August 2009 book-to-bill ratio of 1.03: SEMI

USA: North America-based manufacturers of semiconductor equipment posted $599.0 million in orders in August 2009 (three-month average basis) and a book-to-bill ratio of 1.03, according to the August 2009 Book-to-Bill Report published by SEMI.

A book-to-bill of 1.03 means that $103 worth of orders was received for every $100 of product billed for the month.

The three-month average of worldwide bookings in August 2009 was $599.0 million. The bookings figure is about 5 percent greater than the final July 2009 level of $571.8 million, and about 31 percent less than the $866.8 million in orders posted in August 2008.

The three-month average of worldwide billings in August 2009 was $579.9 million. The billings figure is almost 8 percent greater than the final July 2009 level of $538.0 million, and just over 45 percent less than the August 2008 billings level of $1.06 billion.

“Equipment bookings have increased for five months in a row as market conditions recover from the very low levels reported earlier this year," said Stanley T. Myers, president and CEO of SEMI. “With semiconductor device sales and fab capacity utilization improving over recent months, we expect equipment spending to follow a similar trend during the recovery.”Source: SEMI September 2009.

The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. Billings and bookings figures are in millions of US dollars.

SEMI World Fab Forecast: Predicts 64 percent growth in fab spending

SAN JOSE, USA: SEMI’s World Fab Forecast predicts 64 percent growth in fab spending for 2010 to reach $24 billion.

A large portion (about $14 billion) is expected to come from six companies that have announced ambitious investment plans.

The major investments will come from six companies -- TSMC, GlobalFoundries, Toshiba, Samsung, Intel and Inotera. These companies will contribute more than half of the total fab capex spending expected in 2010. The increase of 64 percent appears high, but this percentage increase is against historic lows in 2009.

Christian Dieseldorff, senior analyst at SEMI, noted “Worldwide installed capacity is expected to decline by 2-3 percent in 2009 mainly due to the closure of 31 fabs. This overall capacity is expected to have a slow growth rate of only 4-5 percent in 2010, to about 21.5 million wafers per month (in 200 mm equivalents), and most spending in 2010 is expected to go towards upgrading fabs rather than expansion of installed capacity.”

The World Fab Forecast tracks planned projects resulting in any change of installed capacity.

SEMI World Fab Forecast report provides high-level summaries and graphs, in-depth analyses of capital expenditure, capacity, technology and products, down to the detail of each fab, and forecasts for the next 18 months by quarter. These tools are invaluable for understanding how 2009 and 2010 will look, and learning more about capex for construction projects, fab equipping, technology level, and products.

Allen Lu named president of SEMI China

SAN JOSE, USA: SEMI announced the appointment of Allen Lu, Ph.D. as the president of SEMI China. Lu assumes responsibility for the association’s programs, products and services in China.

He will oversee relationships with SEMI members, government and academia in the region; support SEMI international programs; and serve SEMI members from all regions that have interests in China. Lu succeeds Rong-Ling Chen, who has served as acting president of SEMI China since April 2009 and who will continue to serve SEMI as an advisor to Lu.

Lu has 20 years of semiconductor industry experience with a background in technology, business and management. Prior to joining SEMI as regional president, Lu managed the Intel Technology Manufacturing and Engineering group’s China Fab Program, overseeing capital equipment supplier chain development for Intel’s first Asia fab in Dalian, China.

Prior to that, Lu started Intel’s Public Affairs organization in China managing government affairs, community relations, and education programs, and served as the Director of Intel China Public Affairs for four years.

Lu also worked in Intel’s California Technology and Manufacturing group for six years as a technologist and Group Leader. Preceding his work at Intel, Lu was senior process engineer and project leader for Applied Materials.

Lu began his semiconductor career as a research scientist at Northwestern University and North Carolina State University. Lu has a B.Sc. from the University of Science and Technology of China and a Ph.D. in solid state physics from the University of Virginia.

“We are extremely pleased to have Allen Lu join SEMI as the president of SEMI China,” said Stanley T. Myers, president and CEO of SEMI. "Allen has demonstrated leadership in both the IDM and equipment manufacturing aspects of the semiconductor industry, and he possesses business acumen with a strong background of working with government, academia, and other organizations on behalf of the industry."

"We are both fortunate and honored that R.L. Chen agreed to serve as acting president during the transitional period after the departure of Mark Ding," said Myers. "R.L. has had an illustrious career in the Chinese semiconductor industry and possesses great familiarity with SEMI members and operations in the region. He is a strong supporter of SEMI, and we offer our heartfelt thanks for his contributions.”

“I am deeply honored to join SEMI as the president of SEMI China,” said Lu. “China is an exciting business environment with continuing growth opportunities in its semiconductor, PV, and FPD industries.

“My broad experiences in several aspects of the semiconductor industry supply chain will help me as we grow the value that we provide to SEMI members here in China and around the world. I value the deep relationships that SEMI already has in China, and together we will achieve great things for the industry.”

Semicon equipment industry posts July 2009 book-to-bill ratio of 1.06

SAN JOSE, USA: North America-based manufacturers of semiconductor equipment posted $569.7 million in orders in July 2009 (three-month average basis) and a book-to-bill ratio of 1.06, according to the July 2009 Book-to-Bill Report published by SEMI.

A book-to-bill of 1.06 means that $106 worth of orders were received for every $100 of product billed for the month.

The three-month average of worldwide bookings in July 2009 was $569.7 million. The bookings figure is about 62 percent greater than the final June 2009 level of $351.7 million, and about 36 percent less than the $889.0 million in orders posted in July 2008.

The three-month average of worldwide billings in July 2009 was $538 million. The billings figure is just over 22 percent greater than the final June 2009 level of $440.5 million, and about 50 percent less than the July 2008 billings level of $1.077 billion.

