European semiconductor industry
Global semiconductor industry forecast updated to +4.9 percent to $552.762 billion for 2024: Future Horizons
IFS 2024 semiconductor industry mid-year outlook by Future Horizons, was held today in Kent, UK.
Malcolm Penn, Chairman and CEO, started with the really good news first. Downturn had bottomed in Q1-2023. Golden cross was breached in July 2023. Then, the really worrying news! It was supposed to be sunshine. Suddenly, there’s storms on the horizon. The death cross could hit as early as June or July 2024. Let’s hope (and pray), this proves the fallacy of extrapolations.
The 2023 market took off with a vengeance. It bottomed out at $119.511 billion at -8.2 percent in Q-23. In Q2-23, there was strong rebound at $126.714 billion at 6 percent. In Q-23, there was solid growth at $134.674 billion at 6.3 percent. Q4 saw above seasonal growth at $145.986 billion at 8.4 percent. 2023 finished at $526.885 billion, with -8.1 percent growth.
Downturn bottomed one quarter earlier than the ‘4-quarter norm’. Ultra strong Q2 was an unexpected surprise, even to TSMC. Q3 powered forward at strong seasonal level, and Q4 was even stronger. Semiconductor industry was originally forecast at -8 percent vs. -20 percent in 2023. ‘Super cycle’ (irrational) exuberance pitched 2025 forecasts in the ‘high 20 percent’. So, what could possibly go wrong?
The wheels fell off in Q1-2024. The global semiconductor industry moved from +8.4 percent to -5.7 percent in Q1-24 to $137.717 billion. Was this train wreck or fender bender? Whoever said this industry can’t still pull surprises?
Monthly IC growth rate turned steeply positive in Sep. 2023, and then, plateaued in Dec. Opto and discretes were still deeply in recession. Was it more representative?
There are four sides to the same cycle. All IC sectors follow the same cyclical pattern. No sector is immune. Logic first (Jun. 2023), and then micro (Jul. 2023), followed by memory (Sep. 2023). Analog ICs still have yet to recover (Mar. 2024?).
Europe has finally succumbed to the semiconductor recession. Having weathered the downturn, Europe has now fallen on its sword. Weak economy and heavy dependence on automotive and industrial are said to be factors. Is this more indicative of underlying global market health?
Looking at the global IC annual growth rate unit and value trends, recovery in market value was driven by Q2-2023 IC ASP rebound. IC unit growth has yet to recover. Also, watch out for IC ASP growth rates that may crash mid-2024.
Downturn recovery was: units first, and ASPs a year later. But, not this time, as it was ASPs first, and in 40 years history, it’s never happened before! This flies in the face of free market economics supply/demand fundamentals. It may either be a quirk of math (percentages can be misleading).
Take a hard look at the details! Strong market value growth was driven by ASPs, and not units. We make and sell units, not dollar bills. We have still ongoing excess inventory and slow end-market demand are underlying causes for lackluster demand. Current situation is exacerbated by hangover impact of plethora of long-term price agreements (LTAs) from post-Covid-19 market boom.
This is aided and abetted by slowdown in demand due to impact of inflation and interest rate rises on consumer and business spending. Capacity utilization rates are mostly in 70-75 percent range. The bulk of chip market is not Nvidia GPUs and AI apps. It is hard to call a recovery, when the unit demand is in doldrums. 2023 was never the start of another semiconductor super-cycle!
Industry outlook
The global economy is still shrouded in confusion and uncertainty. We are trapped in a roller-coaster netherworld of divergent economic reports. Rise in US labor costs sent two-year treasuries yields over 5 percent. It was counteracted three days later by report of smallest increase in wages since 2021.
US retail sales are seemingly surging, yet GDP growth is slowing. Industrial production has been rising, while manufacturing has been easing. Jobless claims are holding steady, yet, hiring has ticked down. There is will they or won’t they conundrum on high interest rates and inflation. If you feel confused, it is rightly so! And, so, too is the market!
US unemployed job seeker rates have hit parity. Arizona and New York state are set to soon join this list. One or more ratio is bad news for job seekers, but good for economy. The trend is in line with the Fed’s gradual labor market cooling agenda.
Eurozone finally exited recession in Apr. 2024. Q1-2024 GDP increased 0.3 percent vs. Q4-2023. This is the strongest pace in 18 months! Consumer prices rose at an annual 2.4 percent rate in March and April. June is now seen as the ECB’s likely start of EU monetary easing.
The stock market has remained remarkably calm. Semiconductor market needs a strong economy to thrive. When interest rates rise, cost of borrowing goes up. This impacts the cost of cars, credit cards, and mortgages. Impact is cushioned by high post-Covid-19 savings and credit card borrowings. These are not a bottomless pit! One day spending cutbacks are inevitable.
Unit shipments are still way below long-term average. It is currently 24.6 percent below 8.2b/week maxed out peak, and 14.1 percent below long-term trend line. 69b units are still to go! It is highly improbable that the much-vaunted unit balance will happen this year. We can’t claim recovery until IC unit growth resumes!
Capex is finally cutting back. Capex percent IC sales peaked Q1-2023 at highest rate ever, beating Dot.Com bubble boom. Feb. 2024 saw total spend back to the 14 percent safe-haven level. Capex cutback is likely for rest of 2024, given soft unit demand (tech Pull vs. capacity build). Also, global new fab capacity starting production in 2024 is up 6.4 percent (42) vs. 2023 (11).
China impact
There is the impact of China on capex. Non-China capex cut back started on cue in Q2-2023, or, three quarters after market collapse. China spend has now reached an apocalyptic proportions of 47.2 percent of total capex spend. Current level is 34 percent higher than 2023, and 80 percent higher than 2022. China capex is a serious red flag, aka solar panels, EV batteries, and vehicles.
As per TrendForce, China chip production should rise 60 percent in next two years, and be 2X in five years. New units are now completed or under construction, or planned in places, such as Beijing, Tianjin, Jilin, Dalian, Qingdao, Yancheng, Wuxi, Suzhou, Shanghai, Hangzhou, Chengdu, Wuhan, Xi’an, Hefei, Nanjing, Xinxiang, etc.
ASPs are moving from rout to recovery. IC ASPs peaked in Feb. 2024, and 52 percent higher than July 2022’s $1.10 downturn low. We can expect to see an ASP correction in H2-2024, especially given the industry overcapacity. What goes up (down) must go down (up), with long-term average growth is zero.
Market forecast
So far, economy is an enigmatic mix of contradictory factors. Unit demand is running way below long-term average. In capacity, non-China capex has now prudently reined back. We have massive China overspend way beyond needs. ASPs have been in steep upward trajectory since May 2023.
There is red flag alert – chip market fundamentals are still systemically very weak. We have continuing unsettled economic and geo-political outlook. Longer-term potential pressure is on mature market nodes, thanks to China, plus Chips Acts.
Forecast revised to +4.9 percent
In Jan. 2024, we forecast the global semiconductor industry to be +16 percent, an upward revision from Sept. 2022 9 percent. 17th industry up cycle started in Q1-2023, and ASP is not unit driven. 2024 forecast is now +16 percent (+12 percent bear and +20 percent bull. Enjoy the value growth spurt, but, beware ‘spreadsheet’ vs ‘real recovery’. Worsening economic outlook can push recovery into bear territory.
Q1-2024 crashed, and +3 percent forecast became -5.7 percent actual, down from Q4’s 8.4 percent. Market crash was sudden and unexpected, starting in Jan. 2024. IC unit demand started to fall through the floor. At the same time, IC ASP growth stalled. The combined impact was calamitous, wiping $10 billion from the forecast. Negative Q1 now makes Q2 growth unlikely. Now, more than ever, keep a strong eye on the data.
