Smartphones, media tablets drive steady semiconductor industry growth

San Francisco, CA--Speaking at the 2011 SEMI/Gartner Market Symposium on Monday afternoon, July 11, as part of Semicon West 2011 (www.semiconwest.org), Bob Johnson, VP of research at Gartner (Stamford, CT; www.gartner.com), forecasts average steady growth (albeit riding a growth-cyclical curve) of approximately 6% per year for the roughly $300 billion dollar semiconductor industry over the next 4 to 5 years. While the growth falls far short of the phenomenal 30% comeback for the semiconductor industry in 2010 after its steady decline from 2007-2009, the slow and steady average growth in the near future--thanks to dramatic increases in smartphone and media-tablet sales--should be welcome news for laser and photonics equipment suppliers that depend on a healthy semiconductor industry.

The growth scenario, says Johnson, is riding the success of smartphone and media-tablet (iPad) sales, with respective 25% and 60% compound annual growth rates (CAGRs) forecast from 2010-2015. With only 500 million smartphones sold in 2011, the number will blossom to nearly 1.1 billion by 2015, while media tablet sales will grow to 330 million in 2015 from the only 70 million to be sold in 2011. Johnson added that while DRAM revenue will see a negative 0.6% CAGR from 2010-2015, NAND flash memory will enjoy an 11.7% CAGR over the same period; that is, some technologies are losing ground while others are flourishing in the semiconductor industry.

Semiconductor CAPEX

But what does the 6% semiconductor growth rate mean for the semiconductor capital equipment (CAPEX) markets? Dan Tracy, senior director of industry research and statistics for SEMI (San Jose, CA; http://semi.org), forecasts only modest growth in semiconductor CAPEX, from $44.33 billion and a slight drop to $43.79 billion in 2011 and 2012, respectively--a "flat" scenario considering the phenomenal growth from the low $15.9 billion in 2009 to the $39.54 billion seen in 2010. Tracy says that a recent decrease in the CAPEX book-to-bill ratio below 1.0 should signal caution for CAPEX providers going forward.

An "ambient" future

But considering that the Semicon West conference was 10% bigger this year in terms of exhibition size, the industry should be positive about the future. At the Tuesday morning, July 12 keynote at 9 am, speaker Tien Wu, chief operating officer (COO) of Advanced Semiconductor Engineering (ASE; www.aseglobal.com), said that despite a deflating housing bubble in China, the debt crisis in Europe, and the observed vulnerability of the semiconductor industry to the global supply chain (as observed in the wake of the Japanese tsunami), the semiconductor industry is growing at a healthier rate--somewhere between 6 and 7%--than worldwide GDP (which is around 3-4%). He said that our industry will make money this year, and probably next year, but that individuals and companies are still uncertain about the future. Taking a historical look at semiconductor industry growth rates, he showed how the financial crisis of 2009 created a vacuum much as the 2000 telecom/internet bubble did, predicting that we should see four years of stability beyond 2009 just as we did after the 2000 bubble.

Describing the semiconductor industry as a "roller-coaster ride", Wu pointed out that each decade since the 1970s has seen some new gadget or innovation that has elevated the semiconductor industry to new heights. And considering that smartphones have nearly 100 semiconductor chips compared to the approximate 40-50 in a standard cell phone (as pointed out in a TechXpot presentation on the show floor later that day), perhaps the semiconductor industry shouldn’t worry. Following the success of cell phones in the 2000s and smart computing in the 2010s, Wu sees a decade of "ambient intelligence" in the 2020s, where users will be able to access smart knowledge everywhere they go and everywhere devices are available; maybe a smartphone with the capabilities of a desktop PC or a video screen at the grocery store that can pull personal files and applications/images from the cloud.

Wu went on to describe just one example of what an "ambient intelligence" or smart future could include: a smart bandage with built-in sensors to monitor the temperature of a wound and secrete the proper medication while wirelessly transmitting healing progress to the doctor’s office--all enabled by the power of semiconductor devices. For the sake of the semiconductor industry, here’s hoping that the chip-enabled future will be this strange and wonderful indeed.

SOURCE: Gail Overton