Global semiconductor market to grow 18 percent in 2021: Malcolm Penn

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At the IFS 2021 annual semiconductor industry update and forecast today, in London, UK, Malcolm Penn, Founder and CEO, Future Horizons, presented the findings for the global semiconductor industry for 2021.

There was hope in 2020, with enforced stay-at-home and WFH, etc. Demand for IT products, telecoms, etc., increased. The GDP slump was painful, although it was not a classic meltdown. Strong rebound is likely once the weather turns milder and more get vaccinated against Covid-19. The world GDP was -4.4 percent now, vs. -4.9 percent in June 2020.

Malcolm Penn.

Strong rebound is expected in 2021. Supply in the semiconductor market is systemic and strategic. GDP had collapsed in 2020, but end demand skyrocketed offsetting the impact. The global IC unit sales by month is remarkably consistent at +8 percent per year for 2021. In 2020, there was +5.6 percent growth, despite 5.1 percent GDP decline. We bounced back very well. Also, units/silicon area was seeing ~2 percent growth. Wafer vs. time PMCC is 0.9382, IC units vs. time PMCC is 0.09698, and IC units vs. wafers PMCC was 0.9491. PMCC shows how matched the variables are.

Leading edge fab capacity is very carefully managed. New capacity, and demand, are not forecast driven. Semiconductor device and total capex market dynamics see cautious capex spend accelerating, but not near overheating, at 15.6 percent in 2020. TSMC is looking at $28 billion capex spend, and Samsung is looking at $30 billion capex spend in 2021. Dollars per square inch has also remained constant.

The IC ASP cycle is showing fast decline and slow recovery. We should be looking at another oscillating cycle. The economy remains hostage to Covid-19. IC units growth spurt is in progress, holding up strong strain. Fab capacity has been sold out, with no near-term relief in prospect. ASPs recovery could happen in 2021. The economic outlook is fragile, but all the other fundamentals are strong. We need to spend more, and see the results by January 2022. There is likely memory price recovery in H2-2021.

The outlook was +10.2 percent for 2021. Double digit growth is inevitable, with 10 percent as minimum. In March 2020, there was potential for strong H2-2020 rebound. We presented the outlook for global semiconductor industry was +1.4 percent. Besides automotives and smartphones, the industry hardly blinked. Q4 sent everyone scrambling for capacity. Q4-2020 was the start of the next chip industry super cycle. Q4-2020 was a one trillion unit quarter.

Outlook 2021
The improving industry momentum will be going into 2021. There will be more stable economic footing following the US election, the UK-EU trade deal, and less hostile US-China trade embargos and tariff wars. Sound industry fundamentals are providing stable growth platform. Three concers are living with China in an increasingly decoupled world, there is uncertain economic roadmap to unwinding fiscal support, and delays in returning to post-Covid-19 normality. The balance of semiconductors growth has more upsides than downs.

The current outlook for the global semiconductor industry is +18 percent growth for 2021. There is no tight capacity relief before 2022 at the earliest. DRAMs are moving ahead. Scaling is now a continuous improvement vs. full node progress. Samsung is now using EUV for 10nm class D1x process. Its the same with 3D NAND. Micron is ahead with 176 layers. There is a 4D NAND structure in place now, especially from Micron. There is talk about 256 layers down the road.

Emerging memory highlights include XPoint technology and products, ReRAM from Adesto, CBRAM, Dialog, etc. TSMC roadmap is really impressive, in logic. N5 is already in full node, for Apple. N5+ is likely in Q1-2021. In advanced R&D, manufacturing and market, there are new transistor structures and materials. Scaling continues through EUV breakthrough, at TSMC, with Apple having the power of a sugar daddy.

EV as growth driver
Key industry growth drivers include AI and neural networks, electric vehicles, etc. Apple and Foxconn will change the automotive world, as EV is the means to the end. It also opens the door to sub-contracting and economy of scale. Tesla was first one off the block, and had a massive lead. There are 260mm2 inhouse designed SoCs.

Foxconn wants to be the Android of automobiles. It is looking at 10 percent global market share for EV platforms by 2025. First Foxconn open platform EVs are likely by 2022. It has a JV with Taiwan’s Yulon (after Hotai Motors) to develop EV cars. It is bidding to buy Silterra.

There will be a cleaner hydrogen alternative, with no charging points, faster refuelling, and build off the existing LPG architecture. Asia will be market driver with Toyota Mirai, Hyundai Nexo and Honda Clarity.

Automobiles is now just like any other system. It is easier for Apple and Google to enter the autonomous car market, with production outsourced to TSMC and Foxconn. The US car industry is now lobbying Joe Biden to get its chips. There is also disruptive innovation in the OEM direct model. Silicon is the founding block for technology. The ecosystem is well developed now.

Key takeaways for 2021 are that EVs are causing massive automobile industry disruption. There is huge pent-up end-user demand, from cars to holidays, and everything in between. Remote working, videoconferencing, voice activation, etc., are here to stay. There is massive acceleration of personal health and medical, dwarfing everything. There is no shortage of technology, and Moore’s Law is not dead, or sick. The rebound will be strong. The US-China friction has to be dealt with. While China races ahead, the US near-term outlook remains fraught. China GDP grew 1.9 percent in 2020. China economy may overtake the USA by 2028.