab Database Reports (February 25, 2011)

In the latest edition of the World Fab Forecast published on February 25, 2011, SEMI has updated data on over 200 facilities, including LED fabs. Using a thorough bottoms-up approach (tracking all projects fab by fab), the data reveal a 28% increase year-over-year (YoY) for fab equipment spending in 2011. In 2012, spending rates currently show a decline of 4%.

Spending on construction projects is expected to decline by about 13% in 2011, a trend which will continue into 2012 with a 9% decline forecasted.

Some Companies: Record Spending in 2011

Some companies will spend dizzying amounts in 2011, reaching historic record levels. For example, TSMC increased capex from a record $5.9 billion in 2010 to another record high of $7.8 billion in 2011. Intel increased capex from $5.2 billion in 2010 to $9.0 billion in 2011. Globalfoundries doubled its 2010 capex from $2.7 billion to $5.4 billion in 2011. Samsung increased total capex (including R&D) by 18%, from a record in 2010 to another record in 2011. However, while Samsung intends to spend more on LCD, OLED and R&D, but their investment for semiconductors actually will decline by 14% for the year. Other companies have increased their capital expenditures for this year (although not to record levels), including Hynix, Micron, SMIC, Toshiba, ST Microelectronics, and Infineon.

Times have changed and the balance of industry segments has shifted. For the first time, equipment spending levels for foundries are approaching investment levels of memory. Memory has historically been the highest spending segment in the industry. Chart 1 compares 2011 with the previous record year (2007) showing the shift between industry segments.

Chart 1: Comparing Fab Equipment Spending for 2007 and 2011 by Industry Segment

ï»¿ ï»¿

Source: SEMI World Fab Database Reports (February 25, 2011)

ï»¿ï»¿ ï»¿

In 2011, fab equipment spending for foundries is expected to reach the highest level in history. Foundries are expected to continue to spend at accelerated levels in 2012. Memory companies will spend much less aggressively in 2011 than in 2006 and 2007, with equipment spending approaching 2008 levels. A large segment of the pie is spending on MPU/Logic, mainly driven by Intel, whose MPU investments will reach record levels in 2011.

Capacity Growth: â�?�?Steady as She Goesâ�?�? â�?�? but Slower than in the Past

SEMIâ�?�?s World Fab Forecast predicts steady growth in capacity, about 9% for 2011 and 7% for 2012 (without Discretes). See Chart 2.

Chart 2: Worldwide Installed Capacity

Consistent with aggressive spending levels, foundries will have the strongest increase in capacity in 2011, followed by MPU/Logic (combined), and Memory. Foundries are also expected to lead capacity growth in 2012. Although these growth rates are encouraging, they are much lower than levels experienced between 2004 and 2007. Prior to the economic downturn, capacity growth from 2004 to 2007 ranged from 14 to 23% per year.

Making predictions more than two years out for is very challenging in this industry due to the influence of macroeconomic fluctuations. SEMIâ�?�?s World Fab Forecast lists 45 future fabs that will begin production from 2012 to 2016. Extrapolating from these data, annual capacity growth rates in 2013 and 2014 is expected to hover around 7%. Most spending is directed towards upgrading existing facilities, as companies try to avoid overcapacity and oversupply.

Construction Projects: How Tight is â�?�?Fab-tight?â�?�?

While there is record spending on Fab equipment, few new facilities are on the horizon. Ironically, some few projects are cropping up in unlikely places, such as Abu Dhabi and Siberia. Comparing new construction projects over the past 10 years to the coming two years, we see a rapid slow down, especially for new 300 mm fabs. See chart 3.

Chart 3: Count of Volume Fabs Starting Construction

In 2010, 34 new volume fabs began construction; in 2011, only seven have a high probability of being realized; and four more are likely to start in 2012. By way of comparison, over the past five years, at least 20 new volume fabs began construction each year, with LED fabs representing the majority of new construction projects in 2009 and 2010.