"The increases in both bookings and billings reported by North American equipment manufacturers boosted the book-to-bill ratio above parity for the first time since January, 2007.” said Stanley T. Myers, president and CEO of SEMI. “Even with that improvement, however, bookings remain significantly below year-ago figures.”

The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. Billings and bookings figures are in millions of US dollars.Source: SEMI, USA

Silicon wafer shipments grow in Q2-09

SAN JOSE, USA: Worldwide silicon wafer area shipments increased significantly during the second quarter 2009 when compared to the first quarter 2009 area shipments according to the SEMI Silicon Manufacturers Group (SMG) in its quarterly analysis of the silicon wafer industry.

Total silicon wafer area shipments were 1,686 million square inches during the most recent quarter, a 79 percent increase from the 940 million square inches shipped during the previous quarter. The new quarterly total area shipments are 27 percent below second quarter 2008 shipments.

"Silicon wafer shipments recovered sharply from the low levels reported in the first quarter, though remain well below last year’s shipments,” said Nobuo Katsuoka, chairman of SEMI SMG and director, SOI process Engineering Department for Shin-Etsu Handotai Co., Ltd. ”The recovery in wafer shipments is inline with general trends reported elsewhere in the semiconductor industry.”

Quarterly Silicon Area Shipment Trends
Semiconductor Silicon Shipments* - Millions of Square InchesSource: SEMI
*Shipments are for semiconductor applications only and do not include solar applications.

Silicon wafers are the fundamental building material for semiconductors, which in turn, are vital components of virtually all electronics goods, including computers, telecommunications products, and consumer electronics.

The highly engineered thin round disks are produced in various diameters (from one inch to 12 inches) and serve as the substrate material on which most semiconductor devices or "chips" are fabricated.

Source: SEMI

Growing signs that semicon equipment market recovery has begun!

NEW TRIPOLI, USA: Rises in the book-to-bill ratio by North American and Japanese semiconductor equipment manufacturers is giving hope that the downturn has bottomed out. BUT THERE’S A PROBLEM, according to the report “The Global Market for Equipment and Materials for IC Manufacturing,” recently published by The Information Network.

Positive signals are pointing to a recovery:

SEMI reported this week that North America-based manufacturers of semiconductor equipment posted $323.4 million in orders in June 2009 (three-month average basis) and a book-to-bill ratio of 0.77, according to SEMI. The three-month average in June grew about 12 percent from $287.8 million in May, with the on-year drop narrowing to 69 percent.

Japan-based manufacturers of semiconductor equipment registered billings in May 2009 of 39.2 billion yen ($409.7 million). The billings figure is 3.2 percent down from April 2009 and 68.7 percent down the May 2008 billings level.

However, capital equipment expenditures as a percentage of semiconductor revenues have been dropping precipitously, as shown in the chart going back to 1995. In January 1995, 11.4 percent of revenues generated by semiconductor manufacturers were spend on new processing equipment. Forward to May 2009 and only 3.8 percent of semiconductor revenues were spent on equipment.

For all of 1995, 13.8 percent of semiconductor revenues were spent on equipment purchases. For 2007, a healthy year for the equipment market, 11.7 percent of semiconductor revenues were spent on equipment.Source: The Information Network

For 2009, we forecast that semiconductor revenues will drop 26 percent, whereas, we forecast semiconductor equipment revenues to drop 46 percent. The chart clearly illustrates this difference. Capital equipment purchases from January through May 2009 were only 4.9% of semiconductor revenues.

Semiconductor equipment manufacturers, in an effort to gain one-upmanship in the market, have been increasing throughputs of their product. Fifteen years ago, 60 wafers per hour was the norm. Now tools are on the market with a throughput twice that amount, meaning that only half the number of tools are needed to process the same number of wafers.

The semiconductor industry started replacing the manufacture of chips from 200mm to 300mm wafers in 1997. Because of the larger diameter, 2.25 times more chips can be made on a 300mm wafer than a 200mm wafer. In 1997, approximately 8,000 300mm wafers were utilized, representing a small fraction of the 141 million wafers with diameters ranging from 100mm to 200mm.

In 2008, nearly 32 million 300mm wafers were processed, representing 21% of the 149 million wafers processed. Here again, half the number of tools are needed to process the same number of chips.

Technology advances have mitigated the reduction. In 1995, state-of-the-art ICs were manufactured with dimensions of 350nm (0.35 microns). Currently, state-of-the-art chips are manufactured with dimensions as small as 45nm.

Equipment to make these chips doesn’t come cheap. Lithography equipment, for example, from companies such as ASML, Canon, and Nikon cost about $4 million to manufacture a chip with 350mm dimensions but $40 million to manufacture a chip with 45nm dimensions. That’s why, a semiconductor manufacturing plant (fab) that cost $1 billion in 1995 now costs $4 billion.

The semiconductor equipment industry is also suffering from competition from some really large vendors. The top 10 equipment suppliers registered $24.5 billion in sales in 2008, compared with $30.7 billion for the whole market. That left on $6.2 billion in revenues to be shared by the next 50 equipment companies.

So, while things look better for the equipment industry going forward through the remainder of 2009, the long term prognosis doesn’t bode well for the industry in general, and particularly for the small players.

Semicon equipment industry posts June 2009 book-to-bill ratio of 0.77

SAN JOSE, USA: North America-based manufacturers of semiconductor equipment posted $323.4 million in orders in June 2009 (three-month average basis) and a book-to-bill ratio of 0.77 according to the June 2009 Book-to-Bill Report published by SEMI.

A book-to-bill of 0.77 means that $77 worth of orders were received for every $100 of product billed for the month.

