50 Years Of Moore’s Law

A lesson in (r)evolution.

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The Industry at 50
This month marks the 50th anniversary of Moore’s Law, an amazing milestone for the semiconductor industry. Looking back through our industry’s history, we must marvel at the speed, growth, technical sophistication and transformative changes computer chips have made over the past few decades. None of this would have been possible without semiconductor equipment and materials – the founding companies of SEMI.

The Birth of SEMI
In 1970, a group of semiconductor equipment and materials vendors were dissatisfied with the attention and visibility they received at industry trade shows at the time. They felt their voice was not heard, and they decided to form an independent organization dedicated exclusively to their segment – and that was SEMI. The “I” stood for “Institute” and was changed to “International” only in 1988. With the emergence of a stand-alone equipment sector with its own trade association, and the trend towards smaller, more powerful and cheaper chips in the 1970s, Gordon Moore’s straight forward but momentous observation that transistor density doubles every 18 months helped the semiconductor industry find its cadence.

Collaboration is King
That cadence, however, was put to a test in the early 1970s, when the industry experienced a challenge that demanded collaboration rather than competitive differentiation. Silicon became a precious, then scarce substrate thanks to the fact that suppliers were dealing with over 2,000 wafer specifications from a sea of different customers, which resulted in tremendous silicon waste. This led to the first consensus SEMI Standards meeting and the development of the first SEMI wafer specification that specified standard wafer parameters (including the diameter) and prevented a serious silicon shortage. This collaborative effort around a critical industry issue marked the birth of the SEMI International Standards Program, now in its 42nd year.

Growth and Expansion
Back to growth: The 1980s saw increasing prosperity in the semiconductor equipment segment, with market leaders making defining leaps in advanced technology and price per device. During this decade, the semiconductor industry also grew geographically, and the U.S. and Japan-centric chip world began expanding to Korea, Taiwan, Europe and China. SEMI supported this development by establishing offices in these regions to help member companies access new markets, help eliminate trade barriers, and expand the critical standardization efforts beyond the U.S.

The table below shows peak revenue for semiconductor equipment and materials (SEM) per year and region, along with the year SEMI established an office there. The time lapse between the emerging “presence” of equipment and materials suppliers in new markets and the revenue peak is testimony to the fact that the semiconductor manufacturing business is difficult, complex and cyclical. SEMI has always attempted – and continues to this day – to be a pioneer on behalf of its members, when it comes to finding the next new growth platform, and without the groundwork the association laid, and the collective framework of activities strengthening its member companies, the road to a now US$80+ billion global and mature equipment and materials industry would have been considerably more difficult.

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With the exception of SEMI’s founding headquarters in the U.S., the table also shows that SEMI opened offices in new regions on average 15 years before the year of peak regional revenue. This pioneer spirit on behalf of SEMI members continues to this day, with SEMI’s office in Bangalore, India, and annual industry forums in Vietnam and South America.

Consolidation
Over the years, cyclicality and sharp volatility dominated the market, and a company’s ability to forecast and ride the boom-bust cycles was often the difference between survival and being left behind. In more recent years, this has led to entirely new supply chain dynamics, predominantly through mergers and acquisition along with the emergence of a multitude of end user markets. Consolidation has reshaped the industry landscape. What used to be a straight forward transaction between an equipment/material supplier and an IDM has evolved into a complex supply chain ecosystem that has redefined “suppliers” and “buyers” and opened new opportunities for SEMI members, particularly with the advent of the IoT. Consolidation has tamed the volatility and cyclicality in the industry and, since 2009, it has experienced fairly stable growth and stability. SEMI’s role during this period has evolved as well, especially with respect to engaging an extended, broader and very diverse supply chain that benefits from collaboration just as much as companies 45 years ago, but with new challenges and complexities that require novel approaches to innovation, differentiation and long-term staying power.

Evolve and Adapt
The semiconductor industry will continue to change and adapt to new challenges and growth patterns. As you can see in the table below, in terms of the combined revenues of semiconductor equipment and materials from 2002 to 2014, China peaked as recently as last year. And with the new and ambitious investment policy of spurring growth exceeding 20% per year through 2020, the rapid creation of a robust domestic semiconductor industry in China may alter the global industry landscape yet again.

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Fig. 2: Semiconductor equipment and materials annual revenue: 2002, $40.5B; 2014, $81.8B. Source: SEMI and SEAJ, 2015.

Annual Revenue
As we remember and honor Gordon Moore and celebrate the 50th anniversary of his invaluable contribution to our industry, SEMI will continue to support its members in their quest for growth, sustainable profitability and collective action to maximize opportunities in the vast world of semiconductor manufacturing. The horizon remains bright as the world of the Internet of Things is dawning and the next chapter of the semiconductor story unfolds.

For more information on SEMI, visit www.semi.org.