There is no way now that 2024 will be double-digit growth. We are back to the drawing board for our 16 percent forecast for global semiconductor industry in 2024. We have now updated forecast for 2024 to +4.9 percent to $552.762 billion. $56 billion were wiped off the new full year number. We are back to Sept. 2023 single-digit number. We are back to 2021’s $555 billion number! Bullish forecast is 8 percent growth to $569.086 billion for 2024.
Key takeaways
The notion that AI will take over the world is pure science fiction. They do increasingly more complex grunt work! But, unlike humans, they can’t do things such as imagination, originality, kindness, creativity, gut feeling, joy, sadness, ecstasy, pride, depression, love, feeling of ownership, physical pleasure, physical pain, mental turmoil, etc.
In automotive, all roads lead to China. An increasing number of MNCs seemingly believe the only way to catch up with Chinese carmakers, which have prioritized EVs and advanced technologies, is to Incorporate technology they use in their own models.
First, Volkswagen announced a series of groundbreaking tie-ups with China. Next, Toyota unveiled a new partnership with WeChat owner, Tencent. Then, Nissan announced a similar partnership with search giant, Baidu. Hyundai also announced it will develop batteries with China’s CATL. Let’s hope it all doesn’t end up in tears. Being a follower (slow or fast) is a proven risky strategy.
We are also getting to see flying EVs from China. XPeng, EHang, and others are leveraging know-how in batteries. An XPeng subsidiart is developing an integrated eVTOL vehicle that can drive on land and fly without separating modules.
In Moore’s Law, TSMC has an advanced technology roadmap. It unveiled a surprise A16 (1.6nm) node, scheduled for mass production in 2026. The last FINFET node is being stretched to its limit!
In high NA lithography, Intel has bet its chance to catch TSMC at 1.4nm node on being the first user of high-NA EUV lithography. Installation is complete and calibration has started on Intel’s high numerical aperture extreme UV lithography tool in Intel’s fab D1X at Hillsboro, Oregon.
The backend’s also getting tricky, especially with HBM. Nvidia H100 comprises MPU/MCU (GPU), discretes (MOSFET), analog (power management), and memory.
So, how sustainable is current value-based rebound? Not until IC unit growth returns. Unit growth return is unlikely before 2025. It is so far, so good, but the road ahead is potholed for the world economy. Current surge in ASPs is part of the normal cycle.
2023 recovery was a ‘spreadsheet’, and not any ‘real market’ recovery. We are still some way off from the start of the next semiconductor supercycle. AI is generally a product enabler. Will the Chip Acts save or overstimulate the industry? The answer is: both, caveat emptor! How will the current China policy play out? It depends on the US elections. Now, Q1 has crashed! What’s the future? The recovery will be harsh!
Energy and digital are going together: Masters of Digital 2024
There a panel discussion around Europe 2030: A Digital Powerhouse, at the ongoing Masters of Digital 2024 in Brussels, Belgium.
The participants were: Renate Nikolay, Deputy Director General, DG CNECT, European Commission, Eva Maydell, Member, European Parliament, Mathieu Michel, Secretary of State for Digitalization, Belgium, Ann Mettler, VP, Europe, Breakthrough Energy, Mohd. Sijelmassi, CTO, Sopra Steria, and Peter Koerte, Chief Technology and Chief Strategy Officer, Siemens AG. Cecilia Bonefeld-Dahl, Director General, DIGITALEUROPE, was the moderator.
Bonefeld-Dahl said Europe has had many issues. Digital has come up as a major solution. 20 percent of recovery fund went to digital. What are the next steps to take? How have you managed to stay in the business so far?
Peter Koerte, Siemens AG, said technology has been transforming and making our lives better. 170 years ago, there was electrification. We are now seeing software-defined hardware. Digitalization has been a really disruptive force for all the industries. There is much more to come! In AI and GenAI, we need to rethink how we can become faster to drive that.
Mathieu Michel, Belgium, said that he is in love with the single market. We are seeing implementation getting speeded up. This is a big opportunity to work with member states. We need to know our main message for the next five years. We currently work too much in silos. The main priority will be perhaps, to build a common governance across Europe. AI Act can be a way to tackle innovation and implementation. It is the way that we can implement the regulation. We also need to work on our skills. We need to build skills, attract skills, and maintain skills.
Renate Nikolay, European Commission, said that we are not yet on track to be digital powerhouse by 2030. Some are however, envious of our AI Act. Digital transformation is quite significant for the EU. Chips Act is also a unifying progress. We have now given ourselves targets for achieving goals. We hope the EID or E-Wallet should give us a boost. We are also not yet there regarding connectivity.
Mohd. Sijelmassi, Sopra Steria, said a non-native has become digital, such as Siemens. Now, companies need to understand technology better. There are some risks, but we need to transform. Next, we have need for skills everywhere. We should understand what the technology brings, and be able to work around. Eg., we need to see additional capabilities that are needed in the cloud. We need more injection of digital awareness.
Eva Maydell, European Parliament, said we need to get back to place for big ideas. We are going back to single market creation. We need to approach this in the next term. We also need to maintain trust in democracies. Citizens are content if things work. We need to consolidating and even deregulating existing rules. We need to bridge the gap between geopolitical and other sectors. Everyone feels the need to look ahead differently. We need to go beyond traditional mechanisms. We need to have big ideas.
Ann Mettler, Breakthrough Energy, said we still need to use digital to the full extent. The innovation takes place at the intersection of different technologies. Energy and digital are going together. AI is already being used in the energy system. Future iterations of AI should be more energy intensive. EU now, is an energy-poor geography. China and UAE have ambitious AI strategies, and also have energy prowess.
We also see energy efficiency doubling. We need to do so using all digital technologies at our disposal. Companies are worried about the high price of energy. We need to help companies, and help rebuild.
We also upgraded from 4G to 5G in an un-strategic manner. We now need to be strategic. We need to think of the power system and energy system for the future. She also added simplicity, to speed, scale, and solidarity.
Where does EU lead?
So, where does EU actually lead? Peter Koerte, Siemens AG, said technology has to be simple to implement. We make customers more energy efficient. There are RoIs, as well. You can run multiple scenarios. We can now bring industries to life, and make them more competitive. Edge computing is one area to look at. We also have a lot of data. We can make that easy to use for SMEs. We have a pick-and-place robots, or cobots. We need these things also across Europe.
Mathieu Michel, Belgium, noted that we have been working in silos so far. Europe needs to break away from that. AI Act can also help. We also need to develop skills. We need to adapt to the educational skills that are needed for the future. We can build more agility, and identify more skilled people.
Renate Nikolay, European Commission, stated when we look at virtual worlds, we have industrial sectors with untapped potential. Data Act will help access to data. AI Act will facilitate AI apps. We need to have digital twins for all the verticals. We need to have alliances between public-private, and Europe-wide. We need to create excellence centers, and scale to the next level. If we bring in connectivity, that will be a new deal for much bigger productive gains for Europe.
Mohd. Sijelmassi, Sopra Steria, said when you do AI, we have to avoid bias. We are working on that. There should be more diversity. We need to have trustworthy systems. We can probably share this knowledge. We also need to see how we are pushing quantum computer startups. Some are taking money also from USA, besides Europe.
Eva Maydell, European Parliament, said people are using ChatGPT today. Companies are also seeing what advancements they can do with their products. We can think of numerous ways to use AI. We must continue improving livelihoods. We need to continue supporting countries such as Belarus and Ukraine.
Ann Mettler, Breakthrough Energy, said emerging clean technologies were needed to replace Russian gas supplies, once the war began. We are spending over $400 billion subsidizing fossil fuels. How can we expect anyone to follow sanctions if we do this? We need to get off Russian fossil energy. We need to zero into emerging technologies. Next, we need to lower cost of energy transition, using digital. We are decarbonizing through decentralization. A decentralized energy system allows for more optimal use of renewable energy, as well as combined heat and power, that reduces fossil fuel use and increases eco-efficiency.