The three-month average of worldwide bookings in June 2009 was $323.4 million. The bookings figure is about 12 percent greater than the final May 2009 level of $287.8 million, and about 69 percent less than the $934.2 million in orders posted in June 2008.

The three-month average of worldwide billings in June 2009 was $419.6 million. The billings figure is just over seven percent greater than the final May 2009 level of $392.6 million, and about 64 percent less than the June 2008 billings level of $1.16 billion.

“We are seeing improvement to the book to bill ratio due to slight growth in bookings," said Stanley T. Myers, president and CEO of SEMI. “However for the equipment manufacturers, the market remains extremely difficult as customers are not yet at a point where additional capacity investments are needed.”

The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. Billings and bookings figures are in millions of US dollars.Source: SEMI July 2009

Global semicon mid-year review: Chip market revival or blip on stats radar screen?

A recent report from Future Horizons suggests an 18 percent growth for the chip market in Q2-2009! So, is this a sign of the chip market recovery or a mere blip on the statistics radar screen?

It is both, said, Malcolm Penn, chairman, founder and CEO of Future Horizons, and counselled that: "The fourth quarter market collapse was far too steep -- a severe over-reaction to last year's gross financial uncertainty -- culminating with the Lehman Brothers collapse in September. The first quarter saw this stabilise with the second quarter restocking, but there are other positive factors also in play."

Examining a bit further, here's what he further revealed. One, the memory market is seeing some signs of slow recovery. He said, "This has already started DDR3 driven!" Likewise, companies are also in the process of revising their forecasts. The reason, Penn contended, being, "The maths has changed dramatically since Jan 2009!"

According to him, factors now leading to conditions looking up in H2 2009, include the normal seasonal demand -- from a tight inventory base -- and tightening capacity. There is also a clear indication of the correction phase to rebalance over-depleted inventories having started. "This is what's driving Q2's high unit, and therefore, sales growth," he contended.

Firms advised to stop seeing and waiting!
This isn't all! Penn further counselled firms who are still in a wait-and-see mode to 'stop seeing and waiting'! Next, fabs are also looking to maximize their returns. For one, they have stopped over-investing.

Do we have enough stats from others to back up what's been happening in the global semiconductor industry? Perhaps, yes!

IC Insights stands out
First, look at IC Insights! It has stood out by pointing out in early July that H2-09 is likely to usher in strong seasonal strength for electronic system sales, a period of IC inventory replenishment, which began in 2Q09, and positive worldwide GDP growth.

IC Insights has predicted global IC market to grow +18 percent; IC foundry sales to grow +43 percent; and semiconductor capital spending to grow +28 percent in H2-09.

DDR3 driving memory recovery? Flat NAND?
Elsewhere, Converge Market Insights said that according to major DRAM manufacturers, DDR3 demand has been on the rise over the last two months and supply is limited.

This is quite in line with Future Horizons contention that there is a DDR3 driven memory recovery, albeit slow. It would be interesting to see how Q3-09 plays out.

As for NAND, according to DRAMeXchange, the NAND market may continue to show the tug-of-war status in July due to dissimilar positive and negative market factors perceived and expected by both sides. As a result, NAND Flash contract prices are likely to somewhat soften or stay flat in the short term.

Semicon equipment market to decline 52 percent in 2009!
According to SEMI, it projects 2009 semiconductor equipment sales to reach $14.14 billion as per the mid-year edition of the SEMI Capital Equipment Forecast, released by SEMI at the annual SEMICON West exposition.

The forecast indicates that, following a 31 percent market decline in 2008, the equipment market will decline another 52 percent in 2009, but will experience a rebound with annual growth of about 47 percent in 2010.

EDA cause for concern
The EDA industry still remains a cause for concern. The EDA Consortium's Market Statistics Service (MSS) announced that the EDA industry revenue for Q1 2009 declined 10.7 percent to $1,192.1 million, compared to $1,334.2 million in Q1 2008, driven primarily by an accounting shift at one major EDA company. The four-quarter moving average declined 11.3 percent.

If you look at the last five quarters, the EDA industry has really been having it rough. Here are the numbers over the last five quarters, as per the Consortium:

* The EDA industry revenue for Q1 2008 declined 1.2 percent to $1,350.7 million compared to $1,366.8 million in Q1 2007.
* The industry revenue for Q2 2008 declined 3.7 percent to $1,357.4 million compared to $1,408.8 million in Q2 2007.
* The industry revenue for Q3 2008 declined 10.9 percent to $1,258.6 million compared to $1,412.1 million in Q3 2007.
* The industry revenue for Q4 2008 declined 17.7 percent to $1,318.7 million, compared to $1,602.7 million in Q4 2007.

Therefore, at the end of the day, what do you have? For now, the early recovery signs are more of a blip on the stats radar screen and there's still some way to go and work to be done before the global semiconductor industry can clearly proclaim full recovery!

Before I close, a word about the Indian semiconductor industry. Perhaps, it needs to start moving a bit faster and quicker than it is doing presently. Borrowing a line from Malcolm Penn, the Indian semiconductor industry surely needs to "stop waiting and watching."

I will be in conversation next with iSuppli on the chip and electronics industry forecasts. Keep watching this space, friends.

SEMI's mid-year consensus forecast for chip equipment industry

SAN FRANCISCO, USA: SEMI projects 2009 semiconductor equipment sales to reach $14.14 billion according to the mid-year edition of the SEMI Capital Equipment Forecast, released by SEMI at the annual SEMICON West exposition.

The forecast indicates that, following a 31 percent market decline in 2008, the equipment market will decline another 52 percent in 2009, but will experience a rebound with annual growth of about 47 percent in 2010.

