Uneven Growth Ahead

By Joanne Itow
SEMI recently released its silicon shipment forecast for 2012-2014. Total wafer shipments are expected to reach record levels in 2013 and 2014. Semico’s Wafer Demand model concurs with that forecast. Wafer demand is expected to grow at a compound annual rate of 11.7% over the next five years.

The wafer demand pie keeps getting bigger but all the pieces are not growing at the same rate. The pie looks a lot different than it did 15 years ago or even 10 years ago. Figure 1 (below) presents a few of the product categories that have traditionally utilized the most advanced technologies.

Fig. 1: Wafer Demand by Product as a Percentage of the Total Wafer Demand

Source: Semico Wafer Demand Model Sept. 2012

Wafer demand for microprocessors has grown 65% over the past 10 years, but as a percentage of the total MPU remains at less than 3% of the total industry wafers. To a certain extent, this is due to the production efficiencies and improved designs that the MPU manufacturers have implemented.

Not surprisingly, wafers needed for wireless communication products have grown almost 10X over the past 10 years. Cranking out a billion cell phones a year has been good business for communication wafer demand. On the other hand, DSP wafers are one of the casualties of the advanced technology products, as product designs have integrated the cell phone function into SoCs reported in the communication wafer category. DSP wafer demand continues to grow but now represents only 1% of total wafer demand.

The most significant change over the past 10 years is the growth of NAND wafer demand. NAND wasn’t even reported as a discrete category by the SIA in 2000. In 2005, all NAND products only required 4.4% of total production wafers. Between 2005 and 2010, NAND wafer demand grew more than 360%. Since then NAND manufacturers have turned to MLC (multi-level cell) technology to improve memory density. But even with the implementation of 2- and 3-bits per cell, NAND wafer demand has grown from only 4.4% of total wafer demand in 2005 to almost 18% in 2012. Continued growth in cell phones, tablets and SSDs for PCs is pushing the need for more and more production capacity for NAND products. NAND, which offers lower power and higher speed for cloud applications, also is making strong inroads in the enterprise space to support all the services used by mobile products.

In summary, what is implied from the data above is that mobile devices will drive semiconductor wafer demand for years to come. In addition to increased wafer demand from the growing need for baseband and application processors in cell phones, wireless products are consuming significantly more NAND per system as time progresses. And finally, as mobile users transfer more applications to the cloud for remote functionality, NAND memory will continue to grow as it becomes the memory of choice in server applications due to its power-saving capability and faster access speed.

For more information on Semico’s Wafer Demand Model and the complete data set, contact Rick Vogelei at [email protected].