CEA-Leti taking risks for creating photonics breakthroughs!
CEA-Leti, France, organized a photonics workshop recently. Sebastien Dauvé, CEO, CEA-Leti, presented from lab to fab. The optics and photonics division has Euro 80 million annual budget, and 700+ patent families. Leti’s technological semiconductor platform merges electronics, photonics and software. It has a platform for nanocharacterization, where characterization of advanced materials and components supporting disruptive innovation is done.
Leti’s future strategy includes FD-SoI and apps, lab-to-fab for More than Moore, and taking risks for creating breakthroughs. Leti is one of the pillars of European Chips Act. It is building a new, cutting-edge semiconductor research facility, with 2,000 m2 of cleanroom space and EUV compatible.
AI and quantum communications
Bertrand Szelag, Integrated Photonics Program Manager, CEA-Leti, presented on silicon photonics: heightening AI and quantum communications. He talked about Next-generation energy-efficient photonic neuromorphic accelerator. It has non-volatile phase shifters based on phase change material, and photonic neurons with massively integrated pulsed lasers.
As for quantum cryptography, the goals are generate entangled photon pairs at a high rate, and detect photonic qubits with high efficiency. Goal 1 has been achieved using integrated photonics. 1GHz generation rate has been achieved by frequency multiplexing. For goal 2, they have guide-integrated SNSPDs for ultra-high efficiency and low dark counts.
Vincent Destefanis, Optical Sensors Partnership Manager, CEA-Leti, presented on towards ultra-miniature photonic sensors: from niche to mainstream. He said bulk sensors are dedicated to niche apps. High-volume use cases are targeting low manufacturing costs.
Main key drivers for development of leading-edge sensors include high performance, miniaturization, low cost, smart, and low power. CEA-Leti optical sensing technologies are for sensing of chemicals and particles of matter. It has a highly selective and sensitive technique, called quantum cascade photoacoustic laser. Quantum cascade laser on Si is used for tackling volume and cost limitations of QCL. Leti is moving toward 1ppm sensors for industrial and environmental apps.
Mach Zehnder inteferometry is used for massively parallel bio-sensing. Leti also does smart sensing of particles of matter. It is ready to explore disruptive photonic solutions. These include modelling, III-V lasers on silicon, GeSn source/det, SiN and Ge/SiGe photonics ICs, photoacoustic detector, bolometer detector, and characterization models.
FMCW-based scanless 3D imaging systems
Pierre Castelein, Image Sensors Partnership Manager, CEA-Leti, presented on advances in FMCW-based scanless 3D imaging systems for consumer applications. Persistence Market Research said that global depth sensing market is expected to reach $15 billion by 2033, rising at a CAGR of 8.2 percent.
Commercial depth mapping sensors look at structured light, and direct and indirect ToF. Frequency modulated continuous wave (FMCW) is considered as game changer for 3D imaging. Features include high-depth resolution, depth and speed measurement, and higher immunity to background light. Complex signal processing and 3D mapping at video rate are work in progression.
We are moving toward scanless 3D FMCW-based imaging. Advanced CIS foundry nodes open the path to compact imagers for scanless depth and speed imaging at video rate. Second generation with integrated optics for higher compactness is being worked on. Next generation will look at extending to short-wave infrared (SWIR) range for long distances and high-end apps based on SWIR materials (III-V, Ge).
MicroLED for multifunctional display
Michael Pelissier, Multifunctional Display Project Leader, CEA-Leti, presented on the use of microLED for multifunctional display.
Smart-pixel solution enables to drive microLED with CMOS. It simplifies pixel transfer to backplane for large display. You can overcome TFT limitation to drive high current. It also enables tailored driving mode for microLED (PWM) and compensation method. High brightness of microLED paves the way to novel apps, such as TV/monitor, wearables, AR/MR etc.
Leti is looking at the opportunity of microLED for multifunctional display. The free space within the pixel enables embedding additional functions either on CMOS or within inter-pixel area. Applications drive the key parameters. Leti is focusing on embedded optical sensors.
CEA-Leti is well positioned to develop multifunctional display solutions. We have the know-how related to microLED. We have co-integration capability with multiple types of photo-detector CMOS ASIC design.
CHIPS metrology research that accelerates innovation
NIST, USA, organized a seminar on the CHIPS metrology: Research that accelerates innovation. CHIPS for America Programs include $39 billion for manufacturing, and $11 billion for R&D.
The CHIPS and Science Act strategy is informed by extensive engagement with semiconductor industry leaders and stakeholders across all fields. NIST was selected as the bureau within DOC to house these new units. 2030 goals include: US technology leadership, accelerate ideas to market, and a robust semiconductor workforce.
Marla Dowell, director of the CHIPS Metrology Program, discussed how CHIPS for America advances metrology research essential for next-generation microelectronics. To address gaps in the semiconductor ecosystem, CHIPS for America is investing in four overlapping entities, all of which include some aspect of workforce training. These programs will share infrastructure, participants, and projects. They will operate in coordination with each other, with the CHIPS for America manufacturing incentives program, and with microelectronics R&D programs supported by other US federal agencies.
The entities are: National Semiconductor Technology Center (NTSC), National Advanced Packaging Manufacturing Program (NAPMP), Manufacturing USA institues (up to three), and Metrology Program.
Metrology is foundational and fundamental for all CHIPS R&D. Metrology solutions are delivered to the industry stakeholders. High-impact research areas are sourced from industry. Metrology technologies should reach commercial scale.
Opportunities are being created for industry, government partners, and academia to participate in CHIPS for America and the CHIPS Metrology Program. You can collaborate with the Metrology community. CHIPS Metrology will help foster collaboration among the semiconductor community with focused groups based around each Grand Challenge. Members of the semiconductor space will have the chance to join webinars, in-person poster sessions, networking sessions, community chat, etc. This is an opportunity to share knowledge with other stakeholders and learn about what other projects are working on.
What is METIS?
METIS, or the Metrology Exchange to Innovate in Semiconductors, is a data exchange ecosystem developed by NIST that will give stakeholders access to CHIPS Metrology research results and serve to catalyze innovative breakthroughs in US semiconductor manufacturing.
METIS will make research and data available in a manner that guards intellectual property, protects US security interests, is aligned with the approach used by NIST for access to research results, and is self-sustaining to meet future needs.
Grand challenges
There are Metrology Program grand challenges. GC1 is materials purity, properties, and provenance. GC2 is advanced metrology for future manufacturing. GC3 is enabling metrology for integrating components in advanced packaging. GC4 is modeling and simulating semiconductor materials, devices, and components. GC5 is modeling and simulating semiconductor manufacturing processes. GC6 is standardizing new materials, processes, and equipment. GC7 is security and provenance of microelectronic components and products.
There was an update on Grand Challenge funded research projects. Over $109 million in funding has been provided to 29 approved research projects over three Grand Challenges. These are in GC2, where, 10 projects were funded, in GC3, where, 6 projects were funded, and GC4, where, 13 projects were funded.
Current projects are helping to develop new measurement instruments, measurement methods, and measurement-informed models and simulations for advanced microelectronics design and manufacturing. Additional projects will be selected by the end of the year. As for industry and academia collaboration, research teams have proposed several distinct industry collaborators to provide materials and software and/or conduct joint research with researchers. Several collaborations with US universities, nonprofit consortiums, research institutes, and associations related to the microelectronics industries have also been proposed.