"Spending on semiconductor manufacturing equipment this year will reach low levels experienced 15 years or so ago," said Stanley T. Myers, president and CEO of SEMI. "Forecasting has never been more challenging, though we expect 2010 spending to show double-digit improvement off of extremely low levels in 2009.”

Wafer processing equipment, the largest product segment by dollar value, is expected to decline 53 percent in 2009 to $10.42 billion.

The forecast predicts that the market for assembly and packaging equipment will decline by 53 percent to $958 million in 2009. The market for semiconductor test equipment is forecasted to decline by about 48 percent to $1.78 billion this year.

Growth is anticipated to be negative in all regions in 2009 with the North American market claiming the number one spot from Japan. Japan will fall to the number two spot, followed by Taiwan. The South Korea market is expected to contract 62 percent, resulting in the fourth largest market for new equipment.

The following results are given in terms of market size in billions of U.S. dollars and percentage growth over the prior year:

Forecast by Equipment Segment
Source: SEMI

Forecast by RegionSource: SEMI

J.C. Kim named SEMI chairman, Rick Wallace named vice-chairman

SAN FRANCISCO, USA: SEMI announced the appointment of J.C. Kim, CEO and chairman of Edwards Korea Ltd., chairman of the industry association's International Board of Directors.

Kim succeeds Bob Akins, chairman and CEO of Cymer, Inc., who served as chairman for the past year. The results of the association's annual elections will become effective at the annual SEMI membership meeting, to be held Wednesday, July 15, during the SEMICON West 2009 exposition in San Francisco.

In addition, the association’s executive committee appointed Richard Wallace, CEO of KLA-Tencor, to the position of vice-chairman of the board.

"On behalf of SEMI and its members, I am pleased to welcome J.C. Kim and Rick Wallace as the new chair and vice-chair of the SEMI International Board of Directors," said Stanley T. Myers, president and CEO of SEMI. "Their industry expertise and service on the Board are strong assets to SEMI and its membership, and we look forward to their guidance in the coming year.”

In accordance with the association's by-laws, the following board members were re-elected: André-Jacques Auberton-Hervé, president and CEO of Soitec; Susumu Kohyama, president and CEO of Covalent Materials Corp.; Douglas Neugold, CEO and president of ATMI; Mary Puma, chairman, CEO and president of Axcelis Technologies; Michael Splinter, president and CEO of Applied Materials, inc.; Kiyoshi Togawa, senior VP and executive officer at Hitachi Chemical Co. Ltd.; Way Tu, CEO and president of Allegro Manufacturing Pte. Ltd.; and Kazuo Ushida, managing director, senior executive officer and president, Precision Equipment Company, NIKON Corporation.

The global industry association's 17 voting directors, four non-voting ex-officio and nine emeritus directors, represent companies from Europe, Japan, Korea, North America, Singapore and Taiwan, reflecting the global scope of its activities.

The association's charter stipulates that individuals may be elected by the general membership as voting members of the board for a total of four, two-year terms and non-voting ex-officio members for a total of three, one-year terms.

SEMI white paper on 3D integration development status

SAN JOSE, USA: SEMI has released a white paper on the rapid progress of 3D IC integration technology, including Through Silicon Via (TSV) developments, entitled, 3D Integration: An Industry Progress Report.

TSV has been one of the most rapidly developing technologies in the semiconductor industry and promises a fundamental shift for the continued role of Moore’s Law and current multi-chip integration and packaging approaches.

The white paper is intended to provide chip makers, equipment and materials suppliers, industry technologists, investors and analysts with a snapshot of the rapidly developing technology and insights on critical barriers that have yet to be overcome.

While current integration schemes such as wire bond and flip chip have been in production for some time, the next-generation of 3D integration proposes to incorporate through-silicon via (TSV) technology as the primary method of interconnect.

The drivers for the widespread adoption of TSVs are increased performance, reduced form factor, and cost reduction. Additionally, achieving true heterogeneous integration at the local level will require a high-density TSV solution and development efforts are rapidly occurring by numerous organizations around the world.

“Few technology areas are progressing as rapidly as TSV and few with such widespread impact on consumer and industrial electronics,” said Karl Stuber, senior director of Assembly and Test at SEMI. “While various conferences and industry news reporting have been helpful in covering recent developments, SEMI members believed a white paper summarizing the current TSV industry-wide development progress was important to enable a more effective industry-wide implementation process.”

The white paper details the critical development areas in TSV formation and subsequent stacking processes which include those that address insulator/ barrier/seed, etching/plating, thin wafer handling for permanent and temporary bond/debond process, and pick-and-place stacking.

In addition, the paper identifies and explores limitations to market adoption of 3D integration using TSVs, including lack of design tools, thermal management issues, test solutions, and supply chain issues.

The report concludes that the successful achievement of all of these technologies relies on collaboration and participation across the supply chain. The paper calls for more communication and information sharing between the design, test, and manufacturing communities to accelerate the march towards market adoption.

To this end, the paper outlines the current industry eco-system, including the variety of consortia, industry standards efforts, collaborations, and joint development projects that have been formed to promote development of 3D integration.

The report was developed by SEMI with the assistance of Francoise Von Trapp, industry analyst, and co-sponsored by AZ Electronics, Brewer Science, Dow Electronic Materials, EV Group, KLA-Tencor, Lam Research, and Suss MicroTec.

Source: SEMI

2010 total fab spending growth could reach 61pc; abrupt reduction in installed capacity through 2010

Christian Gregor Dieseldorff, SEMI Industry Research and Statistics

CALIFORNIA. USA: Updated information from the World Fab Forecast shows the growth rate for total fab spending could be about 61 percent in 2010 (down from 90 percent previously report in mid-May) from a very low 2009 (Table 1). The 2009 spending will reach such low levels that any adjustment or change in 2010 capital spending plans can drastically alter forecasted growth rates.

