Malcolm Penn, Chairman and CEO, Future Horizons, UK, provided an update on the mid-term global semiconductor industry and forecast. According to him, what started in China was declared a pandemic on March 11, 2020. Countries restricted mobility to curb its spread and protect lives. The world GDP outlook deteriorated to -3 percent since April.
The economists are forecasting a rebound in 2021, showing a growth of 5.4 percent. However, 2020 has seen the global semiconductor market growing despite global lockdown and collapse in GDP. The underlying heartbeat has been remarkably consistent.
Total wafer fab capex equipment spend is now breaching sustainable levels. Advanced capacity is in the hands of very few, such as TSMC, Samsung, Intel. SK-Hynix, Kioxia, Micron, etc.
Capex spend across regions has seen growth in China, which saw it rise to >25 percent, while US spend halved in the past 10 years. Japan was also down 24 percent, with Europe barely registering. The IC ASP cycle has seen fast decline and slow recovery. The recovery period is about 4-7 years, which is a long time. The improving industry momentum was going into 2020. There is more downside than upside. An effective Covid-19 vaccine would be the icing on the cake. There are concerns about second wave lockdown undermining fragile economic recovery. The current outlook for 2020 is around +4 percent growth.
If Q4 holds steady, 2021 will be strong
It is forecast that year 2021 will show +12 percent growth for the global semiconductor industry. If Q4 holds steady, 2021 will be strong. The impact of Covid-19 on the 2020 semiconductor market should be $23 billion lost. For 2021, the downside impact loss should be around $24 billion. It all depends on the Q4-20.
Transistor density is continuing to increase. Moore’s Law is still sailing on ahead. The 2D planar and NAND Flash have stopped scaling. But, alternative processing techniques have met the challenge. In logic, TSMC has caught up and passed Intel. Samsung has also passed Intel, but it is not better than TSMC. About 100 billion transistors are expected by 2022. Moore’s Law has been accelerating at TSMC. TSMC did three full nodes in 4-1/2 years, and four full nodes in 6-1/2 years.
On the EUV front for volume manufacturing, it is a 20-year ‘overnight’ success story. Imec’s logic roadmap is also powering on ahead. Standard cell scaling is enabled by EUV patterning. There are new ways to live and work. Some apps doing the rounds today include WFH, video conferencing, online education, online gaming, HD streaming, telemedicine, etc. Apps are being enabled by connectivity, such as autonomous cars, IoT, etc.
Apple is set to dominate the e-healthcare segment. The watch is turning into a semiconductor-based device. Japan approved EKG watch allows users to track heart rhythms and atrial fibrillation.
Today, IoT and 5G are more of a platform. There are data centers and servers that use MPUs and complex SoCs, SSDs, gateways and connectivity, and IoT network nodes. The first real IoT products are starting to appear. Healthcare is said to be the next biggest killer app for semiconductors.
Delicate balancing act
In China, OEM production capability is already the best in the world class, with Foxconn. IC design has caught up with the West. Wafer fabs will follow and catch up by 2030. China certainly has the scale, the need, and the ability. There is the semiconductor chain political vulnerability. Covid-19 exposed the extent to which global electronics supply is outsourced to China. How long can TSMC, and Taiwan, straddle both camps? It is a delicate balancing act! If TSMC were to shut down today, the whole world economy will collapse tomorrow!!
There is no supply chain plan B as of now. US ‘Chips for America Act’ is not the right way of doing that. There are no shortage of opportunities. Covid-19 will accelerate many innovations. There is IoT and connectivity, from cars to appliance to everything in between. Remote working, voice activation and facial recognition are coming of age. AI, automation, ML, and robotics will all impact the society. There is massive acceleration of personal health and medical that is dwarfing everything. There is no shortage of technology, and Moore’s Law is not dead (or sick). There are sound semiconductor fundamentals. Rebound will be strong. The key challenge is to leverage the crisis to emerge even stronger.
How are the semiconductor markets in Korea and Japan looking right now? Japan has had a weak local market. There will be a change in leadership. How it goes on, remains to be seen. The forecast summary is 4 percent for 2020, and growing to 12 percent for 2021. The economic risks are second wave lockdown, US-China trade war escalation, and supply chain destabilization.