In the second of two installments, Linx Consulting reports a steady growth in semiconductor production, as released in The Econometric Semiconductor Forecast. The first installment focused on regional developments that will affect semiconductor industry growth.
Semiconductor production to see steady growth after 2013
The weakness in economic growth spills into end products containing semiconductors in 2012 and early 2013. Our model relating final demands to aggregate semiconductor production (measured by SEMI’s Million Square Inches of silicon processed, MSI) suggests weak demand was anticipated in 2012, and that by early 2013, enough improvement in end markets occurs to push growth up at a modest pace that averages slightly less than 6% for the full year. By 2014, growth should recover to long-term potential growth for MSI of approximately 7%/year.
Figure 1: Aggregate semiconductor production from 1955 to present, with forecast to 2015.
Key assumptions driving this forecast include some solution to the fiscal cliff dilemma that permits US consumers and businesses to begin to return to more normal conditions. Removing uncertainty drives a modest expansion US spending on technology goods of around 2.3%, up from the anemic 0.8% growth anticipated for 2012. Most of that growth will occur in the second half of 2013, as it will take some time for businesses to analyze the new policy environment and then implement investment plans. Inventory-shipment ratios for technology goods, which are spiking in the last half of 2012, are assumed to recede on a steady pace to more typical levels through 2013. If shipments in IT goods do not develop as expected, the quarterly pattern above would most likely show a steeper decline in 2012Q4 and a further decline in 2013Q1, followed by strong gains in Q2 or Q3.
Figure 2: The difference between Segment Demand and Total Silicon Area (includes test and monitor wafers).
Strongest growth will remain in flash memories and logic devices
The overall picture of MSI growth breaks down into the expected performance of device segments and technology nodes. Despite the shift to consumer electronics and mobile platforms, we expect growth to be concentrated in CMOS products with a continuing slowing of unit growth and analog and discrete devices. Strongest growth will remain with flash memories, and advanced foundry logic devices targeted at tablets and phones.
In contrast with advanced memory and logic processing, approximately 56% of the market continues to be produced at design dimensions in excess of 100 nm on wafer sizes at 200 mm or smaller. This market segment is extremely sensitive to economic volatility and has slowed significantly in the last four years. Manufacturers of these devices are often capital constrained and extremely cost sensitive, leading to little process innovation and limited capacity expansion.
More silicon area at 32 nm produced in 2012 than any other node
On a technology basis, despite tight capital budgets, the introduction of devices at 28 and 22nm half pitches continues apace, and significant process challenges are driving increased complexity and resultant challenges in patterning, cleaning, CMP and deposition throughout the device manufacturing process. 2012 is forecast to have produced more silicon area at 32nm than any other node, and the introduction of low 20nm half pitches and flash has continued to grow startling rates.
In total devices manufactured at 65nm and below continued to show strong area growth in 2012 of 14%, with devices at 90nm and above largely offsetting declines from 2011 with 8% growth in 2012, but flat performance on average.