Table 1* Equipping Fabs: Any equipment related expenses for Front End Facilities including using new or used equipment.Source: SEMI

In 2009, all regions will experience severe cuts in spending. However, the cuts are much less for the Americas and Europe/Mideast because of a boost from Intel and Globalfoundries.

Since the last publication in mid-May, over 60 companies have been evaluated worldwide by directly consulting, visiting (in Japan), and reassessing projects, so updates to 130 facilities have been made. This resulted in downward reductions in 2010 spending, in almost all regions, up to $3.5 billion as some projects have been pushed out further or investment plans continue to slow.

Table 2 lists the largest spenders with $1 billion and higher in total spending (both construction and equipping) for Front End fabs.

Table 2Source: SEMI

Spending for equipping memory facilities
Spending for equipping Memory facilities (Flash and DRAM) represents the largest share in 2010 with about 47 percent, up from about 40 percent in 2009 (2008 share was about 60 percent) (see Fig. 1).

The share of foundries is expected to be about 23 percent and MPU at about 17 percent. Logic is expected to double its spending in 2010, increasing its share from about 8 percent in 2009 to 10 percent in 2010.

Fig. 1Source: SEMI

The foundry business has significantly improved off of the 1Q 2009 lows. For example, TSMC has reported increased revenue in 2Q09 and boosted 2009 capex. This trend changes the decline in 2009 foundry spending to about -10 percent where all other product segments experience deeper double-digit negative growth rates.

Will there be enough capacity in the future?
Total installed capacity worldwide could decline by about 2.5 percent in 2009 mainly due to fab closures. In 2010, the installed capacity is expected to see a growth of about 4.5 percent above 2009; however, if we compare 2010 with 2008, the result is only a 2 percent increase in capacity.

Fig. 2 illustrates the change in plans for installed capacity from mid 2008 to current (mid 2009) projections.

Fig. 2Source: SEMI

Based on promising demand forecasts and drives to obtain market share, capacity investment plans were much more aggressive one year ago, with installed capacity projected to approach 19 million wafers per month (wpm) by the end of 2010.

Of course, this has changed since then with many projects pushed out, put on hold or even cancelled. Today, the World Fab Forecast projects only about 16 million wpm capacity by end of 2010, a reduction of 3 million wpm from projections one year ago.

This is quite an abrupt reduction in capacity brought on by the global economic crisis. Some analysts have raised concerns about not having enough capacity in the future. If demand starts to accelerate, in line with an economic recovery, capacity will simply not be able to keep pace given the currently projected low-levels in capital spending. If there will be enough capacity or not remains to be seen.

The World Fab Forecast keeps close track of any planned projects resulting in any change of installed capacity.

Source: SEMI

SEMI and Semi-Directory launch semiconductor supplier guide

SAN JOSE, USA: SEMI, the industry association serving the manufacturing supply chains for the microelectronic, flat-panel display and photovoltaic industries, and Semi-Directory, the most comprehensive semiconductor buyers guide on the Internet, have jointly launched a new, industry wide supplier directory.

Comprised of approximately 7,000 listings spread over almost 1,000 categories, the directory provides a unique platform on which every semiconductor supplier across the industry spectrum can showcase their products and services, while customers can research multiple vendors all in one location.

SEMI members will receive more exposure and promotion since member companies are highlighted in the directory with a SEMI member logo.

“Semi-Directory was created to help decision makers formulate more knowledgeable purchases by giving them a resource that would provide information on all product and service suppliers in the semiconductor industry. In order to achieve this goal, we are committed to building the largest knowledge base of semiconductor vendors, manufacturers, events and technology areas.” says Darren Savery, Managing Director of Semi-Directory.

“To be recognized as SEMI’s approved supplier guide confirms how comprehensive, up to date and valuable this directory is to everyone who uses it,” continued Savery. “With the support of SEMI, we now have an opportunity to make the directory even more wide-ranging and expand the tools and features available to make it a truly indispensable resource.”

A specialized version of the Semi-Directory is available on the SEMI website, providing site visitors with access to semiconductor supplier companies and a variety of new promotional and marketing opportunities.

“We are excited to partner with Semi-Directory, which offers a relevant and comprehensive information set to our members and the industry as a whole,” said Thomas Viano, Director of Interactive Services at SEMI. “By incorporating this approved supplier directory into the SEMI.org site, we are able to provide our members with easy access to the most up-to-date supplier information, enabling them to make more informed purchasing decisions.”

Semiconductor equipment bogged down!

NEW TRIPOLI, USA: Rises in the book-to-bill ratio by North American and Japanese semiconductor equipment manufacturers is giving hope that the downturn has bottomed out. BUT HAS IT asks the report: “The Global Market for Equipment and Materials for IC Manufacturing,” recently published by The Information Network.

SEMI reported this week that North America-based manufacturers of semiconductor equipment shipped about $391.9 worth of equipment in May 2009, about 1 percent more than April 2009, but 72 percent less than May 2008.

Japan-based manufacturers of semiconductor equipment registered billings in May 2009 of 39.2 billion yen ($409.7 million). The billings figure is 3.2 percent down from April 2009 and 68.7 percent down the May 2008 billings level.

While North American manufacturers posted a 1 percent increase while the Japanese manufacturers posted a 3.2 percent decrease in billings.

Keep in mind that North American billings numbers are “preliminary” and usually drop when the final figures are published a month ago. March billings were reported in April at $455.3 million and revised down to $438.3 million a month later.

April billings were reported in May at $389.9 million and revised a month later at $385.7 million.

To complicate matters, we are now hearing that a significant amount of capacity is entering the market because of the downturn. Qimonda’s bankruptcy can add 120,000 300mm wafer starts per month in used equipment bought by semiconductor manufacturers.

