By Joanne Itow, Analyst, Semico Research Corp.

The foundries are ramping 32nm/28nm production but that’s only one of the reasons wafer demand is forecast to grow at above average rates this year.  MEMS and sensors will help to grow wafer demand at the ≥1000nm technology nodes.  Wafers processed at ≥1000nm technology will grow by 10.2% in 2011.  That’s on top of the 25% growth experienced in 2010.

Microcontroller units are expected to grow by just over 10% driving up the need for more silicon. And, although DRAM units are expected to grow by only 4-5%, NAND flash units will continue to grow at double digit rates.  All these are top reasons why wafer demand will grow over 10% in 2011.

Source: Semico Research

The earthquake in Japan may have put a damper on growth in the second quarter but Semico believes the lull in automotive and other markets impacted by the quake will be temporary.  Although all production in Japan may not be brought back online by the third quarter, most companies have managed their production, foundry and supplier relationships in order to cover customer demand.  Nine months ago the Semico IPI indicated third quarter 2011 semiconductor sales would be below average; however, supply chain disruptions after the earthquake may increase worldwide semiconductor demand in Q3.  As a result production in  3^rd quarter could increase by as much as 10% over 2^nd quarter.

Intel remains on their two-year production/technology cadence and will already begin 22nm production this year.  While Intel introduces their 22nm product line, AMD and others are giving their 32nm/28nm production the red carpet treatment.  Although there is still lots of room for productivity improvements at these new nodes, Semico does not expect companies to run into yield issues that were encountered at the 40nm node.  While wafers processed at 40nm/45nm will grow 40.6% in 2011, the amount of silicon necessary to process semiconductors at 32nm/28nm process technology  will almost double.

All the data used to make the forecasts above were taken from the Semico Q1 2011 Wafer Demand Report.  More detailed wafer demand forecast information can be found in Semico Research’s latest release Wafer Demand Summary and Assumptions Q1’11. The quarterly publication provides annual wafer demand by product by technology from 2002-2015.  For more information click here to go to Semico Manufacturing Studies. 

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By Joanne Itow, Semico Research Analyst

The semiconductor industry grabs headlines as companies such as Intel announce the construction of multi-billion-dollar state-of-the-art research and manufacturing facilities. High performance servers, PCs and most of our electronic devices would not exist today if it weren’t for the continual advancements made in semiconductor manufacturing technology. While the most advanced chips supply the processing power and memory needed to provide the functionality and capabilities of our newest mobile devices and home electronics, they are surrounded and supported by dozens of other non-leading edge or mainstream semiconductor devices that play a crucial role in the electronics industry but don’t garner the same level of attention.

The vast majority of these mainstream semiconductors are actually manufactured on something less than leading edge technologies. Analog devices, sensors, microcontrollers, optoelectronics, discretes, MEMS and a number of other semiconductor products comprise the largest markets in terms of semiconductor units.

In order to address the increased demand for mature processing capacity, manufacturing facilities can expand in two ways. In some cases, factories can increase unit output with marginal productivity increases and yields. However, many of these factories have already maximized equipment productivity and process yields. Such factories require additional equipment to increase wafer output. In addition, some higher volume products are able to benefit from an increase in wafer size, transitioning from 100mm to 150mm, or from 150mm wafers to 200mm wafers, thus creating new demand, refurbishment, servicing and repurposing opportunities for 150mm and 200mm capacity.

SEMI, the industry association serving the equipment and material supply chains for the microelectronic, display and photovoltaic industries, established a SEMI Special Interest Group — Secondary Equipment, Services and Technology Group (SESTG). The SESTG special interest group provides a worldwide focus for the secondary market – OEMs, equipment refurbishers, resellers, users, and service providers.

As part of its mission, SEMI/SESTG joined with Semico Research Corp. to embark on a research study to provide ongoing data and analysis that defines the secondary equipment, services and technology markets. Semico Research Corp. is a marketing and consulting research company founded in 1994 by a group of semiconductor industry experts who have improved the validity of semiconductor product forecasts via technology roadmaps in end-use markets.

This study collected information from a wide variety of market players around the world, both large and small, from dealers to refurbishers to OEMs to IDMs. We embarked on this study knowing that the semiconductor secondary equipment market is complex and disaggregated. Needless to say, gathering and analyzing the data was challenging, however the results are interesting and are expected to play a dynamic and significant role for this market segment.

Complex, disaggregated markets are inefficient. Information is not consistently available causing duplication of effort, disparate pricing, variation in quality and often unsatisfactory experiences. This study attempts to shed some light on this multifaceted market. The report includes data on the size of the market, with breakouts by vendor type, regions and type of equipment. Reaching $6 billion, secondary equipment sales represent approximately 13% of total semiconductor equipment sales and increased over 77% in 2010 over 2009.

Although the semiconductor industry transitioned from 100mm wafers to 125mm wafers to 150mm wafers to 200mm wafers, the transition from 200mm to 300mm wafers marked the first time that a significant market for secondary equipment emerged. Brokers, dealers, refurbishers and other IDMs entered this market to take advantage of a need that this industry never experienced before. Currently the largest equipment vendors sell less than 50% of the secondary equipment. Interviews with IDMs revealed that most companies prefer to purchase equipment that is ready to install and yet the market is still supported by a variety of players in the supply chain.

In most cases, as markets mature, clear winners emerge, eliminating a number of inefficient players. That is not the case with the secondary equipment market, yet.

For more information click here or call Sam Caldwell at 602-214-9697.