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Covid Masks And Forecasts At Semicon

SEMI’s CEO presented an outlook for chips and tools.

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Semicon West 2021 was certainty different, if not surreal, this year.

The annual event was held in-person from Dec. 7-9, although there is a virtual component that runs until Jan. 7, 2022. In comparison, Semicon West was an all-virtual event in 2020, due to the Covid-19 pandemic.

At this year’s in-person event in San Francisco, attendees, exhibitors and speakers were all required to wear masks for obvious reasons. To get inside the event, you had to show a proof of vaccination. That’s not a big deal in my mind. In total, Semicon West had more than 5,000 attendees and over 600 booths, according to SEMI. Semicon was co-located with DAC. As my colleague Brian Bailey wrote, DAC’s numbers were down and the show floor was smaller. The same was true for Semicon.

Semicon West works better when it’s in-person. It’s still a place to talk to people, get a pulse on the industry, and hear what’s happening behind the scenes. Generally, the people I talked to at the event were happy to see each another and get down to business in-person.

Doing business virtually has its merits. Zoom calls are fast, easy and cheap. This is slightly easier for the bigger equipment vendors. It’s not too difficult to carve out a meeting with a big customer in Asia, Europe or the U.S., if they know who you are. On the other hand, the smaller equipment vendors and startups are finding it more difficult to do business via Zoom. Most, if not all, customers are willing to do business with startups, if they can see the equipment and kick the tires.

The problem is that many chipmakers have stringent protocols and are unwilling to meet many equipment vendors face-to-face, at least for now. There are exceptions, of course.

Perhaps a bigger problem for all fab tool vendors are the logistics and supply chain. After obtaining an order, equipment vendors must find ways to ship the tools to another country. It’s difficult if that country has strict protocols. It’s even harder if you don’t have a large field engineering staff on-site to install the systems.

It’s also no secret that there are chip shortages in the market. There are a growing number of cases where an equipment vendor can’t ship a given tool or tools to customers, simply because a given chip or sub-system isn’t available. We’ve already seen various fab tool vendors lower their forecasts, simply because they can’t get all of the parts. It may come down to one FPGA or MCU. This is going to get worse before it gets better.

Getting back to Semicon West, I didn’t attend all days and events. I saw enough to get by and have the luxury of watching the virtual component of the events I missed.

At Semicon West, the goal is to get a pulse on the industry. During the Semicon press event, Ajit Manocha, president and CEO of SEMI, provided an outlook for the semiconductor, equipment and materials industries. Here’s the latest:

Semiconductor outlook
Semiconductor sales are expected to grow by >20% to $550 billion in 2021 after growing 10.8% to $464 billion in 2020, Manocha said.

For 2022, the chip forecasts are all over the map. UBS is the most bullish with 15.8% growth, followed by IC Insights (10.8%), WSTS (10.1%), Gartner (9.9%), Semico (6.0%) and Omdia (4.2%), according to a slide during the presentation.

The average among those forecasts is 9.5%, according to SEMI. That’s still decent growth, but the ongoing chip shortage situation will likely extend into 2022 and ruin the party. “Shortages, initially for automotive, are spreading across the board, mostly at legacy technologies,” Manocha said.

New fabs
To be sure, chip demand is strong. And to meet demand, chipmakers are expected to build new 200mm and 300mm fabs between 2020 to 2024. According to SEMI, here’s some of the key data for 200mm fabs:
•25 200mm fabs/expansions are expected in the above timeframe.
•19 of those fabs are targeted for Asia. (14-China, 3-Japan, 2-Taiwan)
•5 200mm fabs are targeted for the Americas and 1 in Europe/Mideast.
•Total 200mm capacity is expected to grow by 18% from 2020 to 2024.

According to SEMI, here’s some of the key data for 300mm fabs:
•Some 60 300mm fabs/expansions are expected in the above timeframe.
•44 of those 300mm fabs are targeted for Asia. (15-China, 5-Japan, 8-Korea, 1-Singapore, 15-Taiwan)
•6 300mm fabs are targeted for the Americas, while 10 are in Europe/Mideast.
•Total 300mm capacity: 48% growth expected from 2020 to 2024

Fab equipment
At Semicon West, SEMI gave preliminary numbers for fab tool growth. At Semicon Japan, though, the trade group gave the official forecast.

Regionally, China, Korea, and Taiwan are projected to remain the top three destinations for equipment spending in 2021. China is projected to maintain the top position, which it claimed for the first time in 2020. Taiwan is expected to regain the top position in the market in 2022 and 2023.

Global sales of total semiconductor manufacturing equipment are forecasted to reach a new high of $103 billion in 2021, surging 44.7% from the previous industry record of $71 billion in 2020, according to SEMI. The growth is expected to continue with the global semiconductor manufacturing equipment market expanding to $114 billion by 2022, according to the trade group.

“Crossing the $100 billon mark in total semiconductor manufacturing equipment sales reflects the global semiconductor industry’s concerted and exceptional drive to expand capacity to meet strong demand,” Manocha said. “We expect continuing investments in the digital infrastructure buildout and secular trends across multiple end markets to fuel healthy growth in 2022.”

The wafer fab equipment (WFE) segment includes wafer processing, fab facilities, and mask/reticle equipment. The WFE segment is projected to expand 43.8% to a new industry record of $88 billion in 2021, followed by a 12.4% increase in 2022 to approximately $99 billion, according to SEMI. WFE in 2023 is expected to decrease slightly by -0.5% to $98.4 billion, they added.

The foundry and logic segments account for more than half of total WFE sales. This part is expected to surge 50% year-over-year to reach $49.3 billion in 2021, according to SEMI. The growth momentum is expected to continue in 2022 with the foundry and logic equipment investments rising 17%, they added.

“Strong enterprise and consumer demand for memory and storage is contributing to strength in DRAM and NAND equipment spending,” according to SEMI. “The DRAM equipment segment is leading the expansion in 2021, surging 52% to $15.1 billion and growing 1% in 2022 to $15.3 billion. The NAND equipment market is projected to jump 24% in 2021 to $19.2 billion and 8% in 2022 to $20.6 billion. Expenditures are expected to drop by -2% and -3% in 2023 for DRAM and NAND, respectively.”

After seeing robust 33.8% growth in 2020, the assembly and packaging equipment segment is expected to grow by 81.7% to $7 billion in 2021, according to SEMI. This is followed by another 4.4% increase in 2022, driven by advanced packaging applications. “The semiconductor test equipment market is expected to grow 29.6% in 2021 to $7.8 billion and continue to expand by 4.9% in 2022 on demand for 5G and high-performance computing (HPC) applications,” according to SEMI.

What could go wrong
Manocha also listed the potential headwinds for the industry. They include:
•“Ongoing trade/export restrictions and geopolitical/economic issues.”
• “Global COVID-19 pandemic control and the pace of vaccine rollout is still a major concern.”
• “Industry talent shortage becoming more pronounced with the current push to expand capacity.”

Here’s my concern: Possible overcapacity in 2023 or sooner. Then, the party is officially over. But not sure if the party ever started in the first place.



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