Ongoing research projects
Funded research projects in GC2 are: Accurate Measurements of Thermal Properties at the Nanoscale, Advanced Analytical Electron Tomography for Materials Development and Failure Analysis in Semiconductor Devices, Advanced Metrology to Enable Next Generation EUV Photoresists, Atom Probe Topography: Nanostructured Semiconductor Materials, Interfaces, and Devices, Critical Dimension Small Angle X-Ray Scattering (CDSAXS) for Next Generation in-line Metrology, Electron-Solid Interactions, EUV Scatterometry Metrology, Non-Destructive Semiconductor Structure Function and Process Optimization for future Microelectronics Manufacturing at the NIST NSLS-II Beamline for XAFS and Diffraction, Overcoming Barriers: Nanoscale Interface Metrology and Electrical Characterization for Advanced Electronics, and Strain Measurement for Semiconductor Devices and Packages.
GC3 Funded Research Projects are: Accurate Cure Kinetics, Stress, Mechanical Properties and Warpage Measurements for Next-Generation Microelectronics Packaging under Device Relevant Conditions, Characterization of nano-to-microscale process-induced thermo-mechanical changes in heterogeneously integrated microelectronics, Metrology of Materials, Surfaces, and Processes for Hybrid Advanced Packaging, Metrology forIntegration of New Magnetic Materials, Nanoscale, Element-Specific X-ray Imaging for Integrated Circuit Metrology, and Standardizing New Materials, Processes, and Equipment for Microelectronics — CalNet.
GC4 Funded Research Projects are: Advancing Power Electronics with Defect Metrology, Causal Green’s function simulations of phonons for multiscale/multiphysics modeling of thermal transport in gate-all-around transistors, Electro-acoustic metrology of piezoelectric materials for wireless communications, High Speed Metrology for Magnetoelectronic Devices and Models, Metrology of Nanoscopic Thermal Transport, Molecular Dynamics Simulation of Heat Transport in Gate-All-Around Transistors, Multiscale Modeling and Validation of Semiconductor Materials and Devices, Nanocalorimetry for Semiconductors and Semiconductor Process Metrology, Quantitative Assessment of Defects and Related Modeling Parameters in GaN Semiconductor Devices, RF Channel Propagation Measurements and Models for Communications Circuits, RF Metrology for Models of High-Frequency Transistors, Thermoreflectance Thermal Property Measurements for Heterogeneously Integrated Materials and Power Electronics, and Time-resolved emission microscopy for circuit evaluation and failure analysis.
Select research teams and their groundbreaking work.was also showcased. These are:
- Ann Chiaramonti Debay: Atom Probe Tomography: Nanostructured Semiconductor Materials, Interfaces, and Devices.
- Joshua Martin — Thermoreflectance Thermal Property Measurements for Heterogeneously Integrated Materials and Power Electronics.
- Jeff Shainline — Time-resolved Emission Microscopy for Circuit Evaluation and Failure.
Analysis. - Ran Tao – Accurate Cure Kinetics, Stress and Warpage Measurements for Next-Generation Microelectronics Packaging with High Thermo-Mechanical Reliability.
Global semiconductor industry forecast to grow +16 percent in 2024; But, it’s not yet time to pop champagne: Future Horizons
IFS 2024 was held today in London, UK. Has the chip market downturn come to an end? What fate now awaits the industry? Malcolm Penn, Chairman and CEO, Future Horizons, stated that the global semiconductor industry was forecast to grow +16 percent in 2024, and reach $608.186 billion. This is an upward revision from Sept. 23 single-digit number of 9 percent.
The bullish number is $628.849 billion at 20 percent growth, and the bearish number is $587.091 billion at 12 percent growth for 2024.
Q1 and Q2 should see high growth rates tailing off (base number impact). ASP impact should likewise also start to temper. Unit growth should return In 2H-2024. Low levels of capacity utilization is likely to persist throughout 2024. 2024 should see the market break the $600-billion barrier! The math is hard to call. So much depends on the timing of the events.
Industry outlook
First, the really good news! Downturn bottomed in Q1. The golden cross was breached in July. It’s sunny weather ahead. Downturn bottomed one quarter earlier than ‘4-quarter normal’.
An ultra strong Q2 was an unexpected big surprise. Even TSMC was warning of -4 to -9 percent quarterly decline. Logic, memory and micro were leading the way, with “AI/high-speed compute” driven, but, driven by ASP, not units. Q3 and Q4 mirrored Q2’s 6 percent annualized growth, but based off 2022’s market downturn collapse. After the 2022 crash, things were bound to get better. The question is: how much and how long?
Looking at semiconductor annualized growth rate trends, annualized monthly IC growth rate turned steeply positive in Sept. 2023. This was the impact of market collapse in Q3-2022. Growth is now measured against 25-30 percent lower baseline. Opto jumped too, but more in line with its ‘normal’ seasonal pattern. Discretes growth is still negative. Is that due to the impact of less severe collapse, or more representative?
The impact of memory was: it is two sides of the same coin. Only the amplitude of the swings is different. Both curves have been positive growth since Sept. 2023. For the first time since May 2022, Memory is now starting to positively contribute.
Now, there are four sides of the same coin. No sector is immune to semiconductor cycle impact. It was memory first, then micro, followed by logic, and then, analog (down and up). Analog ICs still have yet to recover. Will they do so in Q1-2024?
Europe finally succumbs
Europe has finally succumbed to the semiconductor industry. Strength in automotive and industrial sectors had sheltered Europe from downturn. After strength follows weakness. A weak economy now impacting Europe. Is this more indicative of the underlying market ‘recovery’?
Looking at worldwide IC annual growth rate unit and value trend, recovery in the market value is driven by IC ASP rebound measured against Jun 2022 collapse. IC unit growth has yet to turn around, let alone recovery. IC ASP growth rates are notoriously cyclical. And, never forget that long-term trend is zero.
Therefore, all that glitters is not necessarily gold! Earlier ‘recovery’ timing has impacted the math, not the analysis. If unit demand remains low, ‘recovery’ growth will stumble.
Current ‘recovery’ sales is not unit driven. Demand is still devilishly weak. Lackluster month-on-month growth rates lack momentum. High growth is being measured against last year’s low baseline. Annualized growth rates will flatten over the next four quarters. We need to differentiate between the math vs. the market. We also need to look at monthly trends and numbers, not just YoY growth.
Not yet smelling of roses!
The outlook ahead is not yet smelling of roses! In Davos Economic Forum, there were talks around economic potential of Generative AI, threat of escalation in Middle East war, Red Sea global supply chain disruption consequences, political impact from biggest election year in history, US Presidential election and return of Donald Trump, and Q1-2024 that saw Eurozone now formally in recession. Further, Japan GDP had dropped 1.4 percent in Nov. 2023 on export slowdown.
The semiconductor industry is advised to proceed with extreme caution. This is not the next super-cycle. It’s too soon to celebrate ‘chip market recovery’ whilst unit demand, ‘bread and butter’ products, and economic outlook still languish.
The economy is clouded in fog and uncertainty. US inflation outstripped forecast with rise to 5.4 percent for December. Eurozone is in recession, as rising prices have hit spending. Bloomberg Economics estimates price tag for war over Taiwan at $10 trillion or 10 percent of global GDP. Economic worries and new supplies have tempered outlook for crude oil prices. Boeing is not alone in suffering managerial/existence woes. Also, is the American raging bull market taking a breath or exhausted? The chip market needs a strong economy to flourish.
Unit shipments are still way below long-term average. It is currently 12.2 percent below long-term trend line (23.9 percent below 8.2b/week maxed out peak). We need 2-3 more quarters likely before balance is fully restored, with mid-2024 expected to be earliest. We cannot claim recovery until unit growth resumes.
Bill of materials (BoM) and quantity built determines units used. Inventory and lead time determines the units bought. Right now, we are still at the trough of units bought.
China capex worrying!
Capex has been running rampant. Massive capex surge is driven by 2022-23 shortages, and US hi-tech embargo on China. Capex percent of IC sales peaked Q1-2023 at highest rate ever, even beating Dot.Com bubble boom. There can be ‘4Q’ delay before capex spend equals net new capacity. New maxed out peak is now higher than prior 8.2b/week level.
