Future Horizons Semiconductor Industry Forecast Seminar – Mid-term 2011, 14 July 2011

Citation

Ling, J. (2011), "Future Horizons Semiconductor Industry Forecast Seminar – Mid-term 2011, 14 July 2011", Circuit World, Vol. 37 No. 4. https://doi.org/10.1108/cw.2011.21737dab.018

Future Horizons Semiconductor Industry Forecast Seminar – Mid-term 2011, 14 July 2011

Article Type: Exhibitions and conferences From: Circuit World, Volume 37, Issue 4

Future Horizons Chairman and CEO Malcolm Penn welcomed those attending the Industry Forecast Seminar for the Semiconductor Industry held at the Crowne Plaza Hotel at West Drayton. It was Malcolm Penn that the BBC turned to when the earthquake hit Japan, and it was Malcolm who informed the listeners and viewers that the interruptions to the supply of critical components in the electronics supply chain would impact upon consumers, but not immediately. That impact has yet to be seen, but wait until Christmas.

Malcolm looked at the current world status. The good news is that the world expanded 5.0 per cent in 2010, up from −0.5 per cent in 2009. GDP 2011 GDP Growth Forecast is still 4.4 per cent (no change since January) and 2012 GDP growth will be 4.5 per cent (again, the same as forecasted back in January). Despite events such the earthquake in Japan, with the ensuing disruptions to industrial production, and disappointing US growth global GDP growth was 4.3 per cent annualised In Q1-2011, again broadly as expected.

The not so good news is that there is a possible risk of a deleveraging-induced recession, and a real fear that the European debt crisis will slow the pace of global recovery; confidence is low following recent financial turbulence, activity is slowing once more and the downside risks have increased. The slowdown is hardly reassuring, said Malcolm, and the sovereign debt crisis in Europe is a cause for considerable concern, with the eurozone containing some very vulnerable countries. In fact there are persistent fiscal and financial sector imbalances in most advanced economies. The eurozone GDP forecast is 1.6 per cent in 2011 and 1.8 per cent in 2012. Hardly breathtaking.

The emerging countries accounted for 85 per cent of the world’s population, where there is now strong local demand for goods; it is no longer a question of manufacturing cheap goods for export. Indeed, electronics companies are now relocating to Vietnam as labour costs in China rise. The balance of power has changed, it has swung to the east, and we had better get used to it.

In the semiconductor business, the steep demand decrease since September 2008 was an overreaction, as markets are holding up despite the earthquake. Inventories were cut back far too steeply, further exposing supply chain fragility. In the chip market short-term economic confidence is still fragile, but slowly and cautiously building a start/stop scenario and therefore gradual recovery. However, recessions do stimulate innovation which in turn tempts demand, and this process has already begun.

The correlation of the chip market to the GDP growth is weak, it marches to it is own boom and bust cycles just as well; having said that the chip market bounced back from the economic recession faster than world GDP, just as Malcolm said it would. Structural issues do remain, this is not a decade of boom, and deleveraging will dominate the top ten countries economic agenda.

Semiconductors provide the knowledge and technologies that generate some 10 per cent of global GDP.

Mike Bryant, the Technical Director at Future Horizons talked about the applications.

In the mobile telephone field, Apple still dominate, ST-Ericsson is what he described as train wreck, with obsolete products, and prehistoric processes. Mobile telephones was a market that Europe invented and dominated for two decades and this is now lost. The good news is that in the EU there are shortly to be reduced roaming charges, and Skype-type systems will be available on mobile phones. In the Q1 of this year it was Nokia who still led the way with 24m units against Apple at 19m, Samsung at 13m, and HCTat 5m. Samsung are set to overtake Nokia, who have nothing left to offer.

The TV market has seen the biggest LED takeup of all time, and Smart TVs maybe have 5 per cent of the market. In the computing world laptops are the big market still. E-readers such as Kindle sell well, and the electronics content of a car continues to rise, now with solid state lighting to meet the ridiculous EU legislation on daytime running lights. Looking at the electric car, there are 130 different projects here, and within five years we will see medium size saloon cars running on batteries.

In the world of wafers, there is a transition to 450 nm. The launch will be 11 nm, with pilots to 15 nm to test performance next year at Intel Albany. Intel will drive the demand, EUV litho will be the key, with EUV as the critical pacing item, for memory, for MPUs, and for foundries, but less so. 300 nm is now obsolete.

A total of 450 nm will change the industry, with 30 per cent savings, enabling the next period of Moore’s Law to pass onwards. Intel, Samsung and TSMC have declared their entry into this field, with Global Foundries, IBM and Toshiba close behind. The capital costs are staggering; so many companies will go fabless. Anyone with a 300 nm cost structure competing with a 450 nm competitor will be ushered into operating losses and squeezed out of the market. A 450 nm chip costs less than half that of a 300 nm.

Transistors have met the end of their natural life. Intel are at least two years ahead of others wit their 32 nm process, and are shipping them in volume. Use research; said Mike, we have the facilities, but not the management and the will to lead the way. We have many good companies, such as IMEC, who are not being utilised as they should.

Concluding the meeting Malcolm Penn said the point of the day was to remind people that the chip industry is in good shape. For the first time in history industry consolidation is a possibility, driven by 450 nm such that far too many companies will no longer have a competitive USP. Industry seriously needs to restructure itself. Industry co-operates quite happily on R&D and it needs to do so in Wafer Fabs well.

The numbers are down slightly; Q1 was better then expected but then came the earthquake in Japan. The 450 nm business is a fiasco, with Intel, TSMC and Samsung saying yes, and the members of SEMI saying no, an impossible impasse between customer and supplier. OEMs like fabless, cheap and freely available wafers. But the OEMs say they do not care. We will see. The security of supply of ICs is also critical; Nissan found out what happens when the supply chain is broken: production stopped.

Running a chip company nowadays should be a doddle; there is no competition, unlike 30 years ago. But you would still need Future Horizons to unravel this complicated market scenario for you.

John LingAssociate Editor