Slow Down for LED Fabs

The largest segment for new fabs is the LED industry, with wafer sizes of 2-inch and 4-inch. However, significantly fewer new LED fabs will begin construction in 2011 and 2012. SEMIâ�?�?s World Fab report lists 24 new LED fabs beginning construction in 2010, but only five new LED fab projects are likely in 2011.

This slowdown may be explained by recognition that in the near-term the industry has added too much capacity, coupled by changes to government subsidies in China. For example, historically local governments in China supported the domestic LED industry with hefty subsidies. Companies received up to 8-10M RMB for each MOCVD reactor. Some of these subsidies will expire this year, and others are expected to change.

Slow Down for New 300 mm Fabs

In 2010, SEMIâ�?�?s World Fab Forecast counted seven 300 mm volume fabs (excluding R&Ds and pilots) beginning construction. However, in 2011, only Intelâ�?�?s fab is predicted to start in mid-2011. In 2012, three 300 mm fabs will begin construction: one foundry and two integrated device manufacturers (IDMs); two of which are potential candidates for 450 mm-ready cleanrooms.

The slow down for building new 300 mm fabs may be explained by several factors. Facilities are larger, so capacity ramps can be extended over longer timeframes. Also, existing fabs are being upgraded to the next feature size, while IDMs are outsourcing more products to foundries. The recent economic downturn left the industry reluctant to overbuild capacity again. Finally, some companies may wait for the 450 mm wafer technology to mature, stalling until they can invest in the new era.

Assuming demand does not stagnate, but continues to increase, the â�?�?fab-tightâ�?�? landscape may become a concern. If existing fabs are ramped to full capacity, companies may not be able to meet new demand by upgrading their technologies any more. Lead-times for a new fab are just too long, typically taking 1 to 1 1/2 years from construction start to ramp up to volume production. Any new fab starting after mid-2011 wonâ�?�?t be ready for volume production until the end of 2012 or later, depending on technology node.

The Dawn of the 450 mm Era

For the first time, SEMIâ�?�?s World Fab Forecast data identify seven facilities (R&Ds, pilots and volume fabs) in the near future that are candidates for 450 mm readiness. The first facilities are expected to come on line in 2013.

Some 450 mm equipment is already available, such as metrology tools, wafer sorters, and cleaners. It remains to be seen if enough mature 450 mm tools will be available to fully equip a high volume fab.

While several key device manufactures are promoting 450 mm, governments are keenly interested in 450 mm as evidenced by the recent European commissionâ�?�?s decision to award Future Horizons Ltd. and Decision SA a one-year joint contract to assess the benefits of a 450 mm semiconductor prototyping line being located in Europe. Government incentives were also a significant supporter of the first 300 mm pilot line in Dresden, SC300.

Fabs in Unlikely Places: the Desert and Siberia

Driven mainly by economic incentives (no income tax and strong government subsidies), the Advanced Technology Investment Company (ATIC) announced it will spend $6-7 billion on a High Tech Center next to the International airport of Abu Dhabi (Masdar city). Although Abu Dhabi will need to build its infrastructure from scratch, the center includes a plan for a 300 mm wafer fab. Production is expected to ramp up in 2014 or 2015.

From the extreme heat of a desert, to the other extreme: Rusnano plans a project to produce telecommunication ICs at a fab in Siberia. Micran, the project name, will be in a technology park in Tomsk, Siberia, which began construction at the end of 2010 according to sources.

SEMIâ�?�?s World Fab Database is tracking fab projects for you. The World Fab Forecast lists 1,122 facilities, including about 50 future fabs. For 2011, the report is following over 200 equipment projects and 43 construction projects.