Non-China capex cut back started on cue in Q2-2023, three quarters after the market collapse. Capex cutback is likely to continue for most of 2024, especially given the soft unit demand. China predatory capex behavior is a serious red flag.
China capex overspend is a ticking time bomb. ‘Buy anything’ capex surge is a direct result of US-led export license embargo. 2023 capex market share was up 30 percent vs. 2022, and 400 percent vs. 2012. Focus on mature nodes is potentially leading to severe oversupply / dumping. USA is nervous about ‘flood’ of older generation chips from China. We pray it remains uncrated in storage. We may otherwise have chip market apocalypse.
ASPS have moved from rout to recovery in under 12 months. IC ASPs are 16 percent higher than $1.35 pre-recession peak, and 42 percent higher than Jan. 2023 low. Don’t get too excited, as ASP cyclicality is notoriously volatile. The average growth is zero. We now expect to see an ASP correction in 2H-2024, especially given the industry overcapacity. The 400 billion $1.60 ASP IC unit market isn’t dominated by $40k nVIDIA AI GPUs!
Market forecast
Last year, we said the global semiconductor industry will be -22 percent. It was harsh, but negative growth message was more important than the number. However, what happened was -8.6 percent growth. 2023 is expected to be $524.162 billion — a drop of -8.6 percent.
Recovery kicked in one quarter earlier (big influence on the math). Economy proved more resilient than expected, with bewildering received wisdom. Market ‘rebound’ was driven by sharp recovery in ASP, which is still unclear, yet, why.
Growth momentum indicator is now sailing in blue skies. The next death cross is hopefully two plus years away, but it’s never plain sailing! Future Horizons forecast 2024 as a +16 percent growth for the global semiconductor industry.
Key takeaways
Hype springs eternal for generative AI. You can’t go to Amazon or ETSY and buy AI. It’s an enabler, not a market, as with IoT. In EV amd automotive, BYD sold more EVs than Tesla in Q4-2023, making it the world’s biggest EV maker. EVs include chips plus motor, battery, and now, ‘AI’. It has led to the auto industry Nokia moment!
Next, Moore’s Law has been killed more times than Dracula. However, Moore’s Law still lives, just different! In Apple vs. Microsoft, Apple is largely left out of the AI fervor. Microsoft is Open AI’s largest backer and cloud hosting provider, and pioneered in deploying AI chatbots across its search and workplace products. Nvidia is benefiting from a similar right place, right time, right product. There is a constant need to keep reinventing the wheel.
Chips are strategic! It is time to rethink the supply chain. OEMs are enjoying a free semiconductor ride — $35-$450 vs. semiconductor firms $9. We need to look at strategic visionaries, long-term balance sheet security, total cost of business, etc. We are now looking at ‘Partnership’ business model. and long-term goals and shared visions.
Semiconductor industry is structurally unstable. Shortages are triggered by under capacity, leading to under investment and increased demand. Oversupply is triggered by excess capacity, leading to over investment and market collapse.
It is impossible to achieve sustainable supply and demand balance. Demand can change very rapidly (up and down), but, capacity can’t! The industry needs a new model. OEMs also need to share capex business risk. This is what the semiconductor industry and the Chips Acts really should be focusing on. Whoever resolves this conundrum really will gain a strategic edge.
Points to ponder!
So, what’s keeping the chip industry executives awake at night? How sustainable is the current value-based rebound? Well, its not until IC unit growth returns. When will unit growth return? It’s unlikely before Q2-2024. Can the world economy continue to defy gravity forever? Extremely unlikely, but no-one knows when/how the correction will come. Is the current surge in ASPs a false dawn? Its part of the normal cycle.
Is the ‘recovery’ overstated, measured against last year’s bad data? Probably, yes! But, beware the risk of ‘spreadsheet’ vs. ‘real market’ recovery. Is this the start of next semiconductor supercycle? Well, not yet!
Is AI the next industry killer product or hype? Well, both-ish! It’s a product enabler. Will the Chip Acts save or overstimulate the industry? Both! Its the caveat emptor? Caveat emptor is a Latin phrase that translates to “let the buyer beware”. Finally, how will the current China policy play out? Its a case of right problem, but wrong solution?
Summary
The 17th semiconductor industry up cycle started in Q1-2023 (ASP, not unit driven). 2024 forecast is now +16 percent (+12 percent bear and +20 percent bull). Enjoy the value growth spurt. But, beware ‘spreadsheet’ vs. ‘real recovery’. Worsening economic outlook will push recovery into bear territory.
Now, more than ever, keep an eye on the data. It’s not yet time to break open the champagne! Keep track of the industry fundamentals – it’s rarely “different this time. Don’t overthink or overhype – AI is more artificial plagiarism, not intelligence! Finally, prepare for a slowdown in value growth and plan for an untick in unit demand. Keep your eyes peeled for clues. Act decisively when needed!
Advancing skills and talent in EU semiconductor industry
METIS, Europe organized an event on advancing skills and talent in the semiconductor industry.
Laith Altimime, President SEMI Europe, stated that the global semiconductor industry is on the path to $1 trillion, that has been made possible by unprecedented fab capacity expansion. A diverse range of new disruptions are now driving exponential growth – underpinned by AI. There is a war going on for talent right now!
About 94 – 200mm / 300mm fabs and major expansions will be coming online between 2022-2026. Americas will have 14 300mm, and four 200 fabs. China will have 25 300mm, and five 200mm fabs. Europe/Mideast will have nine 300mm, and four 200mm fabs. Japan will have eight 300mm, and one 200mm fab. Korea will have three 300mm fabs. SE Asia will have three 300mm, and four 200mm fabs. Taiwan will have 13 300mm, and one 200mm fabs. That makes 75 300mm, and 19 200mm fabs, respectively.
If we look at the semiconductor supply chain percentage of the global manufacturing capacity in 2020, USA had 12 percent, EU had 9 percent, respectively. Taiwan had 20 percent, Japan, China, and South Korea had 18 percent each, and SE Asia had 6 percent share.
EU Chips Act is instrumental for a more resilient ecosystem. Europe’s microelectronics ecosystem is diversified, with semiconductor research, semiconductors for automotive, IoT, sensors, power etc., lithography equipment and materials, mobile network equipment, etc. Companies are involved in design and manufacturing, besides suppliers and RTOs.
Several players have been investing in Europe during 2023. Bosch lined up Euro 400 million for expanding wafer fabs in Dresden and Reutlingen, Germany, and Penang, Malaysia. STMicro is investing $3.4 billion for first industrialization of new 300mm fab. Soitec has invested Euro 300 million in Bernin, France, for new SiC wafers fab. Intel has invested Euro 17 billion for two fabs in Magdeburg, Denmark. Okmetic has put Euro 400 million in 200mm silicon wafer production fab in Vantaa, Finland.
STMicro invested another Euro 7.4 billion in Crolles, France, for jointly-operated 300mm manufacturing facility for FD-SoI-based technologies. Onsemi invested $300 million in Roznov, Czech, for expansion of SiC fab. Infineon invested Euro 5 billion in new factory for 300mm for AMS and power semiconductors. Wolfspeed invested Euro 3 billion in Ensdorf, Denmark, for joint 200mm SiC fab and R&D center. Finally, Cisco is setting up design center for ‘next-gen’ semiconductor devices worth Euro 300 million in Barcelona, Spain. A total of Euro 37.5+ billion was invested in 2022.
Intel plans new semiconductor plant in Poland. Infineon kicked off new fab in Dresden. And, TSMC, Bosch, Infineon, and NXP established JV to bring advanced semiconductor manufacturing to Europe. Intel Ireland and Soitec developed the first EUV for manufacturing in Europe. Soitec positioned SmartSiC as future EV standard.
