Barbara Kalkis's Maestro PR Blog: Semico's "Spin" on IDM Market Opportunities

Question: How many items in your home operate thanks to semiconductors? 

You can start counting up the appliances sprinkled around your kitchen, crowding your car out of your garage, or taking up space around the house. Or, I can just tell you without torturing you.  According to Joanne Itow, VP and analyst of Semico Research (www.semico.com), the answer is more than 70.

Put aside trendy electronics like computers, tablets, readers, telephones, cell phones, TVs, game consoles, and cars. Think smaller, hidden and portable, after all, we’re talking about semiconductors.  From the bathroom (thermometers, glucose meters, blood pressure cuffs) to the laundry room (washers) to home control (security systems, temperature controls) to the treadmill gathering dust in the garage,  we rely on electronics to monitor, analyze, calculate, gauge, measure, manage, communicate and report information to us any time we want it.

I don’t believe any other industry has provided the platform for advancing the information age as semiconductors have.

In an address to IDMs (integrated device manufacturers; ie, companies that own their own fabrication facilities) and their suppliers, Joanne reviewed several key industries that promise rich market opportunities for, what I will call, electronic platforms.

(I’m using the term ‘electronic platform’  to indicate semiconductor-based products.  The “chips” are the foundation to create the invention and operation of our vast array of consumer goods.)

The first market to capture everyone’s interest is healthcare.  Joanne stated that 860 million people worldwide are chronically ill.  Diabetes, an increasing global epidemic, shows all the signs of mushrooming  as the number of diabetics jumps  from 366 million worldwide in 2011 to 550 million by 2030.  In the USA alone about 140 million people are chronically ill. The biggest health problems?  Diabetes and its ‘cousin’, obesity.  About 25% of US healthcare dollars go toward addressing these two health threats.

Another factor is that 21% of the USA population will be over 65 years old by 2050.  In some countries, the percentage is higher.   But ‘seniors’ have become a feisty, stubborn lot.  They are adamantly determined to remain in their own homes, rather than moving to senior housing or living with their kids, grandkids, dog, cat, and pet gecko. 

The only answer to this scenario is electronic innovation.  Electronic devices for medical and lifestyle applications  reduce the stress of disease and chronic illness by making them manageable.  The independence, control, fewer doctor visits, and potentially lower insurance bills all make this market alluring financially and universally desirable to every consumer!

 

Infrastructure Opportunities.

As global population increases, common infrastructure systems for highways, skyscrapers, fuel delivery and other commercial and industrial systems are stressed to keep pace. Determining how electronic systems can address applications will be a challenge requiring input of industries typically lagging in electronics know-how.

Meanwhile, the flagship market for chips – computers of all types and mobile devices – will only continue to grow.  “The Cloud” will mushroom, demanding more server and storage capability.

Semico says that 200mm still leads in total number of units sold, with 300mm occupying less than 15% of total units. But! Revenues for 300mm wafers lead that of 200mm and other wafer sizes, and demand for 300mm wafers will grow by 12.6% CAGR over the next five years.  

200mm  [  300mm Now.

Attention  smart operations and fab managers:  No crystal balls are need. This revenue trend means that if  you run a 200mm wafer fab, you need to transition to 300mm now.  Yes, Europe fabs, this means YOU. 

You still have high demand for the cheaper 200mm wafer products but…for how long?  Customers can switch suppliers faster than you can select, order, buy, install, test, and mass-produce silicon on new equipment. Result?  Your near-term revenue can dry up before your requisition for next-generation equipment ever gets approved, let alone signed. (Good-bye quarterly, annual earnings.  Oh, and you own stock in your company, too? Oops.)

Sensors and MEMS are two growing device sectors but still largely untapped for a variety of possible applications.  In basic technology, the analog market and power management devices remain strong.  Semico cites the Asia-Pacific region as the largest analog market in 2013 with sales of almost $23 Billion.  The Americas and Europe are neck and neck for second place, with sales of $6.8 Billion and $6.4 Billion respectively.  Sales in Japan have dropped in recent years down to $4 Billion in 2013.

The Take-Away.

  1.  Healthcare, industrial, infrastructure and other mainstream markets deserve a second look from innovators.  Designing new systems and ecosystems poses a challenge, but the world has the talent pool to address it.  And, for device-manufacturers, we know the problems in these markets can be solved with proven, cost-effective 300mm manufacturing.  
  2. Wireless communications devices will continue to proliferate.  That means…
  3. . . .Analog, mixed-signal, MEMS technologies will continue to grow right alone with the markets!
  4. Despite the attention given to 450mm wafers, EUV, and other evolving technologies, the workhorse technologies at the heart of IDM businesses are still pumping revenue growth in many markets, with new opportunities on the horizon.  Hello, Tomorrow.

Barbara Kalkis, Maestro Market & Public Relations, March 2014