SEMIâ�?�?s World Fab Forecast report uses a bottom-up approach methodology, providing high-level summaries and graphs; in-depth analyses of capital expenditures, capacities, technology and products by fab. Additionally, the database provides forecasts for the next 18 months by quarter. These tools are invaluable for understanding semiconductor manufacturing in 2011 and 2012 will look, and learning more about capex for construction projects, fabs equipping, technology levels, and products.

Learn more about the SEMI fab databases at: http://www.semi.org/MarketInfo/FabDatabase and http://www.youtube.com/user/SEMImktstats

SEMIâ�?�?s Worldwide Semiconductor Equipment Market Subscription (WWSEMS) data tracks only new equipment for fabs and test and assembly and packaging houses. The SEMI World Fab Forecast and its related Fab Database reports track any equipment needed to ramp fabs, upgrade technology nodes, and expand or change wafer size, including new equipment, used equipment, or in-house equipment.

State of the Union Speech Outlines Support for Many SEMI Policy Priorities

2011-02-08T22:36:00.000Z

By Maggie Hershey, senior director, SEMI Americas Public Policy

As is required by the Constitution and honored by tradition, President Obama addressed Congress and the nation in the annual State of the Union Address on Tuesday, January 25. The assembled Members of Congress made a statement of bipartisanship by sitting together for the speech, as opposed to the normally divided chamber. In his speech, the President made many remarks about the future of our nation and how we can get there together. Much of what the President had to say is good news for SEMI members and our industry. Below is a summary of the key points that are pertinent to SEMI members:

Support for Innovation

One of the major themes of this address to the nation was the message that innovation is key to â�?�?winning the future.â�?�? Two years ago, the President called for a level of research and development that had not been seen since the height of the â�?�?space race.â�?�? Obama said he would send a budget to Congress in a few weeks that would help meet that goal. The budget will contain investments for biomedical research, information technology, and especially clean energy technology.

Clean Energy Agenda

The President made a clear case for the need for American innovation with particular emphasis on clean energy. The president called for increasing the budget for clean energy technology and R&D to $8 billion, which is a 33 percent increase from 2010. Obama also called for a doubling of the share of electricity generated from â�?�?clean energy sourcesâ�?�? by 2035, from 40 percent today to 80 percent. While this goes beyond wind and solar to includes to nuclear power, clean coal, and natural gas, it could be a boon for the solar PV industry if there is a â�?�?carve outâ�?�? for this resource.

Doubling Exports

To help businesses sell more products abroad, the Obama administration has set a goal of doubling U.S. exports by 2014. The President remarked that exports are already up and have created many American jobs. In addition, he spoke of recent agreements that the United States has signed with India and China that will support more than 250,000 jobs in America. Obama also mentioned that his administration has finalized the trade agreement with South Korea that will support at least 70,000 American jobs and urged Congress to act to pass this agreement quickly.

High Skills Immigration Reform

Obama used his platform in front of Congress to make a plea that both parties work together to address the topic of immigration reform. The President made special mention of the effort to grant citizenship to those the come to America and complete a degree in Science, Technology, Engineering, or Math (STEM) in order to keep talented and educated individuals in this country.

Corporate Tax Reform

The President made the case in his speech for the need to lower what is now the highest corporate tax rate in the world in order to promote more investment by companies. â�?�?It makes no sense, and it has to change,â�?�? said Obama. This is a strong statement that tax reform will be near the top of this Administration agenda for the next two years.

While it is good to see so much support for areas of policy that are important to SEMI members, it is important to recognize that many of these initiatives require acts of Congress to be passed into law. With the great string of bipartisan achievements after the mid-term elections during the â�?�?lame duckâ�?�? session of the last Congress, there is some hope for future bipartisan collaboration.

On the other hand, there are signs already of positioning for the 2012 elections, so it will remain an interesting time in Washington. SEMI and its Washington D.C. office will continue to work on these issues throughout 2011. If you have public policy questions, please contact Jamie Girard (jgirard@semi.org).