There are several headwinds on path to $1 trillion. Led by geopolitics, there are talent shortages, climate change, supply chain disruptions, rising capex/opex, shorter product and demand cycles, design complexity challenges.
Current challenges
Looking at skills in the semiconductor industry, what are the current challenges in Europe? There are not enough people available at the employment market with the right motivation and skills. Semiconductor industry has an image problem. The sector does not reflect and benefit from the full diversity of Europe’s society and talents. Skills requirements are also changing. There are substantial future skills missing. Semiconductor industry is ramping up at a fast pace. Missing staff is a bottleneck for growth.
Some current activities in Europe include EU projects, SEMI Europe initiatives, and SEMI HQ initiatives in Europe. The semiconductor industry must enable diverse talent pipeline to reach EU Chips Act ambitions. Cultivating talent gap in the European semiconductor industry is needed. An additional 350,000 staff is needed to reach EU Chips Act ambitions (20 percent global market share), and enable a total workforce of 600,000 by 2030.
A variety of backgrounds are needed: software developers, engineers, operators, and technicians – positions which are in decline. Diversity enlarges the talent pool: the industry must collectively address the topic of diversity. Currently, women make up 20-25 percent of the global semiconductor workforce. Competitive and attractive Europe is needed to attract qualified candidates from abroad.
Skills strategy needed
Léo Saint-Martin, Associate Consultant, Decision Etudes & Conseil, presented on skills intelligence and skills strategy for the microelectronics sector. METIS semiconductor skills monitoring has 316 stakeholders from 171 organizations. It is representative for ~145,000 microelectronics jobs across Europe. That is, ~55 percent of European microelectronics workforce. 23 percent of respondents were women (more than average of the sector in Europe).
From 2020 to 2023, most critical job profiles on the European job market include software engineer, system design engineer, process engineer, analog design engineer, data specialist, design engineer, maintenance technician, test engineer, process technician, etc.
Demand and shortage for four profiles has significantly raised since 2020 — data specialist, moving from 15th position in 2020 to 4th position in 2023. Other profiles include system designers, analog designers, and process engineers. The situation seem to have improved since 2020 for junior design engineers, especially, digital designers. ML engineers has emerged as new profile, identified as critical by 38 percent stakeholders in 2023.
Severe shortage of senior profiles on specific topics continues. These are advanced systems architecture designers, systems test engineers, senior analog designer, especially associated with strong programming skills, application engineers, with experts in specific applications fields, and senior managers in general. Supply chain expert/Logistics specialist is another new profile that emerged in 2023.
60 percent indicated systems architecture as most critical skills/knowledge on European job market. It was followed by data analysis, AI/ML, analog design, etc. Most critical soft skills required were teamwork and communication. There are increasingly complex topics, so, teamwork and collaboration among teams is crucial. They should have ability to also summarize complex topics for non-experts. Creativity was key, with innovation capacity, ability to propose new ideas, new processes, new designs, to use new technologies, new applications, agile thinking, business thinking for R&D, etc.
Since 2020, there has been exponential rise of investments in manufacturing capacities. Higher recruitment needs leads to higher talent/skills shortage, especially seniors. Focus on production capacities leads to need for more process engineers, maintenance technicians, process technicians. Semiconductor shortage means that we now design for resilience and availability. More skills are needed to handle supply-chain management / logistics. There are delays in recruitment processes. It leads to delay in business plans, progresses, and therefore, in hires. Still 67 percent of stakeholders were experiencing no impact of the EU Chips Act on skills needs in 2023. There is strong and raising shortage of skills linked to the topic of edge IoT / edge AI.
We have integrated four new profiles linked to microelectronics in the ESCO platform. Up to 25 additional job profiles were identified that could be added in the ESCO platform. The four profiles added are:
Microelectronics designer: Focus on developing and designing systems, from the top packaging level down to the integrated circuit level. System-level understanding with analogue and digital circuit knowledge, integrating the technology processes. Overall outlook in microelectronic sensor basics.
Microelectronics smart manufacturing engineer: They design, plan and supervise the manufacturing and assembly of electronic devices and products, such as ICs, automotive electronics or smartphones, in an Industry 4.0 compliant environment.
Microelectronics materials engineer: They design, develop and supervise production of materials required for microelectronics and MEMS, and can apply them in these devices, appliances and products.
Microelectronics maintenance technicians: They are in charge of preventive and corrective maintenance in semiconductor manufacturing.
There was 11 percent growth of employment in the EU27 in 2022, with +30,000 hires. Considering the entire electronics value chain (passive components, electronic boards, systems), 2,720,000 employees are located in the EU. Among the top 25 employers, 12 are in semiconductors, seven from materials, and three each from equipment, and research & technology organizations.
EU Chips Skills Alliance
Christopher Frieling, Director for Advocacy and Public Policy, SEMI, talked about EU Chips Skills Alliance. METIS has three objectives. One, skills intelligence and strategy for microelectronics: monitor critical profiles and skills. Two, develop and deliver training courses. Three, develop a long-term action plan, and a stakeholder network beyond the lifetime of the project.
We are building on the METIS network, with the objective of ~50 partners. Vision of the alliance are: Fully connected semiconductor skills community with EU universities and industry working together. Recognition of the Alliance by the EU Commission and major European semiconductor players as major collaboration network for skills. Major platform for information exchange on skills for microelectronics. Have new degrees more suitable for the industry. Lastly, increasing attractiveness of semiconductor industry and inclusion of the unrepresented groups.
The overall objectives are: sustaining results of METIS project. Facilitating employability across the border. Speaking with one voice. Standing list of associated partners for all chips skills projects. And, stimulating STEM and women participation.
Long-term action plan for short- to mid-term has been set. These are advance skills monitoring mechanisms to review trends in microelectronics, conduct quantitative and qualitative analysis of the skills gap, resulting in yearly monitoring reports and updated Skills Strategy. Lay the building blocks for the decentralized EU Chips Skills Academy through reinforced VET–industry collaboration: updating and creating new courses with micro credentials on an IT platform.
Next, connect EU projects and initiatives targeting shortage of skills–ALLPROS, IPCEI´s working group on Skills, ECoVem, and others to consolidate all activities addressing skills shortage. Set up collaboration with the National Competence Centres. Build bridges to clusters and regional skills initiatives via the Silicon Europe Alliance and European Semiconductor Regions Alliance (ESRA) to exchange on best practices and plan pilot projects. Finally, advocate for set-up of dedicated funding mechanisms to support the strategic goal of the EU Chips Act on development of skills (towards an EIT Chips).
In the longer term, we need to build of a fully integrated microelectronics skills community, speaking with one voice representing, connect academia and industry. Operationalize the EU Chips Skills Academy with a comprehensive e-learning platform for all types of learners, mutually recognized system, and an international summer schools on microelectronics. We will create an EU-wide image campaign to attract young talents to STEM, with special emphasis on women´s participation, raising awareness on importance and attractiveness of microelectronics jobs. The long-term vision is to set-up an EIT Chips as an umbrella for initiatives, competence centres, projects, alliances, etc.
Training for microelectronics
Dominik Zupan, Bernd Deutschmann (TU Graz), presented on the training, up-and reskilling for microelectronics. METIS catalog of training has 41 modules and 88 courses. One goal of the METIS project was to attract a diverse range of learners pupils, students, trainees, workers, etc. Hence, we have focused on offering training courses through a diverse selection of lecturers.
Addressing workforce challenges for EU semiconductor industry
EU Digital Future Forum 2023 was held recently. It was sponsored by Erasmus+, KDT JU, and ECSEL Joint Undertaking. Christopher Freiling, Director of Advocacy, SEMI Europe, welcomed the audience.
