By Lara Chamness, senior manager, market analysis, SEMI
Given the industry’s anemic performance during the first part of the year, a number of analysts have recently downgraded their 2013 semiconductor revenue forecasts to low-single digits, while forecasting stronger growth in 2014. SEMI believes that the semiconductor materials market will trend with the device market, resulting in an increase of one percent this year and a seven percent increase in 2014, resulting in a materials market approaching $50 billion in 2014.
Looking at materials trends by region, Japan has traditionally been the largest semiconductor materials consuming region owing to its significant fab base and packaging presence. Over the past four years, manufacturers in the region rapidly adopted a fab-lite strategy or have consolidated many of their fabs and packaging plants. During this same time, companies based in Taiwan invested heavily in advanced packaging and foundry operations.
In the 2009 downturn, the materials market contracted 22 percent in Japan, while falling only 12 percent in Taiwan. Immediately out of the downturn, all regional materials markets enjoyed strong gains and by 2011 the Taiwan market surged ahead Japan, resulting in Taiwan becoming the largest semiconductor materials consuming region in terms of revenue. Rest of World, primarily SE Asia, represents the third largest market for semiconductor materials given the dominance of packaging in the region. For this year and the next, Taiwan will strengthen its lead, with Rest of World’s materials market to exceed Japan’s next year (Figure 1) due to continued strength in its packaging materials market.
It is interesting to note that in spite of many Japanese device manufacturers opting for a fab-lite strategy and/or consolidating, Japan still represents one of the largest regional markets for fab materials. This should not be surprising considering that fabs located in Japan currently account for about 22 percent of global IC fab capacity, followed by South Korea with 21 percent, Taiwan with 19 percent and North America with 15 percent (Source: SEMI World Fab Forecast database, August 2013). As a result, the wafer fab materials market roughly mirrors IC fab capacity (Figure 2).
Given current growth expectations for the semiconductor market, SEMI is forecasting that semiconductor materials will increase 1 percent this year and 7 percent in 2014. Taiwan now dominates the semiconductor materials market as the result of its aggressive foundry and advanced packaging presence. Japan still represents a significant portion of the global materials market owing to its historical manufacturing strength but it is expected that Rest of World, primarily SE Asia, will surpass the Japan market next year as the Rest of World region grows at a stronger rate due to continued strength in its packaging materials market.
To learn more about semiconductor materials and key market trends, register to attend the SEMI Strategic Materials Conference, which will be held at the Santa Clara Marriott, in Santa Clara, California on October 16-17. For more information about SEMI, visit www.semi.org.