Why I'm Betting on 2011

2010-12-15T00:52:00.000Z

By Jonathan Davis, president, Semiconductor Business Unit, SEMI

While speculation grows about the future of the semiconductor industry, itâ�?�?s clear that 2010 was a banner year for semiconductor equipment companies. Total fab spending in 2010 ($37.9 billion) was up 134% over the abysmal 2009 ($16.2 billion). So will 2011 and 2012 keep up the crazy pace of 2010? Absolutely not, yet I remain optimistic that the semiconductor industry will remain healthy in 2011 and on into 2012. Hereâ�?�?s why.

General Economic Environment

The world economy is in the early stages of recovery from the worst recession in over 50 years.Following a disastrous 2009 where world GDP declined 2.7%, the World Bank estimates GDP will grow 3.3% each year from 2010-2013.The IMF (International Monetary Fund) increased its forecast for global economic growth to 4.5% for this year and 4.25% for 2011. In the U.S., Pacific Investment Management Co. (Pimco), which manages the worldâ�?�?s biggest bond fund, just increased its forecast for

U.S.

growth next year in response to the tax policy compromise.

Can the World Bank, IMF and top financial analysts be wrong? Of course. Are there alternative economic forecasts that arenâ�?�?t so positive? Probably. But a solid consensus of moderate to healthy GDP growth for the next few years has developed.

What Fabs Are Saying

SEMI monitors capital spending at over 1,000 fabs around the world and hereâ�?�?s what they are saying. Total fab spending is expected to increase by 18.3% in 2011 and by 9.5% in 2012 as a result of on-going technology upgrades and continued capacity growth, especially for Memory, Foundries and MPU. In 2011, itâ�?�?s true that spending on construction projects is declining, but spending on Fab Equipment is forecast to rise 23%â�?�? reaching about $40 billion. With $40 billion in equipment spending (for Front End fabs, including Discretes, new equipment, and used equipment), 2011 will surpass the spending levels of 2007, showing the highest spending on fab equipment in the 19-year history of the SEMI World Fab database.

At the same time, spending on fab construction projects is going down (-11%) in 2011. After the massive construction project growth from 2009 ($1.9 billion) to 2010 ($5.1 billion), less construction is not surprising. The current focus is on upgrading and ramping existing facilities, as companies try to figure out if the market has really stabilized. Unfortunately, this approach could be problematic for the industry since it takes 18 to 24 months to plan, construct, equip and ramp a new fab. The industry may not have enough capacity in the next two years, as new fabs take time to come on line.

Fab Spending for Front End Facilities (including Discretes)

In US$ Million	2007	2008	2009	2010	2011	2012
Construction projects	$8,358	$4,553	$1,947	$5,106	$4,519	$3,345
Change %		-45.5	-57.2	162.2%	-11.5%	-26.0%
Equipment spending	$38,103	$25,983	$14,311	$32,834	$40,380	$45,813
Change %		-31.8	-44.9	129.4%	23.0%	13.5%
Total spending	$46,461	$30,491	$16,201	$37,942	$44,899	$49,158
Change %		-34.4%	-46.9%	134.2%	18.3%	9.5%

SEMI 2010

Next, letâ�?�?s look at fab capacity. SEMI predicts 8% annual growth in installed fab capacity for 2010, at least another 8% for 2011 and at least 9% for 2012. Granted, these increases are modest compared to double-digit growth rates seen each year from 2003 to 2007. Still, itâ�?�?s interesting. Examining capacity by region, the World Fab Forecast data shows that in 2010, Japan will maintain its leadership with over 23% share, followed closely by Korea and Taiwan with about 20% each. The U.S. is at 14.5% and Europe is at 9.1%. Looking forward to 2012, the U.S. and Europe will lose ground (decreasing by 2.8% and 6.6%, respectively), but overall the changes are not as dramatic as they could be, given that the governments in the U.S. and Europe do not provide the same types of tax advantages and subsidies as Asia. Not surprisingly, China will likely be the big winner with five companies contributing to Chinaâ�?�?s increased share (22.5%) by 2012: SMIC, Intel, TSMC, Hua Li and Promos.

