Much Ado About Weakening Currency, China, And IoT

Amid uncertainty, IoT and China remain powerful drivers to the industry.


At the 10th annual SEMI/Gartner Market Symposium, keynoted by ARM’s Ian Ferguson, market analysts gathered to present their views on the current state of the industry. Several key themes emerged including weakening currency impact on the industry’s forecasts, China’s $20 billion Industry Fund, and the Internet of Things (IoT).

Industry overview and trends were presented by Bob Johnson, Research Vice President at Gartner, Lara Chamness, Senior Market Analyst Manager at SEMI, and Christian Gregor Dieseldorff, Senior Analyst, Director Market Research at SEMI. Gartner downgraded its 2015 chip forecast from 4.0% to 2.2% this year, with growth of 1.3% anticipated in 2016. Reasons cited for the muted forecast involve the stronger dollar relative to other currencies and weakening demand for electronic equipment, including smartphones. The dampened chip outlook also impacted Gartner’s forecast for wafer-level processing equipment; 0.1% growth is now forecasted, down from 5.0% expected earlier this year, for 2015. SEMI is projecting that the total new equipment market, which covers wafer processing, other front end, assembly and packaging, and test equipment, will increase 7.1% this year. While SEMI acknowledged the impact of the weakened Yen and Euro on the equipment market, its outlook is more optimistic based on the year-to-date data it has collected. Also driving this year’s equipment market are the seventeen 300 mm fabs that will begin volume processing this year and the next.

Amid breaking news during the symposium of China’s state-owned Tsinghua Unigroup Ltd. reported interest in buying U.S. chip maker Micron Technology Inc. for $23 billion, Sam Wang, Research Vice President at Gartner and Allen Lu, President of SEMI China discussed the impact of China’s $20 billion Industry Fund. According to Gartner, China represents 33% of purchases in the semiconductor device market. In order to reduce the greater than $150B trade deficit caused from the import/export of semiconductor chips, IC manufacturing has been identified as an essential component to economic growth and national security and is a key feature in the “Made in China 2025” plan issued by China’s State Council. Allen Lu provided the following illustration of the fund’s structure.


The last theme of the symposium covered the Internet of Things (IoT) and its impact on the semiconductor market as discussed by Gartner’s Michele Reitz, Principal Research Analyst, Dean Freeman, Research Vice President, and James Hines, Research Director. Gartner defines IoT as the network of dedicated physical objects, excluding general purpose devices such as PCs and smartphones that contain embedded technology and sense or interact with their internal state or external environment. Gartner estimates that there will be 25 billion things, excluding smartphones, tablets, and PCs connected by 2020. Of those 25 billion things, 1.2 billion will be wearables, and over 200 million will be connected vehicles on the road, enabling new in-vehicle services and automated driving capabilities.

Gartner maintains that a critical component of the IoT is the significant cost declines of infrastructure including sensing, bandwidth, storage, and processing over the past 10 years. A specific example of affordable manufacturing was provided by SEMI, who noted that in order to support IoT, at least 20 fabs will be expanded/upgraded from 150 mm to 200 mm with 13 new 200 mm cleanrooms.

While much uncertainty faces the industry in the near-term, it is clear that IoT and China are powerful drivers to the industry. Venues such as the SEMI/Gartner symposium provide a valuable forum to better understand market trends, opportunities, and issues facing the entire semiconductor supply chain.

For latest trends about semiconductor industry, please visit Semicon Taiwan 2015 and Semicon Europa 2015.

Also make sure to check out the SEMI Strategic Materials Conference 2015, for information about advanced materials that can enable a smart and interconnected world. The conference will be held Sept. 22-23 in Mountain View, Calif. For more information, click here.

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