June 4, 2012 — The ConFab’s sessions opened with “The Economic Outlook for the Semiconductor Industry,” featuring Jackie Sturm of Intel, Dan Hutcheson of VLSIresearch, and Jim Feldhan of Semico. The ConFab is an invitation-only meeting of the semiconductor industry, taking place this week in Las Vegas.
Jackie Sturm is VP of the Technology and Manufacturing Group and GM of Global Sourcing and Procurement at Intel Corporation. She focused on bright spots of growth in a mature semiconductor industry. She also urged attendees to consider factors outside of the semiconductor industry — gross domestic product (GDP) around the world, disposable income, etc. — when forecasting. Jim Feldhan, president of research and analysis firm Semico, shared Sturm’s view on macroeconomic factors, listing jobs growth, consumer spending as a percentage of GDP, and the inflation rate as factors impacting chip sales.
|Intel’s Jackie Sturm presenting at The ConFab 2012 in Las Vegas.|
Emerging markets like Brazil, India, China, etc. all present vastly different consumer habits and refresh cycles than mature markets like the US and Western Europe. They also have varying saturation of consumer goods like PCs and smartphones. Expect rapid adoption for these consumer electronics from Eastern Europe, Latin America, and China. Semico has lowered its 2012 world GDP growth forecast from 4.5% to 4.2%, considering drivers like emerging markets, US and European economies, and growth in China and India.
Exponential growth is expected in data server demand, Sturm noted, thanks to increased time spent, and available content, online. Photo and video up/downloads increase every year. New applications like tablets and music/video players are driving NAND Flash memory bit growth, pointed out Feldhan.
Semiconductor sales are on an upward trajectory for the remainder of 2012, Feldhan says, after a dip in late 2011/early 2012. Semiconductor revenues could be up by 9% this year.
|Semico’s IPI shows semiconductor industry trajectory.|
Growth applications include ultrabooks, tablets, and 4G phones. “Consumers still love electronics,” Feldhan said, and this means purchasing of HDTVs, set-top boxes, cameras, games etc. Unit sales are growing and aggregate IC ASPs are stabilizing. Feldhan said that the supply chain realized that inventories were too low, and this trend is reversing.
What does it take to capitalize on these areas of semiconductor demand? Sturm advises that companies drive price points by the consumer, remain agile to meet new needs, collaborate where possible, and invest in your company’s future. Be aware of the varying refresh rates for different consumer goods, as well as how these vary in different parts of the world. Collaborations with academia and government, as well as intra-industry collaborations with suppliers and customers, enable rapid work on device structures, designs, and processes.
Sturm’s advice: Work with customers to understand market needs. Work with suppliers to ensure the tools and materials are in place for you to meet those needs. And work with universities on R&D for future technology generations. Investing in research and new process and product development requires significant revenue. Sturm estimates $9-12 billion in annual semiconductor revenue is needed to support just 1 leading-edge fab. With this factor, it’s no surprise that the semiconductor arena is experiencing consolidation.
As an example of how electronics suppliers need to adapt to consumer behavior, Feldhan discussed the jolt of energy that PCs will get from the emerging ultrabook category, which will cannibalize other notebooks. Ultrabooks will be 15% of total notebook market in 2012, some ODMs think 20% Components from the battery to the CPU and GPU to the display will change as ultrabooks take market share. Right now, touchscreens are a limiting factor in ultrabook production, as is user confidence in the OS. Many ultrabook barriers will be worked out by 2013, and by 2015, ultrabooks will be outshipping notebooks.
Other end-use products? Tablets, despite phenomenal consumer adoption, do not threaten to eradicate the PC market, Feldhan noted. Smartphones saw higher-than-expected (29%) growth in 2011; expect 34% growth in 2012. New features and functions will be the key to success for smartphone designs.
This, in turn, benefits micro electro mechanical system (MEMS) makers, and companies that supply power management ICs.
MEMS are behind many new components that enable better sound quality, new device capabilities, and more. Keep an eye out for micro opto-electro mechanical systems (MOEMS), used to improve images and lower costs in new displays. MOEMS suppliers are a mix of industry heavyweights and newcomers — TI, Microvision , bTendo, Maradin, Mirrorcle, Qualcomm, and Unipixel. 2012 is the opening year of breakneck growth for MOEMS, 79.1% compound annual growth rate (CAGR) through 2016, fueled primarily by communications and computing applications.
2012 is also a jumping off year for MEMS oscillators, which are challenging the entrenched crystal quartz technology for timing ICs. Smartphones use as many as 7 timing devices per unit.
Video interview: Jim Feldhan speaks to Solid State Technology editor-in-chief Pete Singer
Read on for a discussion of silicon cycles and capex with input from session speakers Dan Hutcheson and Jim Feldhan in How to prevail over silicon cycles.
Learn more about The ConFab 2012 at http://www.theconfab.com/index.html.
The ConFab sessions cover economic outlooks, technology trends, the foundry-fabless relationship, 3D packaging, and tool investments/obsolescence. Click on any of the keywords for a session preview. Also read chief editor Pete Singer’s blogs from the conference.
Today’s keynote address presented the "virtual IDM" concept, from John Chen of Nvidia. The next keynote address will take place Tuesday morning, with Ali Sebt, CEO of Renesas Electronics America, presenting “Smart Society, the Sensing Era and Signal Chain.”