Share of Worldwide Capacity by Region (without Discretes)

Region	% of 2011	% of 2011	% of 2012
Americas	14.5%	14.6%	14.1%
China	7.9%	8.8%	9.6%
Europe & Mideast	9.1%	9.1%	8.5%
Japan	23.8%	22.8%	22.1%
Korea	20.3%	19.9%	20.1%
SE Asia	5.0%	5.4%	5.7%
Taiwan	19.3%	19.4%	19.9%

SEMI 2010

Looking at year-over-year capacity growth by industry segment, the LED segment is the stand out. The LED industry is growing leaps and bounds, in double digits for the past six years. In the past, the Memory segment capacity addition led growth, with growth rates twice as high as foundries. As you can see, since 2008, memory is no longer the leader of the pack.

Change of Installed Capacity by Industry Segment

Itâ�?�?s just a whole new industry ecosystem, and deciding what kind of company to be is critical. Staying on top of the issues in this industry isnâ�?�?t easy. Iâ�?�?m hoping that youâ�?�?ll attend the SEMI Industry Strategy Symposium (ISS) on January 9-12 in Half Moon Bay, Calif. ISS really looks at the forces that shape our industry, offering strategic ideas and concrete information that enables success in a tough business. ISS this year will deal with managing capital efficiency, maximizing R and D investment choices, and investing in future growth with a focus on risk mitigation strategies. For more information, visit the ISS website (http://www.semi.org/iss). The Strategic Materials Conference is January 12-14, immediately following ISS at the same location (http://www.semi.org/smc).

Tough Decisions Ahead on the Road to 450 mm

2010-11-08T22:30:00.000Z

The 450 mm Road is Paved with Complexity, Uncertainty

By Jonathan Davis, president, Global Semiconductor Business, SEMI

Important developments are unfolding in the industry's analysis of a possible wafer size transition. Moving leading-edge semiconductor manufacturing to 450mm wafers is one of the most complex and challenging issues in our industry. While advocates maintain that larger wafers are needed to keep pace with Mooreâ�?�?s Law, opponents argue that larger wafers will detract from innovation and negatively impact profitabilityâ�?�? draining precious R&D funding away from critical advances in scaling, manufacturing flexibility, and cycle time improvements.

Switching to 450 mm wafer manufacturing will involve difficult decisions involving timing, funding mechanisms and planning processes. The industry will miss the ISMI 2012 target date, but new target dates have not been firmly established. Funding mechanisms for the multi-billion dollar R&D price tag for a 450 mm wafer transition also have not been established? And, moving leading edge manufacturing to 450mm calls into questions how the industry makes informed, collective decisions on issues impacting multiple chip makers and a global supply chain? Over the past several months, progress has occurred on each of these issues, but important questions and significant uncertainties remain.

SEMI is involved in moving the debate forward by advocating for a detailed economic and supply chain cost analysis before moving to implement 450 mm manufacturing. It has worked on the issue through the SEMI Standards 450 mm Task Force and publication of the first 450 mm standards for wafer carriers and load ports. Significant progress has also been made by the International SEMATECH Manufacturing Initiative (ISMI) which is facilitating industry readiness through wafer handling pilot lines, sample wafer loans, and other activities. Other R&D consortia and many individual companies are also ready for the hard work involved in scientific research and product development.

Scaling Up

In 2005, ISMI reported that wafer processing cost curves were shifting unfavorably so that the Mooreâ�?�?s Law could not be maintained unless wafer size increased. Later in 2005, the SEMI and SEMATECH Board of Directors members met for the first time to discuss an industry-wide transition to larger wafers.

