Tight capacity forced semiconductor production efficiencies in 2010

PHOENIX, USA: The semiconductor industry has celebrated the 30+% semiconductor revenue growth in 2010. Semiconductor unit sales also increased an impressive 31 percent. But wafer demand, based on semiconductor product shipments, only increased 22 percent. How can this be?

Semiconductor manufacturers were once again caught in a capacity bind due to underinvestment over the past several years. However, according to Joanne Itow, MD, "This industry is known for delivering solutions under pressure."

Even under tight capacity conditions, manufacturers were able to meet the 31 percent increase in unit demand. Memory manufacturers transitioned to more advanced technology nodes to take advantage of scaling, resulting in higher density chips for the same silicon consumption. Logic manufacturing continued to increase productivity on 45nm/40nm product lines. Wafers processed at less than or equal to 45nm comprised 16.5 percent of total wafer demand in 2010 up from only 9.4 percent in 2009.

Finally, moves to larger wafer sizes for mature products contributed to productivity improvements in 2010.

Discrete units grew a record breaking 32.7 percent in 2010 and analog products grew an even faster 34.1 percent. Products in these categories are beginning to take advantage of efficiency gains through transitions to larger wafer sizes. For example, many MEMS manufacturers are moving from 150mm wafers to 200mm and analog manufacturers such as Texas Instruments are moving to 300mm wafers.

"Even if only one manufacturer moves to a larger wafer size, the move forces every market player to become more efficient," remarked Ms. Itow.

Semico expects silicon suppliers to report that 2010 sales in terms of square inches were significantly higher than the wafer demand associated with product shipments. Silicon inventories were depleted in 2009 and required a significant build up in 2010. In 2011, silicon shipments and total wafer usage are expected to grow in tandem as inventories reach equilibrium.

A full breakout of semiconductor wafer demand by product by process technology node is available in Semico's quarterly publication, the Wafer Demand Summary and Assumptions.

It includes an excel spreadsheet with annual wafer demand by product by technology from 2002-2013. Product categories include DRAM, SRAM, NAND, NOR, Other Non-volatile, MPU, MCU, DSP, Computing Micro Logic, Communications, Other Micro Logic, Programmable Logic, Standard Cell, Gate Array, Analog, Discrete, Optoelectronics, Digital Bipolar. In addition, there is a five-page summary write-up providing the major assumptions behind the forecast and changes from the previous quarter.