Future Horizons

MOS memory investors, China to correct DRAM imbalance

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penn1According to an IC Insights report, the 47 percent full-year 2017 jump in the price-per-bit of DRAM was the largest annual increase since 1978, surpassing the previous high of 45 percent registered 30 years ago in 1988! This sounds interesting!

Are the rising DRAM prices aiding startup Chinese competitors? Are major DRAM suppliers somehow stunting global DRAM demand?

Dr. Walden C. Rhines, president and CEO, Mentor Graphics, a Siemens Business, said: “The DRAM business has always gone through cycles of imbalance between supply and demand. Growth of demand in the last 18 months has been stronger than growth of supply.

“Substantial investments in 2017 by the MOS (metal-oxide semiconductor) memory producers, as well as the addition of China to the supply chain, will correct this imbalance late this year or, at the latest, early next year.”

The DRAM price-per-Gb has been on a steep rise. To this, Dr. Rhines said: “It is a commodity, although there are many types of specialty DRAMs emerging. Because DRAMs are viewed by customers as a near-commodity, the price is heavily influenced by the availability of supply. Supply has been very tight during the last 18 months.

Malcolm Penn, chairman and CEO, Future Horizons, UK, added, “This is supply and demand, pure text-book economics.”

Are the rising DRAM prices opening the door for startup Chinese competitors?

Dr. Rhines noted: “Chinese competitors made their decision to invest in DRAM capacity long before the recent strengthening of demand in the balance of supply and demand. Of course, higher, or stable, pricing may make it easier for new producers to absorb the costs of ramping up new capacity and developing experience with a new technology.”

Malcolm Penn agreed: “Potentially yes, and to anyone else. Coca Cola were contemplating building DRAMs in the 1990s. DSRAM market boom, again, pure text-book economics. Whether or not they succeed is an entirely different matter. If the Chinese do enter the market, can they then survive the inevitable downturn and cycles? That remains to be seen!”

Can the startup Chinese DRAM producers field any competitive product soon? Dr. Rhines noted: “They probably can. But, they will have to develop a production base of “learning” to reduce cost, improve yields and maybe even reliability. This will take some time.”

Penn added: “Technically (i.e., meeting the spec), probably, yes. Reliability, probably no, for the Tier 1 customers (that will take several years to build up the production experience). Cost, definitely not!

“Their small fab scale and late learning curve start means that their die cost will be sizably higher than those of Samsung and SKH, and also Micron. Plus, their yields will be lower. Then, there’s the deep cash pockets issue to fund these ongoing cost disadvantages.”

300mm fabs
In a separate situation, some 300mm fabs closing, for example, ProMOS. Dr. Rhines said: “It’s because of an imbalance of supply and demand for the products they make, thus limiting their profitability. It could also be because they don’t see an adequate investment return from the expensive new capacity investments, and therefore, find it more attractive to phase out some of their existing capacity.”

Malcolm Penn felt that the fabs were too old and technically obsolete.

Finally, are there more IC companies making transition to fab-lite or fabless business model?

Penn noted: “There’s no-one left to change! Everyone’s now fablite or fabless, except for Intel and Samsung (logic) and the memory manufacturers.”

Dr. Rhines said: “Based upon the growth of foundry revenue vs. total semiconductor revenue growth, there must be a continuing transition of capacity away from IDMs toward foundries. In addition, IDMs like Samsung are finding it economic to build the foundry business to increase the volume base of products that utilize their technology and capital investment.”

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Global semicon industry poised to grow 21 percent in 2018: Malcolm Penn

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According to Malcolm Penn, CEO, Future Horizons, UK, the global semiconductor industry will see 21.1 percent growth and is likely to reach $499.973 billion in 2018! “Year 2018 will see a continuation of the growth with our official forecast at 21 percent,” said Penn. There will be further double digit growth, barring economic collapse. This recovery has nowhere near yet run its course.

In 2017, the global semiconductor industry grew 22 percent hitting $413 billion ($415 billion upside).

Capex drivers
stratix-10The 2018 capex drivers include node migration from 16nm/14nm To 10nm/7nm logic nodes, 3D NAND, where Samsung alone will spend a staggering $14 billion, following $26 billion total In 2017, including 3D NAND, DRAM ($7 billion) and foundry ($5 billion).

China remains a hotbed of activity in fab equipment spending, with multinational and domestic chipmakers building new fabs. EUV lithography is moving closer to production. Traditional lithography with multiple patterning will dominate front-end equipment makers demand. 200mm fab capacity will remain tight in 2018, prompting the need for 200mm equipment, but 200mm tools will be hard to find.

Entering 2018
Entering 2018, a global financial crisis is unlikely. However, China debt and new borrowing is worryingly high. Any slowdown in China growth likely to impact elsewhere.

There is also a potential risk of 2007-09 Eurozone crisis. Big economy with slow growth/high public debt loses market confidence and/or needs bail out too big for Germany to stomach. Middle East conflicts could easily cause oil prices to soar, leading to recession in developed economies.

Further, central banks could trigger downturn. There can also be UK/EU/Global Brexit peripheral economic damage and fallout. No deal is better than a bad deal political brinkmanship. Forecast rests on assumption that major policy mishaps are avoided, and there are positive ongoing economic relationship between UK/EU. There is no significant increase/change in global economic barriers.

Tech trends
As for technology trends, Moore’s Law is still shrinking, and the hype’s exploding. There is still more hype than substance even in technical conferences. In logic devices, silicon area is ceasing to be the prime cost setter. Advances in design (using variance tools) and production (using metrology) mean that yields now so good that it can be worth using a larger die to remove a few process steps.

The ‘X nm’ or ‘node Y’ designations are becoming increasingly irrelevant. Many IC designs are so interconnect limited that smallest transistors are only needed in critical areas of speed or power. Intel pulled away a little due to better metallisation process. Samsung and TSMC are fast followers, but definitely need some divergence in processes again – so they are no longer clones of each other.

The exception is GlobalFoundries. As the smallest company, they need to focus on a single process. Others, including China, don’t spend enough on process R&D. Intel’s 10nm node is the first logic process to exceed the 100 million transistors per sq mm mark. There is still a 12-layer metallisation process, plus Fin and contacted gate. The industry seems to have stalled at 12-layers of metal. Is it impossible to reach layers higher than this, without actually reducing density?

Intel used cobalt for the first two layers of metallisation where all the short inter-gate connections are made. Cobalt provides a more reliable and repeatable conductivity in short interconnects where resistance of the contact dominates, not interconnect length. Another cobalt advantage is that it reduces electromigration. Instead of FEOL (front end of line), BEOL (back end of line) expertise will be the future semiconductor company key differentiator.

EUV (extreme ultraviolet lithography) is now cost effective. There will be new techniques with immersion being used at 10/12nm and beyond. Most layers will stay with 193nm immersion lithography, wherever possible.
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