Many SEMI members recall the difficult and costly transition to 300 mm wafers, and they formed the Equipment Productivity Working Group (EPWG) to conduct their own simulation, survey, and modeling to analyze the issues supporting the cost reduction contribution of a wafer scale-up. After two years of open, collaborative analysis, the EPWG concluded in a White Paper that 450 mm wafer scale-up represents a low-return, high-risk investment opportunity for the entire semiconductor ecosystem[1].

However, the obvious upside to scaling up is improved silicon productivity. This remains the primary argument for wafer size transitions. Increasing the wafer area increases the number of dies per wafer and leads to a theoretical reduction in die cost of approximately 30 percent if all other costs remain constant. The semiconductor industry has increased wafer size about once every 10 years. In 1991, the industry first started using 200 mm wafers, switching to 300 mm wafers in 2001. ISMIâ�?�?s original goal of transitioning to 450 mm wafers in 2012 would be consistent with that industry timeline.

The semiconductor industry also faces increasing difficult challenges in scaling, another critical issue. Critics of 450 point out that focusing on wafer size increases represents the single most disruptive type of investment the industry could undertake, thus detracting from scaling issues. To implement 450 mm, every piece of process and automation equipment must be redesigned, from crystal growing to final test.

Some argue that technology requirements for 450 mm tools far exceed a simple linear size expansion of existing 300 mm tools. Wafer bow and flatness, wafer thermal expansion, loading and wavelength affects, new chamber designs, and other impacts will fundamentally alter the physics of patterning, deposition, etch, planarization, and other processes. Each of todayâ�?�?s 300 mm processes require nearly 1,000 steps and each will need ground-up scientific analysis and reengineering. Data processing and metrology requirements of the larger wafers will slow cycle time, and yield will be profoundly affected.

Figure 1: Companies Manufacturing Semiconductors by Wafer Size

While the industry debated, the original 2012 target for 450 mm transition is no longer realistic. The latest ITRS roadmap on semiconductor technology has pushed out the arrival of a viable 450mm tool set to 2014, with volume production expected 4â�?�?6 years later. With lithography roadmaps uncertain, new transistor designs and 3D IC in planning stages, and the industry still reeling from the worst downturn in history, firm targets for a wafer-size transition seem elusive as ever.

However, significant progress has been made and most observers feel the issue is no longer a matter of â�?�?if,â�?�? but rather a matter of â�?�?when.â�?�? Funding a transition remains a difficult challenge, but new funding models are starting to emerge.

ISMI and SEMI: Involved in Getting the Industry Ready

ISMI is actively involved in supporting 450 mm wafer development and material handling requirements through a number of programs and demonstration projects. They have created a â�?�?wafer bankâ�?�? to lend test wafers to equipment developers, developed an interoperability test bed to support automation and material handling demonstrations, and created a set of equipment performance and EHS documents. ISMI has completed prototype testing of 450 mm factory integration equipment, including lab testing focused on 12 mm pitch FOUPs, MACs and load ports. They have evaluated multiple personal guided vehicles (PGVs) for wafer handling and verified pallet requirements for MAC shipping. Later this year, ISMI will demonstrate automated materials handling system (AMHS) components including new 450 mm stockers and overhead hoist transport systems.

ISMI has also created preliminary ISMI 450 mm vacuum platform guidelines and published EQP software guidelines, but final evaluation of the feasibility of vacuum platform standardization wonâ�?�?t begin until 2013, according to ISMI.

SEMI International Standards development has also made progress to enable pilot development and provide a platform for future development work. In July 2010, SEMI M76 was adopted by the industry to detail test wafer requirements for various applications such as lithography, patterning, thermal processes, films and deposition. Also in July 2010, SEMI passed E156 that relates to the storage and transport of 450 mm wafer carriers in a semiconductor factory.

