45nm and below grabs 24 percent of wafer demand in 2011

PHOENIX, USA: The economic malaise in Europe and the US, along with the natural disasters around the world, have put a damper on 2011 semiconductor sales. Heading into the holiday buying season, consumer confidence is low and inventories are higher than preferred. OEMs are, at best, cautious and in most cases, pessimistic about their markets.

Semico expected a shakeout in the tablet market and anticipated slower economic growth; however, conditions in the 3rd quarter prompted a downward adjustment to the forecast. In addition to the decline in ASPs and semiconductor revenue, units and wafer demand have been cut as well. Semiconductor revenues are now expected to decline by 1.4 percent in 2011, but units and wafer demand will eke out single digit growth rates.

This year semiconductor units are expected to grow by 3.9 percent over 2010. Although that is a positive growth rate, when compared to the 25 percent unit growth we experienced in 2010, anything below 10 percent feels anemic. The growth is also impacting product segments differently. While NAND chips will continue to experience over 20 percent growth, DRAM units will decline by 1.6 percent in 2011. DSP is another major product category seeing a dip in unit sales, but sales in the wireless communication category continues to grow by over 20 percent.

Wafer demand will continue to grow at 6.5 percent in 2011; however, that is 3.4 percent lower than our Q2 forecast. In 2011, demand for wafers processed at 45nm or smaller will increase to 24 percent of total wafer demand compared to 16.7 percent in 2010. Products processed on 45nm technology continues to be the sweet spot at the foundries. Ramp of 32nm at GLOBALFOUNDRIES has been on schedule; however, TSMC reported their demand for 28nm is slower than expected.

2011 Wafer Demand by Product by TechnologySource: Semico, USA.