Workforce challenge
Naresh Naik, Director, SEMI University, said they are addressing the workforce challenge. In a rapidly evolving semiconductor industry, estimated to reach $1 trillion by 2030, there will be an estimated shortage of over 900,000 workers. Companies are limited on resources and time. Employees, especially engineers, require even more accommodating solutions. The electronics manufacturing and design industry needs 21st century training solution.
SEMI University was launched globally on Feb. 7, 2023. It is designed by industry experts. With a comprehensive curriculum focused on electronics and semiconductors, SEMI University is a new and vital resource for organizations seeking education and training for their employees. SEMI University is built on Absorb LMS platform. We provide relevant content, and are guided by SEMI Members.
SEMI University offers 525+ on-demand courses specifically for semiconductor industry. These are spread across advanced technologies, AI and data technologies, design principles, front-end and back-end processing, test and characterization, yield and failure analysis, MEMS, optoelectronics, safety, etc. Since launch, users from 53+ countries have already enrolled in courses.
METIS for skills shortage
Laurence Dassas, Global Innovation Manager, X-Fab, presented on METIS, a collective initiative to face skill shortage in the semiconductor industry. X-Fab currently has six manufacturing sites — three in Germany, and in USA, France, Belgium, and Malaysia. It is focused on automotive, industrial, medical, and consumer, communications, and computer markets.
The semiconductor industry can contribute to achieve digital and green transition. EU Chips Act is for improving Europe’s competitiveness and resiliency in semiconductors. Europe is aiming for an ambitious 20 percent market share by 2030. We also have challenges such as technical leadership, increase capacity, and people/skills. We need people to run the new factories coming up.
METIS has a common goal of bridging the skills gap in the microelectronics sector for a more competitive Europe. Microelectronics Training Industry and Skills (METIS) is a European-funded program. Skills Sector Alliance is co-funded by Erasmus+ program, and coordinated by SEMI. 18 partners from 12 countries have joined forces.
Key actions include skills intelligence and strategy for microelectronics, monitoring critical profiles and skills. We are designing and developing training courses. We are developing a long-term action plan, and stakeholder network beyond project lifetimes. This project is also ending soon, and we have some good results. We have 10 focus groups and 50 structured interviews, etc.
Demand and shortage for four profiles has significantly raised since 2020 — software engineers, application engineers, data scientists, and experts in cyber security. We also have strong shortage of specific senior profiles. These are advanced systems architecture designers, strong analog design skills, and strong programming skills, and expertise in specific app fields. We also have some critical skills/knowledge on European job market, such as AI/ML, systems architecture, applications, new materials, data specialists, quality and reliability, analog design, and security.
Women in deep tech
Women in deep tech was the next session. Several examples were given. Example, maths classes are male dominated. Women tend to need a nudge. They also have fear of failure. We need mentorship schemes and supportive male allies. We need to showcase achievements, and take down stereotypes. We also need job flexibility. We need to get over the rules and conditions, and focus on impact.
Deep tech needs to be gender agnostic. We need deep change and deep thinking. We need frugal and open innovation, and multi-disciplinary skills. Women can enable power, create differentiation, and catalyze change. Women are ready to provide added value, and help the European chips industry.
Spell semiconductors without ‘F’ (luorine)? What can we do about PFAS?
Per-and poly-fluoroalkyl substances or PFAS is prevalent in our world, and very much in our current conversation. But, what is it? (or more correctly, what are they?) Why are they under great scrutiny? Are they all hazardous? How would the semiconductor industry be impacted by their removal?
SEMI, USA addressed the what, why, and how of PFAS in the semiconductor industry. Laurie Beu, semiconductor EHS consultant and leader of SIA’s Semiconductor PFAS Consortium, provided an overview of PFAS materials, concerns about health effects, and current state of regulatory response.
There are about 16,000 PFAS substances available globally. These are environment persistent, and some are bi-accumulative and toxic. PFAS are divided into polymers and non-polymers. Under polymers, there are fluoropolymers, polymeric perfluoropolyethers, and side-chain fluorinated polymers. Under non-polymers, there are perfluoroalkyl substances, polyfluoroalkyl substances, and fluorinated gases.
There are several definitions of PFAS. Any substance that contains at least one fully fluorinated methyl (CF3-) or methylene (-CF2-) carbon atom (without any H/Cl/Br/I attached to it), as per EU Annex XV Restriction Report. EPA OPPT 2021 defines it as any structure that contains the unit R-CF2-CF(R′) (R″), where R, R′, and R″ do not equal “H”, and the carbon-carbon bond is saturated (note: branching, heteroatoms, and cyclic structures are included).
PFAS concerns
There are several concerns with PFAS. Fluorochemicals have been used since the 1940s to solve myriad needs where inert materials are necessary. Beginning from early 2000s, researchers and regulators expressed concerns with long chain perfluorooctyl sulfonate (PFOS). They are persistent, bioaccumulative, and toxic. Over time, the number of PFAS chemistries of concern has increased, such as PFOS, PFOA, long-chain PFAS, PFHxA, PFHxS, PFBS, etc. PFAS as a category is facing state, country, regional and
international regulatory restrictions.
Looking at the regulation history, in the early 2000s USEPA began to work with some molecule manufactures to stop producing PFOS. An EPA TSCA Significant New Use Rule was proposed on the now ‘dead chemical’ to no longer allow new PFOS production. A lithography technologist notified some device manufacturers that PFOS was important in some photoresists. This information initiated a supplier/device maker activity to understand and represent the importance to EPA. Some exemptions were provided in the US, EU, and UN. Alternatives adopted by suppliers were also PFAS (which regulators thought at the time were ‘safe’).
EU actions on PFAS
In 2020, EU REACH announced a broad spectrum of PFAS restriction process. The final RAC and SEAC opinions are sought in mid-2024. Draft proposal for PFAS restriction under REACH will happen in 2025. Final PFAS Restriction will be published in the EU Official Journal latest by 2027. Exemptions may push effective date of restriction for certain restrictions up to or even past 2030. Any exemption will expire 4-, 7- or 12-years after the 18-month implementation period.
In all previous REACH-specific restriction processes, a few molecules were considered in small groupings (e.g., a molecule and its salts). In 2020s, the EU and some US states proposed regulating the entire class of fully fluorinated molecules. SIA performed some initial surveys, but found limited data available on the industry uses. Data is the only usable response to proposed regulation, and much more was needed.
Consortium formed
Semiconductor PFAS Consortium was formed in January 2022 to develop a more complete data set, and identify research needs. Semiconductor PFAS Consortium is an international group of semiconductor industry stakeholders formed to collect technical data needed to formulate an industry approach to per- and poly-fluoroalkyl substances (PFAS) based on science. It is not focused on advocacy. The scope includes:
- Gathering and vetting of technical PFAS-use information relevant to the semiconductor industry.
- Development and completion of workplans for socio-economic impact analyses, as needed.
- Identification of research needs and drafting of plans to appropriately address them.
- Drafting of aligned industry commitments, as needed.
- Development of technical reports, presentations, and position papers, as needed.
Semiconductor manufacturing process and steps are being evaluated for PFAS. These include FEOL, BEOL, packaging processes, etc. There are thousands of pieces of semiconductor manufacturing and related equipment (SMRE), facilities, infrastructure, and general manufacturing equipment under scrutiny.
Seven Technical Working Groups are foundation of Semiconductor PFAS Consortium. These are litho, wet chemicals, PED, articles, lub, HTF, ATPS, etc. The Consortium funds projects annually to support each of the working groups and its objectives. In 2023, Semiconductor PFAS Consortium posted 20 papers, expanding the scope of publicly available data, from PFAS use in photolithography to cover all semiconductor manufacturing operations.
Published papers have focused on four main topics. These are: uses and essential-ity in semiconductor manufacturing, potential release pathways, technical, societal, and economic impacts of potential restrictions, and projects and research.
More R&D required!