Eventually, a 450 mm pilot system needs to be developed. Certainly, these material handling demonstrations, standards and guidelines activities are necessary precursors for the pilot system, but critical process technology analysis has not begun. While wafer polishing processes have improved and particle levels have been dramatically reduced, wafer quality remains below the threshold for process research and development. Surface metal metrology is still in development and inspection equipment is not yet online. ISMI claims there are no technical â�?�?shows stoppersâ�?�? but the fact remains that the hard scientific work has not yet begun.

Funding Model Questions Remain

Economic justification for a 450 mm transition includes questions on funding models. In the SEMI White Paper study, equipment suppliers claimed the 300 mm transition benefitted only chip makers, and the supply chain has yet to recoup their R&D investment from the last wafer scale-up. SEMI estimated that the R&D for the 300 mm transition at over $22 billion [1]. In 2005, SEMI asserted that industry was facing an R&D funding gap that threatened the continuation of Mooreâ�?�?s Law-related cost reductions. In 2006, SEMI claimed that â�?�?Before a successful transition to 450 mm can be conceived, the industry will need to fund the investment in a way that provides a reasonable return to the supply infrastructure whose participation will be required. At this time, it is not clear that there is a benefit to the industry that outweighs the increased cost of the equipment required.â�?�?

In July 2010, ISMI acknowledged that the historical financial risk model for wafer- size transition funding is no longer relevant, and that â�?�?risk-sharing with tool suppliers is expected to realize the 450mm transition.â�?�? ISMIâ�?�?s planned mechanism is some type of cost sharing to lower the financial risk for tool and technology suppliers.

ISMI has announced that they will engage in discussions and negotiations to support funding of R&D development, but how this approach will roll out across the supply chain is vague. Presumably, ISMI will enter into a case-by-case funding approach with every supplier of every key tool set, or some subset of suppliers based on yet-to-be determined considerations. While much is still not known about scope, scale and strategy of this ISMI funding approach, it is a radical departure from traditional consortia funding and roadmap development models.

As we examine the issue of 450 mm, our goal remains the continued growth and proliferation of electronic goods and services. The key driver for this growth is the industryâ�?�?s push to keep up with Mooreâ�?�?s Law, dramatically reducing costs. Fundamental to this growth is a highly-refined collaborative process such as the ITRS and SEMI standards, plus industry consortia to finance pre-competitive R&D. How will these models and mechanisms for collaboration operate in the coming years to support a transition to 450 mm wafers? Let us know what you think.

[1] SEMI White Paper, Equipment Suppliersâ�?�? Productivity Working Group 450 mm Economic

Findings and Conclusions, June 2008

[2] SEMI White Paper, Equipment Suppliersâ�?�? Productivity Working Group 450 mm Economic

Findings and Conclusions, June 2008

In Praise of Innovation

2010-10-20T22:48:00.000Z

By Jonathan Davis, president, SEMI Global Semiconductor Business

Itâ�?�?s often been said that innovation is the lifeblood of high tech. In fact, innovation is the driving force behind economic growth, prosperity and products that improve our quality of life. Throughout the ages, breakthroughs in our understanding of science and technology coupled with the enterprising ability to commercialize new products has resulted in advancements that heighten productivity, harness information, improve communication, increase safety, protect life, and improve our well-being, not to mention â�?�? energizing entertainment.

A recent report on innovation and economic prosperity by the Information Technology and Innovation Foundation says that two-thirds of the increase in per-capita GDP is attributable to innovation. The public policy â�?�?think tankâ�?�? that promotes pro-innovation policies in Washington claims that innovation in tradable new products is critical for regional economic growth. It claims that innovation matters because economic transformation is constant and innovation is required to continually renew an economy.

Innovation and Entrepreneurship

In other words, the fruits of innovation extend far beyond your cool new iPad or sleek new cell phone; they are essential for the very fabric of economic life that we know today. Peter Drucker, primarily noted as a management and entrepreneur guru, said in his 1985 book, Innovation and Entrepreneurship, â�?�?Innovation is the specific instrument of entrepreneurshipâ�?¦ the act that endows resources with a new capacity to create wealth.â�?�?

