2017 "“ A Record Year for the Industry
By Lara Chamness, SEMI
PCs have long been a critical demand driver of the semiconductor industry, with smart phones becoming an integral part during the last decade. More recently, the number of new applications for the industrial, automotive, medical, and consumer markets has exploded, fueling unprecedented demand for semiconductors. This strong demand coupled with improved device pricing, especially for memory, will propel the semiconductor market past the US$400 billion mark for the first time this year "“ a mere four years after it reached the $300 billion milestone. By way of comparison, it took 13 years, starting in 2000, for the semiconductor market to grow from $200 billion to $300 billion.
Source: Equipment: SEMI Historical Worldwide Semiconductor Equipment Market Statistics (WWSEMS)
Materials: SEMI Materials Market Data Subscription (MMDS), August 2017
In addition to record device revenues for this year, both the equipment and materials markets are also expected to exceed their historical peaks set in 2000 and 2011, respectively. The chart below plots total semiconductor equipment and materials revenues. Early on in the industry, both markets were roughly equivalent until the mid-1990s, when the equipment market increased dramatically during the 200mm ramp and the run up to Y2K, when the market peaked at $48 billion. The equipment market has been highly cyclical since but has failed to top the peak set 17 years ago.
By contrast, the materials market surpassed its 2000 peak in 2004 and went on to experience record revenues for the next three years. Since then, the materials market has had its share of ups "“ peaking in 2011 "“ and downs. But, compared to the equipment market, those cycles have been much more moderate.A key factor negatively impacting materials market growth is the intense downward pricing pressure on materials, especially silicon. Despite record silicon shipments, total silicon revenues are nowhere near their 2007 peak. Even though silicon pricing has recovered somewhat this year, aggregate silicon pricing remains just over half of what it was in 2008, despite 300mm representing over 60 percent of silicon shipments by volume year-to-date compared to less than 40 percent in 2007.
Materials: SEMI Materials Market Data Subscription (MMDS), August 2017
On a regional level, the industry has seen the migration of semiconductor manufacturing from Japan to Asia Pacific. Over the past 14 years, we have seen tremendous gains in Asia Pacific, driven by TSMC in Taiwan, Samsung in Korea, and multiple players in China. In 2003, Japan was the largest market for equipment and materials due to its large installed fab base and strong packaging materials presence, while the market in North America was more fab focused. By 2017, Taiwan, Korea and China accounted for 61 percent of the total equipment and materials market, up from 33 percent in 2003.
Taiwan in 2009 claimed the largest market share from Japan in this combined market. The following year, Korea moved up in the rankings to second, displacing Japan to the third position. Last year, China claimed the third spot from Japan. This year, Korea is expected to surpass Taiwan, while China will retain the third position.
As mentioned earlier, this year is shaping up to be a record in terms of device, equipment and materials revenues. SEMI will issue its Year-end Equipment Forecast at SEMICON Japan but a quick analysis of year-to-date trends reveals that the equipment market will see record-setting double-digit growth for the year. Korea will be the largest market for semiconductor equipment this year due to Samsung's record investments, followed by Taiwan, and then China. The total semiconductor materials market is expected to increase at seven percent this year, with all regions that we track experiencing growth. However, the materials market in China will grow the strongest. Looking at 2018, SEMI currently sees growth continuing in both the equipment and materials markets as the industry meets demand generated by mobile, automotive, storage, industrial, medical, and consumer electronics.