Add to that equipment from other troubled memory manufacturers such as Powerchip and ProMOS, and a total of 400,000 wafer starts a month are possible. The latest SICAS repot shows that in Q1 2009, 300mm capacity was 433,000 wafers starts per week. So, this excess capacity on the market represents 25 percent of the capacity.

“Our proprietary leading indicators, which determine inflection points in economic activity and which we utilize to show turning points in semiconductor equipment sales have turned positive, indicating that an upturn in equipment sales will begin by October, not now (see below),” noted Dr. Robert N. Castellano, president of The Information Network.

“We have been using these indicators since 2000 and they have proven to be highly quantitative metrics in every forecast we have given, and in nearly every given year we have not had to change our forecast midstream. We do not give forecasts in tenths of percentages only to change them two months later.”

Semicon equipment: May'09 book-to-bill ratio 0.74

SAN JOSE, USA: North America-based manufacturers of semiconductor equipment posted $288.5 million in orders in May 2009 (three-month average basis) and a book-to-bill ratio of 0.74 according to the May 2009 Book-to-Bill Report published by SEMI. A book-to-bill of 0.74 means that $74 worth of orders were received for every $100 of product billed for the month.

The three-month average of worldwide bookings in May 2009 was $288.5 million. The bookings figure is about 16 percent greater than the final April 2009 level of $249 million, and about 72 percent less than the $1.03 billion in orders posted in May 2008.

The three-month average of worldwide billings in May 2009 was $391.9 million. The billings figure is just over 1 percent greater than the final April 2009 level of $385.7 million, and about 72 percent less than the May 2008 billings level of $1.31 billion.

"Bookings for the North American semiconductor equipment market are still near historically low levels, though the sharp declines have subsided,” said Dan Tracy, senior director of Industry Research and Statistics at SEMI. “While recent industry data show increased semiconductor device unit sales, the industry is waiting for stronger signals to increase capital investments.”

The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. Billings and bookings figures are in millions of US dollars.Source: SEMI June 2009

SEMI World Fab Forecast reveals signs of increased investment

SAN JOSE, USA: According to the latest update of the SEMI World Fab Forecast database, spending on front-end fabs (construction and equipping) has seen a consistent quarterly decline since 2008, and on a year-over-year basis is expected to fall by 51 percent in 2009.

On a global scale, construction spending is at its lowest level in 10 years. However, the latest data from the report suggest an increase in investments for both fab construction projects and fab equipping in the second half of 2009, with the trend continuing into 2010.

In 2010, investments in fab construction projects are expected to almost double and spending on equipping fabs may increase by as much as 90 percent year-over-year from the significant declines expected in 2009, according to the report.

Investments are actually increasing in the Americas, with a total quarterly spending increasing to almost US$1 billion, mainly due to major investments announced by Intel, as the company moves forward on a planned upgrade to 32nm.

According to the report, 19 fab facilities closed in 2008, and about 35 facilities will close in 2009, though the number of closures should decline in 2010 as only 14 facilities are expected to close. Nine fabs are expected to launch operations in 2009.

Overall the trend of new facilities commencing operations has slowed since 1995, due to the fact that most new fabs are 300mm Megafabs for memory production, meaning fewer, but larger fabs are needed.

Worldwide installed capacity for 2009 is expected to decline by about 3 percent, mainly due to fab closures, however data from the World Fab Forecast show that installed capacity for 2010 could increase by about 6 percent.

Memory and logic fabs are expected to take the biggest hit in 2009, with a decline in installed capacity of five to seven percent each due to fab closures.

Semicon equipment: April 2009 book-to-bill ratio 0.65 -- 3pc rise!

SAN JOSE, USA: North America-based manufacturers of semiconductor equipment posted $253 million in orders in April 2009 (three-month average basis) and a book-to-bill ratio of 0.65 according to the April 2009 Book-to-Bill Report published by SEMI. A book-to-bill of 0.65 means that $65 worth of orders were received for every $100 of product billed for the month.

The three-month average of worldwide bookings in April 2009 was $253 million. The bookings figure is 3 percent greater than the final March 2009 level of $245.6 million, and about 77 percent less than the $1.09 billion in orders posted in April 2008.

The three-month average of worldwide billings in April 2009 was $389.9 million. The billings figure is 11 percent less than the final March 2009 level of $438.3 million, and about 71 percent less than the April 2008 billings level of $1.34 billion.Source: SEMI, USA.

"Capital investment by chip makers remains limited and bookings for semiconductor manufacturing equipment from North America-based companies have been essentially flat at extraordinarily low levels for the past quarter," said Stanley T. Myers, president and CEO of SEMI.

The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. Billings and bookings figures are in millions of US dollars.

Silicon wafer shipments drop in Q1-09

SAN JOSE, USA: Worldwide silicon wafer area shipments declined sharply during the first quarter 2009 when compared to the fourth quarter 2008 area shipments according to the SEMI Silicon Manufacturers Group (SMG) in its quarterly analysis of the silicon wafer industry.

Total silicon wafer area shipments were 940 million square inches during the most recent quarter, a 34 percent decrease from the 1,428 million square inches shipped during the previous quarter. The new quarterly total area shipments are 57 percent below first quarter 2008 shipments and at the lowest levels since 2001.

"Clearly, difficult global economic conditions continued to have an impact on wafer shipments in the first quarter of the year,” said Nobuo Katsuoka, chairman of SEMI SMG and director, SOI process Engineering Department for Shin-Etsu Handotai Co., Ltd. ”However, market conditions recovered after the bottom observed in the January and February period.”

