SIDEBAR: Moving Away from the Killer App
By Nanochip Editor
Participants at a recent SEMI Austin forum discussed the need for better forecasting in a time of capacity constraints.
“You can’t stock what you don’t know,” said Stuart Holland, sales and market development manager at Austin Seal Company (Austin, Texas), who described the seal manufacturers he represents as “busy, but not maxed out.”
“Most of our customers are not privy to information from their customers. It is all about forecasting. That is getting better, and some of the companies are more mature than others in terms of their forecasting ability,” Holland said.
Larry Broome, business development manager at Odyssey Technical Solutions (Round Rock, Texas), which specializes in repairs of RF generators, said most fabs are running at full capacity and usually don’t have backup critical components. The vacuum capacitors needed to ensure impedance matching in RF generators, for example, have long lead times.
“Most fabs don’t have the luxury of having spare (RF matching) units sitting on their shelves. When they have a unit go out for repair, they want it to be turned around and back on the production line as fast as they can get it. Everybody is at capacity, and everybody wants their units back tomorrow,” Broome said at the SEMI event.
Forecasting demand for electronics systems has become more reliable, as electronics sales now closely track worldwide GDP growth, said Bob Johnson, research vice president at Gartner. The wild swings of the past have moderated, but Johnson warned that the memory market is still prone to periods of undersupply followed by overcapacity.
“We are in a crazy period now,” Johnson said at the SEMI Austin event, with total 2017 semiconductor sales up 19.7%, much of that caused by sharply higher ASPs for DRAMs and NAND memories. The semiconductor industry is expected to exceed $400 billion in sales in 2017 for the first time ($417 billion), growing slightly in 2018, and then retreating a bit in 2019—a period of relative stability.
Johnson said the semiconductor industry is moving beyond boom-and-bust to a rebalancing, with industrial and commercial IT applications expected to grow more quickly over the next five years than demand for smartphones, PCs, and other consumer systems. “The demand drivers are changing to more commercial and industrial,” Johnson said.
The Internet of things, servers used in data centers for cloud computing, and industrial sensors, among others, are driving the non-consumer side of the business. “We are moving away from the killer app mentality to multiple drivers,” Johnson said.
Neverthless, Johnson believes the memory industry is due for a cooling-down period after the current period of supply shortages on both the DRAM and NAND sides. However, two trends will serve to ease the current NAND memory shortage, he said. As yields improve for 3D NAND devices, and as memory vendors perfect the multi-level 4-bits-per-cell NAND devices, the supply of NAND bits will increase without huge new investments in memory capacity,” Johnson told the SEMI members.
Andrea Lati, director of market research at VLSIresearch Inc. (San Jose, California), said he expects the strong market conditions that prevailed in 2017 to moderate somewhat. “We still expect 2018 to be a pretty solid year,” Lati said. While the memory sector retains cyclicality, Lati said consolidation in the memory industry will contribute to less cyclicality. “The down cycles are not nearly as bad as they used to be. The last memory downturn was really pretty mild.”
The semiconductor industry is moving from mobility as the main growth driver to an AI-driven model, Lati said, with “lots of data coming from lots of sources needing lots of compute power.” The widespread adoption of artificial intelligence will drive the need for cloud-based computing, deep learning algorithms, GPUs and FPGAs, and sensors, with 5G wireless networks moving data from end systems to the cloud.