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What’s Next For Semis?

Semico’s CEO provides an outlook for the semiconductor biz.

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It’s been a turbulent year in the semiconductor industry.

2020 was supposed to be a strong year. Then, the coronavirus outbreak hit. Suddenly, a large percentage of countries implemented various measures to mitigate the outbreak, such as stay-at-home orders as well as business and store closures. Economic turmoil and job losses soon followed, not to mention the human tragedy involved.

More recently, though, the semiconductor business appears to be bouncing back. To gain some insights in the market, Semiconductor Engineering discussed the status of the semiconductor industry with Jim Feldhan, president of Semico Research.

SE: What’s your latest forecast for the semiconductor market in 2020? Has that changed? Any surprises?

Feldhan: The Semico 2020 total semiconductor forecast calls for 3.3% growth in dollars to $430 billion. Units will decline 2.3% to 911.2 billion. In July 2019 we were forecasting 6.6% growth for 2020. When COVID-19 hit, we reduced the forecast to -0.2%. However, semiconductors and electronics have benefited from the stay-at-home economy and our forecast is back into positive territory, just 3.3% below the July 2019 forecast. One surprise is the strength of PC, notebook, and tablet upgrades. People have quickly discovered that their 5+ year-old systems were not adequate for work-at-home and remote schooling.

SE: How do you see the semiconductor market right now?

Feldhan: The semiconductor market is quite strong compared to other sectors in the economy. In the near term, households upgraded their home networks, gaming, entertainment and personal electronics. Now the world is focusing on reopening and getting the economic engine humming again. Semiconductors are an integral part of that success.

SE: What about Q4? What’s the supply/demand picture look like?

Feldhan: We expect both the third and fourth quarter to show positive revenue growth sequentially. There was some inventory build of low ASP products in Q1 when vendors thought the virus would only affect China. From a supply and demand perspective, it appears that most product categories are now close to equilibrium.

SE: What are the growth and non-growth markets?

Feldhan: The rollout of 5G, both infrastructure and devices, continues to ramp. Growth markets include the expansion of server farms for cloud and streaming services, remote working and schooling, online purchasing, security and AI. Semico wrote about the innovations in remote medical services five years ago, but adoption has been slow. The pandemic has made telemedics more acceptable for both patient and provider. We expect to see increased efficiencies in the medical arena from electronics. High unemployment and lower disposable income will put a damper on general holiday shopping, but consumers will try to find ways to be more efficient with their electronic devices, which may result in some device upgrades. Markets that are struggling include automotive and other discretionary large home appliances. Of course, large group entertainment events and travel will not return to normal for over 12 months.

SE: What about memory (DRAM, NAND, etc.)?

Feldhan: Memory is once again driving the total semiconductor market. DRAM units are up and ASPs are stable; therefore, DRAM revenues will be up nearly 8%. NAND units will be down 3%; however, as the market moves to larger densities with higher ASPs, NAND revenues will experience a 23% growth. In almost all applications, OEMs are increasing the amount of NAND in the systems. Interestingly, analog, discretes and optoelectronics will all see revenues decline this year.

SE: How does 2021 look?

Feldhan: Our forecast for 2021 is for low double-digit growth in dollars and units as the overall economics improve worldwide next year. As for 2021 we expect:
•5G handset and infrastructure continues to ramp.
•Auto sales will begin to improve.
•AI in the cloud and at the edge will continue to penetrate more applications.
•Cloud storage and increasing bandwidth will drive demand.
•IoT continues to permeate through all aspects of the economy.



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