And our industry that owes a lot â�?�? if not everything, to the twin engines of innovation and entrepreneurship. The developments that have let to the exponential increases in computing power or 400 million-fold decrease in transistor costs are acts of amazing insight and inspiration.

The microelectronics industry and those closely related to silicon processing technology are a epicenters of innovation at the cutting edge of applied physics, chemistry, electrical engineering and materials science, to name but a few of the specialized disciplines involved in honing the extraordinarily complex manufacturing processes.

So itâ�?�?s a good thing that we sing the praises of innovation and recognize the great technologists who are responsible for making it happen. The individuals that produce these marvelous breakthroughs are â�?�? by definition â�?�? bucking the trend. They have a unique ability to imagine new solutions to old problems.

Oracle CEO Larry Ellison said, â�?�?When you innovate, you've got to be prepared for everyone telling you you're nuts.â�?�?

Some significant traits of innovators include dogged determination and a healthy sense of denial. Itâ�?�?s been said that you cannot hear people telling you "that wonâ�?�?t work" or "that will never be acceptedâ�?�? or "you can't launch until you have such and such feature. â�?�?

Once you ship, then you can begin to listen to the things that people say; until then an inner conviction often drives the creative force.

â�?�?Wild Spiritsâ�?�?â�?�? Agents of Change

Harvard economist and author Joseph Schumpeter argued that the innovation and technological change comes from agents he called â�?�?wild spirits.â�?�? He coined the word â�?�?Unternehmergeist,â�?�? for entrepreneur spirit. He also asserted that entrepreneurial and technical innovators are responsible for most of the economic progress we recognize.

Our industry is replete with the â�?�?wild spiritsâ�?�? that work at the outer boundaries of science and engineering to research and develop the next generation of silicon processing technologies to make semiconductor and other electronic systems work better, faster and more cost efficiently. The stories of these people constitute the chronicle of our industry progress.

Spurring the Industry Forward

Think of the major breakthroughs in semiconductor manufacturing and a few names come to mind:

Jean Hoerni, one of the â�?�?Traitorous Eightâ�?�? that left Shockley Semiconductor Laboratory to start Fairchild Semiconductor was a silicon transistor pioneer noted for developing the planar process.
Walter Benzing and Mike McNealy refined technologies to deposit thin film on silicon wafers and started a company named Applied Materials.
Ken Levy developed and commercialized the of automated inspection systems for the semiconductor industry.
Peter Rose pioneered ion implant technologies.
Richard Spanierâ�?�?s contribution to metrology development for semiconductor process control significantly improved the critical measurements of thin-film deposition required to optimize IC manufacturing.
Jim Koford developed the IC industry's first logic and functional design simulators and the first downstream design tools. He helped create the technological infrastructure and tools that enabled the IC industry to move from manual design, manufacture and test to automated design, manufacture and test of IC circuits.
Dan Maydan, pioneered key advances in laser applications, x-ray lithography, and plasma etch technology at Bell Laboratories prior to joining Applied Materials and developing the game-changing Precision 5000.
Grant Willson co-invented chemically amplified resist, a key invention that has enabled leading edge lithography for the last 25 years.
Robert Akins, who co-founded Cymer Inc. in 1986, contributed to the field of DUV lithography.
Robert Patti, the chief technology officer of Tezzaron, Inc., pioneered work in the emerging technical area of 3D IC integration.

These people are just some of the people who spurred the industry forward by innovation and significant contributions to technology development. They also share the distinction of being recognized as recipients of the SEMI Award for North America. The SEMI award, which has been annually since 1979 to honor individuals and teams who have made significant technical contributions to the semiconductor industry, is our effort to celebrate and promote the critical innovation that industry requires.

For more information visit: http://www.semi.org/en/About/Awards/AwardNorthAmerica/P_000658