For R&D, PFAS Consortium is moving the global semiconductor industry towards a solution that will require partnering through R&D to identify analytics to measure emissions, evaluate control technologies to reduce to near detection limits, invent and evaluate alternative materials and chemicals, and determine and implement PFAS material content tracking and reporting.
Funded projects in 2023, and additional Working Groups include: alternative lubricants, polymer leaching from articles, articles recovery, recycling, and reuse, data transfer protocol, alternative heat transfer fluids, 19F nuclear magnetic resonance (NMR), wastewater analytical methods, wastewater characterization, and semiconductor videos.
Semiconductor PFAS Consortium is organized under the auspices of Semiconductor Industry Association (SIA), USA.
PFAS in multiple markets
Ralph Dammel, Technology Fellow at EMD Electronics, provided insights on use of PFAS in the multiple markets. Four categories require substantial innovations that can reduce exposure to PFAS and emissions of PFAS. These are remediation, abatement for derogated PFAS, circularity, and substitution.
Looking at the environmental impact of fluorochemicals, atmospheric lifetime dictates global warming potential (GWP). Emissions from NF3 production was 525,572 mt CO2-e (2021). Emissions from NF3 use in fabs was ~600,000 mt CO2-e (2021).
Main PFAS uses in semiconductor photolithography range from immersion barriers, photoacid generators (PAGs), photoresists – polymers, barrier layer polymers (PBO/PI), TARCS, EUV anti-collapse rinses, surfactants, etc. No concepts for replacement exist for immersion barriers. PAGs, TARCS, PBO/PI might possibly see replacement, but in a longer time frame. EUV anti-collapse rinses, surfactants, may see replacement in shorter timeframe.
Merck KGaA and EMD have first results on a new class of PFAS free PAGs for 365, 248, and 193 nm. Replacing PFAS PAGs is an ambition, but it will take time. Even if we had a perfect PAG replacement today, it would take a decade or more to replace large number of existing chemically amplified resists (CARs).
Full collection of TARC spin bowl waste is the easiest way to significantly reduce the PFAS wastewater emissions. Multiple start-ups are competing in PFAS abatement market. Some are at pilot stage, a few have first commercial installations, but generally the technologies are still below technology readiness level (TRL) of a mature technology. There is also a need for a sensitive, real-time, user-friendly PFAS detection method.
EU Chips Skills Alliance formally launched today!
METIS, or Microelectronics, Training Industry, and Skills, Europe, along with Silicon Saxony, XFab, and SEMI, organized a conference on the EU Chips Skills Alliance. It is co-funded by the Erasmus+ Program of the European Union. Ms. Alesia Ramanishyna, Silicon Saxony, welcomed the audience.
Ms. Laetitia Guisot, HR Director, X-Fab France, said that chips are now the bedrock of our economies. Chips are also omnipresent in our daily lives. We need investments in the future. Capex required is very huge in the semiconductor industry. We also need highly-skilled operators, technicians, and engineers. There is also a significant shortage of microelectronics skilled personnel.
Semiconductor companies in Europe rank lower than businesses in other sectors regarding workplace attractiveness. We need to work on improving that. However, we also do not have enough people available in the market with the necessary skills.
We have three main actions: branding, vocational educational training (VET), and diversity. We need to establish a global and European branding for semiconductor industry to attract new talent. We also need to boost VET centers, and attract new profiles. Today, we only have about 20-30 percent of women working in the European semiconductor industry.
Europe has some initiatives. First is Fabmobil in Germany, with Silicon Saxony, Infineon, Bosch, XFab, and GlobalFoundries. In France, main actions are coming from ‘Campus des metiers et des qualifications’ (CMQ). It was created in 2014 to identify networks. We also have the I-NOVMICRO inititative.
The semiconductor industry has to work together under the Pact of Skills and fight problems. We need to continuously invest in skill development for future. We need to bring in the right, and high-quality talent. There are internship programs available for students who come into Europe. We further need to show who we are, and also develop the European semiconductor industry.
METIS and Alliance launch
Christopher Frieling, Director of Advocate and Public Policy, SEMI Europe, talked about METIS. 18 partners from 12 countries, coordinated by SEMI, came together to start METIS. It has skill intelligence and strategy for microelectronics, develop and deliver training courses, and develop long-term plan, etc. In 2020, the EU sectoral skill strategy was started. We currently have 10 focus groups under METIS.
Demand has risen in Europe for software engineers, application engineers, data scientists, and experts in cyber security. Most critical skills and knowledge on the European job market today, include AI/ML, etc. We have also created category of training modules in key areas of microelectronics.
Pact for Skills program was launched Nov. 2020. It is building from the European skills initiatives. We would now like to propose the European Chips Act Skills requirements. We need at least ~50 partners, involving semiconductor industry, public actors, STEM networks, clusters, and universities, VET providers, etc.
We need a fully-connected semiconductor skills community with EU universities, and the European semiconductor industry working together. It includes recognition of the Alliance by the EU Commission, and major semiconductor players as the major collaboration network for skills. European Chips Skills Alliance is built around the Skills Observatory, DEIB (diversity and inclusion), Academy, Interest and Awareness Raising, and Clusters, MS Competence Centers, regional alliances, (ESRA).
The soft launch of European Chips Skills Alliance is today, and also the start of the pre-sign-up. We will start the METIS follow-up project ESCA next month. We will have the final round-table in Nov. 2024.
Chip crisis likely to last till 2024 forcing companies to adopt costly mitigating measures: EC chips survey
Findings of the recent Chips Survey launched by the European Commission highlighted that the European semiconductor industry expects demand for chips to double by 2030.
Key findings include:
- Chip demand is expected to double between 2022 and 2030, with significant increases in future demand for leading-edge semiconductor technologies.
- Companies establishing new chip fabrication facilities cite qualified labor and government regulations as key when selecting manufacturing locations.
- Supply crisis affects all the ecosystems, and is expected to last until at least 2024, forcing companies to adopt costly mitigating measures.
- Semiconductor R&D funding was mostly relevant for companies on the supply-side. Support initiatives are also relevant for the demand side.
As per current and projected wafer and chip demand, aggregate demand will significantly increase for wafer and chip demand in the coming years. Demand for leading edge technology nodes will increase significantly in the short- and medium-term.
For the automotive ecosystem, a clear increase in the aggregate demand for chips is expected over the period 2022 to 2030, with a near doubling of demand. Energy renewables ecosystem had a significant growth in chip demand. Companies in the ecosystem forecast six-fold growth rate by 2030, led by significant increase in demand for analog and discrete semiconductors.
Next come priorities for establishing chip production facilities or choosing a contract-manufacturer and technology node. Organizations establishing new fabs highly prioritize the availability of a qualified work force, operational costs, existing infrastructure, IP protection / legal security, levels of bureaucracy and compliance requirements. Proximity to customers is not highly prioritized.
Also, when selecting a fab to manufacture semiconductor devices, the organizations prioritize the technical aspects of process node itself, quality of service, delivery time, and price. Geographical proximity and risk hedging through geographical diversification are not highly prioritized.
On the relevance of R&D in the semiconductor value chain, Member State and European R&D funding was more relevant for respondents on the supply side than those on the demand side. Pilot lines are relevant for supply side and for companies operating on supply and demand sides, but they are currently less relevant for demand-side actors.
Most respondents found node shrinkage to be relevant within their business operations. Most supply-side companies buy or sell semiconductor intellectual property, or do both. Interestingly, more than 15 percent of the demand-side respondents purchase semiconductor IP.
Now, to the semiconductor supply chain crisis. Chip supply crisis adversely affected overall production of most respondents. Most expect the semiconductor shortage to last at least until 2024/2025. Most companies are taking measures to mitigate sourcing challenges.
As the European Semiconductor Expert Group begin work on monitoring and mapping frameworks, the findings of the Chip Report can provide insights to help shape future initiatives.
PRADEEP's TECHPOINTS 