What the room heard: Get ready for a second downturn. DRAM is in the tank because PC production is down, causing ASP price erosion. All sorts of indicators mean that the semiconductor industry isn’t out of the woods yet.
What I heard: The sweet spot for growth is being driven by smart phones, tablets, and SSDs. If you’re in that area of the market, things are looking up.
I ask you, is it bad to be so focused on getting 3D processes off the ground that I continually gloss over the grim truth and turn the spotlight on the glimmer of hope?
Last week at the annual MEPTEC luncheon in Tempe, AZ, packaging market analyst, Jim Walker, Gartner, gave a slightly different perspective of semiconductor industry growth than he did last year. Then, it was all about the miraculous rebound from 2009. Now it was about the effect Washington’s political antics and Europe’s financial instability is having on the GDP and by default, the semiconductor industry.
Walker pointed to some “real changes” in the past 3 months that have caused him to readjust a 5-5.5% growth to flat growth. “Demand has slacked off and consumer confidence is at a 30 year low,” he said. “Blame the politicians in Washington for screwing up. We’ve stopped spending. Q3 is usually the best of the year, but we’re well below seasonal norm this year and seeing downward revisions.” He said that 70% of the GDP is based on consumer spending.
The supply chain is already showing significant slowdown, and Global Insights says the odds of a double dip recession rose from 25% to 40% in one month. Walker has pushed expectations for recovery out one year. Semiconductor growth for 2011-2012 is expected to be -0.1% and 4.6% respectively; unless the economy takes a turn for the worse. Then he says we could be looking at -2.2% for 2011 and -4.9% for 2012. Rebounds will come in 2013 as ASPs recover.
That was the bad news.
Luckily (lest you want to hang it all up and buy that hotdog cart now) there are some bright spots guiding us forward, and they are called Media Tablets, Smart Phones, and Solid State Drives. Walker says 85% of the growth will come out of these three applications. The cloud computing/server market will also grow, but not at the rate of the smart mobile device market.
Media tablets, particularly, are experiencing tremendous growth. Already, Walker says this market has replaced up to 10% of the notebook market. And if Microsoft software can be developed for tablet use, that will increase. The appeal is in its ease-of-use, instant-on operating system. “It’s all about portability from a consumer standpoint,” notes Walker.
This is the good news…… for the back-end market anyway. Since 1997, revenue growth of the OSATS has more than quadrupled from $5.1B to $23.6B in 2010. OSATS market share of the total packaging market has grown to 48.7% in 2010.
Here is more good news for the WLP and 3D markets. It’s going to become more difficult to wire bond as chips get smaller; and as the industry moves to 22nm it will have to go to flip chip and TSV. Walker even questions the value of a brief transistion from gold to copper wire. Why not go directly to copper pillar bump?
After all, if the top 3 applications are driving 85% of the market; and these applications require high density parts; it seems to bode well for 2.5D and 3D market players. In fact, according to Walker, if you’re in the flip chip and copper pillar bump market right now, you’re definitely in the right place to be. I’d even venture to add that since these applications driving flip chip and copper pillar bump will eventually require the high density, superior performance, and low power that can only come from TSVs and 3DICs, 3D is also a good place to be. ~ F.v.T.