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Global semiconductor market growth forecasts

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Analysts at the Semiconductor Industry Association (SIA) and World Semiconductor Trade Statistics (WSTS) forecast increased growth in 2014 and 2015, due to double-digit increases in monthly semiconductor microchip sales year-over-year. The global semiconductor market maintained its strong bullish growth run in April, released on Friday, with year-over-year sales increasing across every region and product category. This semiconductor market growth is exceeding the pace set in 2013, which was a record year for semiconductor revenues. Furthermore, April marked the 12th consecutive month that year-over-year sales have increased, and that trend is expected to continue during the remainder through 2015. This industry is striving to meet the requirements for next-generation microchip technology for data centers and mobile devices, which continue to seek reduced power consumption, which is subsequently beneficial for the environment as well.

According to WSTS, worldwide semiconductor sales reached $26.34 billion in April 2014, an increase of 11.5 percent over April 2013. WSTS predicts global semiconductor sales will reach $325.4 billion in 2014, a 6.5 increase from the 2013 sales total and a revision from its fall 2013 forecast, which projected 4.1 percent growth. The WSTS predicts 3.3 percent growth globally for 2015, or $336.1 billion in total sales, and 4.3 percent growth for 2016 to $350.5 billion. What’s more, the WSTS expects year-over-year increases in 2014 for Asia Pacific, Europe, and the Americas with a 1.3 percent decline projected for Japan. Other market analysts from the IMF and other firms support these results within a small percent variation.

The SEMI semiconductor market research organization has released data for this period as well, which also indicates significant growth in the microchip market. SEMI’s data shows that after two years of decline, semiconductor capital expenditures, excluding fabless and back-end, are expected to increase for two years. While some companies are expected to keep capital expenditures essentially flat in 2014, others have increased plans in 2014 with an expected to increase nearly double-digit percent growth levels.

In the May 2014 World Fab Forecast publication, SEMI tracks more than 200 major expansion projects involving equipment spending for new equipment or upgrades, as well as projects to build new facilities or refurbish existing facilities. SEMI now forecasts 24 percent growth up to about $35.7 billion for fab equipment spending for front-end facilities in 2014 and 11 percent growth up to about $39.5 billion in 2015. In terms of equipment spending, 2015 is on par to surpass an all-time record year 2011, which is music to the ears of equipment-makers that have had to endure ongoing frequent boom and bust cycles over the last decade.

According to the SEMI World Fab Forecast, by the end of 2014, there will be 26 high-volume production semiconductor fabs using technology nodes between 14nm to 16nm, including two with 3D-NAND, which is the new wave of memory to boost density with less aggressive leaps in node sizes, while offering a pathway for solid-state disk drives (SSDs) to reach the terabyte level for enterprise storage in data centers. By the end of 2015, this is expected to increase to 33 fabs with 14nm to 16nm process nodes, including 11 with 3D-NAND including Samsung and Toshiba/SanDisk. Although less construction projects will occur during 2014 than the prior year, there are still a few significant new fabs being constructed in regions such as Europe/Mideast, Japan, U.S., and Taiwan. Thirty facilities including discrete and LED chips will begin volume production in 2014 and 2015.

Forecasted IC volume fabs, not counting foundries, will reach full capacity by 2018. Considering the unlikeliness for high-volume 450mm fabs in the near future, and that overall capacity is lost when upgrading facilities to leading-edge nodes, the industry will have to add more 300mm fabs to compensate for increased demand. The timeline to build and equip these new complex facilities suggests that new 300mm fab plans will need to start by next year.

The arrival of the era of 18-inch wafer foundry processes may not come until 2018 as Intel reportedly has slowed down the development of 18-inch wafers, while semiconductor equipment supplier ASML has also temporarily discontinued development of production equipment for 18-inch wafers, according to industry sources. This wafer size transition cycle has been pushed out several years already from its original target date. Samsung, being the largest supplier of DRAM and NAND flash chips, is the strongest advocate for shifting the industry toward 18-inch wafers, as larger wafers would significantly help reduce production costs for memory chips using 10nm or below processes for SSDs.

The development of 18-inch wafers is also included in TSMC's roadmap as the Taiwan-based foundry house has already developed plans to develop 16nm, 10nm and 7nm processes, after taking a leading role previously in the 28nm and 20nm segments, along with Intel, Samsung, and Global Foundries. However, reaching those node sizes is an ever-challenging milestone, as photolithography chip patterning capabilities wane. While there may be a non-extreme ultraviolet (EUV) litho roadmap for 7nm using iterations of multiple patterning (which I helped patent while at Micron), the strategy at the 5nm node is less clear. Many predict the emergence of fully-depleted silicon-on-insulator (FD-SOI) technology, III-V elemental compound semiconductor channels for mobility enhancement and nanowire patterning schemes to become strong potential candidates at that time, which will lead to a big boost in the number of patent applications in this field over the next several years.

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