SEMICON West addresses changing supply chain

San Francisco, CA. SEMICON West got underway Tuesday morning with SEMI president and CEO Denny McGuirk welcoming members of the press. He cited the importance of SEMI’s more than 900 standards, which “connect the industry,” enabling more than 80 equipment suppliers, hundreds of machines, and more than a thousand robots contribute to the production of 30,000 wafers per day.

Karen Savala, president of SEMI Americas, then noted that SEMI on behalf of its 2,000 member companies connects the electronic supply chain. The supply chain is changing, however, because of massive industry consolidation; the demands of the IoT and smart manufacturing; new device types, processes, and materials; and smart everything. Consequently, she said, the supply chain is becoming tighter and more interdependent, with system integrators calling the shots. “Forget business as usual,” she said. “Everything is changing, and SEMI is adapting to the new reality.”

SEMICON West, she said, is hosting more than 26,000 electronics professionals and nearly 700 exhibiting companies (including 130 first-time exhibitors). Throughout the week the event is delivering more than 250 hours of business and technology programs with more than 300 speakers. Attendees represent system integrators, OEMs, OSATs, IDMs, foundries, and fabless companies.

Dan Tracy, senior director for industry research and statistics at SEMI, followed with an industry overview. Key factors, he said, include smartphone growth slowing and PC shipments down, with semiconductor revenues declining for the second consecutive year. Nevertheless, he forecasts an upswing for 2017, spurred on by new fab construction. He also cited a resurgence in 200-mm fab capacity, including two new projects in China not included in an earlier forecast.

SEMI also released the mid-year edition of the SEMI Capital Equipment Forecast. SEMI forecasts that the total semiconductor equipment market will grow 1% in 2016 (reaching $36.9 billion) after contracting 3% in 2015. An increase of 11% is expected in 2017 for the market to reach $41.1 billion.

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

SEMI 2016 Mid-Year Equipment Forecast by Market Region

By EQUIPMENT TYPE

year-over-year

year-over-year

2015

2016F

% Change

2017F

% Change

Wafer Processing

28.78

29.33

1.9%

33.09

12.8%

Test

3.33

3.36

0.9%

3.46

3.0%

Assembly & Packaging

2.51

2.39

-5.0%

2.48

4.0%

Other Front End

1.90

1.86

-2.1%

2.05

10.2%

Total

36.52

36.94

1.1%

41.08

11.2%

 

By REGION year-over-year year-over-year

2015

2016F

% Change

2017F

% Change

China

4.90

6.41

30.8%

7.24

12.9%

Europe

1.95

2.07

6.2%

2.46

18.8%

Japan

5.49

5.08

-7.6%

4.72

-7.0%

Korea

7.46

6.17

-17.3%

7.99

29.5%

North America

5.12

4.62

-9.8%

4.97

7.6%

ROW

1.97

3.13

58.9%

3.68

17.6%

Taiwan

9.63

9.46

-1.8%

10.02

5.9%

Total

36.52

36.94

1.1%

41.08

11.2%

*Totals may not add due to rounding; Source: SEMI, July 2016; Equipment Market Data Subscription (EMDS)

Equipment spending had a slow start in the beginning of the year and is expected to accelerate in the second half of the year. Spending growth will continue into 2017 driven by foundries, memory (both 3D NAND and DRAM), MPUs, power devices, and investments in China. Front-end wafer processing equipment is forecast to grow 2% in 2016 to total $29.3 billion, up from $28.8 billion in 2015. The test equipment segment is expected to total $3.4 billion, essentially flat when compared to last year. Assembly and packaging equipment and other front end equipment are forecast to contract this year, falling to $2.4 billion (-5%) and $1.9 billion (-2%), respectively.

“After a tepid 2015, device manufacturers are beginning to ramp their investments in key industry segments,” said Denny McGuirk, president and CEO of SEMI. “We expect capital spending to improve for the remainder of 2016 and into 2017.”

Taiwan is forecast to continue as the world’s largest spender with $9.5 billion estimated for 2016 and $10.0 billion for 2017. In 2016, China is projected to be the second largest spender at $6.4 billion, followed by Korea at $6.2 billion. For 2017, Taiwan is projected to maintain its leading position while the market in Korea will nudge past the market in China.

In 2016, year-over-year increases are expected to be largest for Rest of World (59%), China (31%), and Europe (6%). Projected year-over-year percentage increases for 2017 are forecast to be largest for Korea (30% increase), Europe (19%), Rest of World (18%) and China (13%).

Visit www.semi.org/en/MarketInfo for more information.

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