Global silicon shipments in terms of square inches will rise to record levels in 2010, according to semiconductor manufacturing market research firm iSuppli.
Shipments of silicon for semiconductor manufacturing in 2010 will grow by 23,6% year-over-year, reaching 8,9 billion total square inches, up from 7,2 billion square inches in 2009, the research forecasts. By 2014, 12,4 billion total square inches of silicon will be shipped.
“Following the recession of late 2008 and 2009, chip manufacturers spent the first half of 2010 striving to reverse the damage they had suffered,” said Len Jelinek, director and chief analyst for semiconductor manufacturing and supply at iSuppli. “Visibility in the second half of 2010 remains limited even as the all-important holiday season inches closer. The good news is that barring any new collapse, silicon suppliers will have sufficient orders on the books to carry them through the third and fourth quarters. And while growth in 2011 will not match the high expansion rate seen in 2010, iSuppli anticipates that the semiconductor industry will require additional increases in silicon shipments of about 13% compared to 2010 shipment rates to meet the projected development.”
Outperforming the industry
The demand for silicon in 12-inch wafers continues to rise at a rate that will outperform the industry average for silicon through 2014. In order to maintain growth, however, silicon suppliers must continue to expand 12-inch wafer manufacturing. Beyond 2010, iSuppli expects to see a greater emphasis on shifting to even more 12-inch wafer manufacturing. Specifically, mixed signal and other technologies will be moving to 12-inch wafers as a result of older 12-inch tools no longer being cost effective for the manufacturing of leading-edge technology products.
While the desire and feasibility for manufacturing 18-wafers is out there, iSuppli does not anticipate the technology will commence manufacturing for at least five more years. Even then, the costs may prove to be prohibitive. And while a few companies and consortiums are discussing the idea of manufacturing 18-inch wafers, the dilemma for equipment costs continues to loom as the final hurdle toward adoption.
Semiconductor market forecast
Meanwhile, with consumer demand slowing and inventories rising, iSuppli is trimming its 2010 semiconductor revenue forecast to 32%, down from its previous outlook of 35,1%.
Global semiconductor sales now are expected to amount to $302 billion in 2010, up from $228 billion in 2009. Despite the reduced outlook, 2010 still will be a year of impressive growth and record-setting revenue for the semiconductor industry. Revenue in 2010 will rise by $73 billion compared to 2009 and be almost $28 billion higher than 2007, the previous last peak year for semiconductor revenue, according to recent semiconductor industry analysis.
iSuppli now expects that revenue in the fourth quarter will decline by 0,3% compared to the third quarter, the first sequential decrease since the market collapse in the fourth quarter of 2008 and first quarter of 2009.
“There has been a significant slowdown in the second half in consumer demand for some electronic devices, including PCs,” noted Dale Ford, senior vice president at iSuppli. “Meanwhile, inventories have been building throughout the semiconductor supply chain. These factors will conspire to cause a small sequential decline in semiconductor revenue in the fourth quarter.”
Largely because of this fourth-quarter decline, global semiconductor revenue in the second half of 2010 will rise by 7,8% compared to the first half of the year. This is down from 10,7% growth in the first half of 2010 compared to the second half of 2009. The leading electronic equipment market driving demand for semiconductors in 2010 will be the data processing area, a category dominated by PCs. With shipments of mobile PCs—including tablets—continuing to soar in 2010, semiconductor sales to this area will rise by 38,6%.
The second strongest growth area will be wireless communications, fuelled by booming demand for smart phones. Global semiconductor sales to the wireless communications area will rise by 30% in 2010. Even the lowest growth markets are expected to generate impressive semiconductor consumption in 2010. Wired communications and consumer electronics will drive semiconductor revenue growth of 25,4% and 26,5%, respectively, in 2010.
While the industry outlook remains cloudy and revenue will contract in the fourth quarter, iSuppli does not believe this signals the start of a significant downturn in the global semiconductor market. “Unstable economic conditions and worrisome market reports continue to create an environment of poor visibility and ongoing uncertainty in the electronics industry,” Ford said. “This has led to frequently expressed concerns regarding a potential double-dip downturn in both the overall economy and in the electronics and semiconductor industries. However, based on its most recent analysis of the electronics supply chain, iSuppli expects the chip business to experience a soft landing in 2011 and not to suffer the kind of dramatic downturn seen in 2009.”
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