Quarterly Silicon Area Shipment Trends
Semiconductor Silicon Shipments* -- Millions of Square Inches*Shipments are for semiconductor applications only and do not include solar applications
Source: SEMI

Silicon wafers are the fundamental building material for semiconductors, which in turn, are vital components of virtually all electronics goods, including computers, telecommunications products, and consumer electronics.

The highly engineered thin round disks are produced in various diameters (from one inch to 12 inches) and serve as the substrate material on which most semiconductor devices or "chips" are fabricated.

Opportunities in India's solar/PV landscape: SEMI India

Solar/photovoltaics (PV) holds tremendous potential and promise for India, a fact not hidden from anyone. To further highlight its importance, SEMI India unveiled its first paper on Solar PV in India yesterday afternoon.

More action from Indian government needed
The meet called for more action from the government of India, a more closer industry-government collaboration, as well as the need for financial institutions to pay more attention to the solar/PV segment in India.

The photo here shows from left to right: Dr. Madhusudan V. Atre, President, Applied Materials India; Dr. J. Gururaja, Renewable Energy Action Forum & Executive President, SEMI India; K. Subramanya, CEO, Tata BP Solar; and Sathya Prasad, president, SEMI India.

Touching on the rationale for this SEMI paper on solar/PV's landscape in India, Dr. J. Gururaja, Renewable Energy Action Forum and Executive President, SEMI India, said it was meant to project the solar/PV industry's perspective: where we are and what needs to be done! This is a first account report and will be followed by many other such reports.

He said: "Solar in general, and PV in particular, can address the challenges that we face today. Solar/PV has a special attraction. It converts solar to electricity without involving any moving parts."

He added that although the industry has been looking at the potential, the markets have not been expanding as expected. "We need to see what can be done and achieved. This report is a stock-taking exercise," he pointed out.

Case for solar/PV in India
Sathya Prasad, president of SEMI India, touched upon the case for PV in India. These include:
* The existing power deficit situation in many parts of the country.
* India's brisk economic growth implies rising energy needs.
* Overdependence on coal for electricity generation -- limited coal reserves and CO2 emissions.
* Overdependence on oil and natural gas imports -- it accounts for 7 percent of GDP and consequent energy security concerns.

According to him, India is abundantly endowed with solar radiation. So far, so good!

Key PV opportunities for India
According to SEMI's paper, the key PV opportunities for India lie in off-grid applications and grid-connected PV. The off-grid applications include:
* Basic lighting and electrification of rural homes.
* Irrigation pump sets.
* Power back-up for cellular base station towers -- approximately, there will be 2.9 lakh base station towers by the end of 2009.
* Urban applications -- such as street lighting, etc.

The opportunities in grid-connected PV exist in:
* The current grid connected PV generation capacity is very small.
* Existing power deficit and huge projected future need.
* The cost point of PV has been declining continuously with technology improvements and scale.

Benefits of PV in India
The benefits of PV in India extend well beyond addressing energy needs. For instance, renewable energy technologies create more jobs than any fossil fuel based technologies. It also creates jobs across the value chain -- from R&D to manufacturing, installation and maintenance. Sathya Prasad highlighted MNRE's point that about 100,000 jobs could be created out of PV.

PV also has the capability of transforming lives. About 450 million Indians today manage with kerosene/other fuels for very basic lighting despite its significant health and safety risks. In this context, special mention needs to be made of the Aryavarta Grameen Bank's home electrification program.

Challenges for PV in India
Evidently, a bunch of opportunities are awaiting India in the solar/PV space. However, several challenges need to be overcome as well. These would be:
* Need for closer industry-government co-operation.
* Need for standards.
* Need for collaborative, goals driven R&D.
* Training and human resources development
* Need for financing infrastructure and models.

So, what are the recommendations of this paper on solar/PV landscape in India, and further call to action? These are:
* Need to evolve a common government-industry vision to make India a world leader in PV.
* Develop financing infrastructure and models that will motivate large-scale PV adoption and investments.
* Expand development of PV in off-grid applications.
* Accelerate grid-connected PV generation on a large scale.

Call for low carbon growth strategy
"Low carbon growth path is universal now. To make that happen, there needs to be a political will," advised K. Subramanya, CEO, Tata BP Solar, and chairman SEMI India PV Advisory Committee, while presenting his perspective on the solar/PV industry in India.

There has been little action on part of the government of India. "This needs to be implemented on the ground. We need policy and lifestyle innovation," he added. Subramanya cautioned that, "Too much of analysis will result in paralysis." According to him, separate budgets are required for a low carbon growth strategy. "Solar has tremendous potential. Even its learning curve is brilliant," Subramanya noted.

He added that if the European Union (EU) can make a low carbon journey so smoothly, then why not India? For instance, in Karnataka state alone, the demand is said to be 6700MW and a 10-11 percent peak shortage. We have 20-odd lakh Bhagya Jyoti and Kutir Jyoti units, and around 7,870-odd street lights. If a majority of these can be replaced by solar, it could lead to tremendous savings! This could be at least 57MW for a state like Karnataka. Apparently, all of this would require an investment of Rs. 52 crores and a payback time of two years.

"Why can't we develop a low-carbon growth path for every state in India? Imagine, what it can do for the other states," Subramanya highlighted. "If the power sector does not do well, it will hit the country's GDP!" Quite rightly so!!

Subramanya cited another example of solar water heaters in Karnataka. There are 32 lakh homes, of which about 5 lakh homes have solar water heaters. If more houses were to adopt these, it would result in a saving of 4,000MW of electricity! The Tata BP Solar CEO also called upon financial institutions to have a closer look at solar. Even the tariffs structure for solar/PV in India is not favorable enough.

He also touched upon US President Barack Obama's energy plan and the actions taken, since his coming to power, and drew a parallel with India's national action plan, which includes a solar mssion. This was released last June, but hardly any action has happened on the ground. So, there needs be changes on this front as well.

Four key aspects for solar/PV in India
Dr. Madhusudan V. Atre, president, Applied Materials India and vice chairman SEMI India PV Advisory Committee, highlighted four major aspects while presenting his perspective on the solar/PV industry. These are:
* See the advantage SEMI India brings to India. It can help bring costs down, due to the involvement of the PV Group.
* A point Dr. Atre had highlighted to me about a year back -- that solar/PV is a great way to trigger manufacturing in India. He said that the solar/PV ecosystem will be a very important step in setting up a semiconductor manufacturing ecosystem in the country.
* What wireless did to telecom -- perhaps, solar/PV has a similar aim! It can get rid of transmission lines and actually take power to the people!
* The Indian government-academia-industry would need to work hand-in-hand.

Global semiconductor industry could well see revival in 2010?

"Let's start from the very beginning! A very good place to start!!"

Hope you all remember this lovely song sung by Julie Andrews in The Sound of Music!! So, what's the connection?

Right! Last week, I blogged about how the global semiconductor industry is likely to drop by 28 percent in 2009, while the Indian industry should grow by 13.4 percent during the same period, and that, we should not get carried away by these statistics!

A moment to ponder: isn't this drop of 28 percent too high for the global semicon industry? Or, is the situation really that bad? So, let's start from the very beginning, and go straight to the source -- Malcolm Penn!

Revival likely by 2010?
Here's what Malcolm Penn, CEO and founder of Future Horizons, had to say: "Fraid not! It could even be lower, but remember that this is a year on year number. It is based on the following assumptions: Q4-08 down 22.5 percent vs. Q3-08; Q1-09 down 20 percent vs Q4-08; Q2 down 2 percent vs Q1; and Q3 up 12 percent vs Q2, and Q4 up 3 percent vs Q3! And, if this pattern runs true, 2010 will be up 28 percent vs 2009!"

Voila! The global semiconductor industry could well be in for a major revival next year itself! Why, even Bill McClean, president of IC Insights, took a more optimistic look at the state of the industry in light of the current global economic situation at the recently concluded SEMI ISS 2009 conference!!

Continues Penn, "The actual Q4 results (released this Sunday) were down 24.2 percent, slightly worse than our estimate."

How to get the buzz back in semicon?
It has been said that the current situation the global semiconductor industry finds itself in was fueled by greed and short-term business goals. So, who were the culprits? Weren't they warned earlier?

Adds Penn: "It was more complex that that! The woeful state-of-the-world economy was a consequence of debt, greed and irresponsibility; political self interests and short-term business goals, aided and abetted by compliant governments; ineffective regulators; imprudent institutions; incompetent management; irrational self delusion and vested self-interests! No one is blameless for this crisis! Concerns were raised, but the human nature is often irrational, and the 'easy option' always the one of choice."

So true! Perhaps, the 'easy option' factor seems to be affecting the Indian semiconductor industry as well, but more of that later!

The key issue today is: what needs to be done to get the buzz back in the global semiconductor industry? The answer probably lies in the following: in the short-term, it involves rebuilding the industry confidence, and in longer term, it involves a radical return to 'old fashioned' business and political values.

On another note, I was curious to know how the EDA segment is doing? Penn said, "No better, no worse than normal, technology marches on, new designs accelerate in a downturn."

Tricky memory!
Memory is another segment that's been hit hard. In fact, the other day, someone asked me why Qimonda's story was so important!

Another could not understand what Spansion really did, and why it had announced this January 15 that the company was exploring strategic alternatives for a sale or a merger! Doesn't matter! Memory is a very tricky business, and semiconductors is the mother of all such tricky businesses! Perhaps, isn't that why they once said in jest: "Real men have fabs!" Anyhow!

Coming back to memory, when can the industry expect some recovery in NAND? More importantly, will the various government interventions help? Qimonda also recently petitioned for the opening of the insolvency proceedings.

Penn is clear: "NAND will recover when the excess capacity abates, and that will take several more quarters. The government intervention won't help, rather the opposite, and it will exacerbate the excess capacity issue."

Fab spends to move up only by Q1-2010
Earlier, Penn predicted a recovery in 2010 with the resumption of growth in Q3 2009. What will make this happen? He says, "A recovering world GDP growth, plus a return in business confidence."

However, those keen on fabs, do not expect the fab spends to look up any time soon! In fact, Penn estimates fab spends to start moving north not until Q1-2010 at the earliest.

The Chinese impact!
Interestingly, China is set to see negative growth of 5.8 percent during 2009. It will be worth noting how much of this this impact the global semiconductor industry.

Point one, compared to a global semicon fall of 28 percent in 2009, Penn considers a fall in China's semicon fortunes of 5.8 percent to be 'darned sight better!' So, China should still be a high growth market (relatively speaking).

And India?
Like I mentioned earlier, the Indian semiconductor industry is perhaps getting affected by the 'easy option.' Design services continue to do well, hopefully, but when it comes to real semiconductor product companies, those are far and few.

And, I haven't seen any real activity in the recent past that could tell me more such initiatives are in the pipeline. Nor do I think there are many attempts to even incubate such companies. On the contrary, there's a mad rush toward solar!

No harm there! Solar is great for India and the need of the hour. However, India should not forget its semiconductor priorities as well! Indian simply cannot bank on chip design services and solar gains, and then proclaim that it has a very successful semiconductor industry! Real action is still quite far away.

I think, India needs to rethink its semiconductor strategy! It cannot survive on chip design alone.

"When you know the notes to sing, you can sing most anything," concludes the song from The Sound of Music!

So, is the Indian semiconductor industry hitting the right notes? That's going to be my next blog post, friends.