GLOBAL SYSTEM IC INDUSTRY SERVICE
The semiconductor market is in a high growth phase, and the growth would be even higher if there was access to sufficient manufacturing capacity for semiconductor products. Shortages are expected to continue for many semiconductor products in 2022, with the potential for excess capacity in 2023. The anticipated high growth of the semiconductor market from 2024 to 2030 will likely result in the reemergence of shortages for a wide range of products in the longer term.
Supply chain problems are become increasingly challenging to resolve and are driven by the strong growth of the semiconductor market. However, companies that provide wafer processing equipment to the semiconductor industry have significant opportunities for growth.
The broadening adoption of 5G on a global basis is resulting in the growth of 5G smartphones. This is major driver for the high-volume production of wafers at 5nm in 2021 as well as 3nm in 2023 and 2nm (TSMC’s definitions) in 2025 or 2026. Additionally, 5G smartphones are driving strong demand for power management, display driver, DRAM, NAND, Wi-Fi, Bluetooth, and a wide range of other products. Consequently, there is high demand for wafers in specialty process technologies as well as advanced feature wafer processing technologies.
The amount of generated data is increasing dramatically, and artificial intelligence (AI) allows companies to monetize value from data. There is need for additional capacity for processing data. As a result, data centers are driving the growth of high-performance computing (HPC) technology, including high-performance processors, 400Gbps Ethernet, and high-bandwidth DRAM and NAND products.
To date, the highest CAPEX for data centers has come from the U.S. In the future, however, the data center CAPEX in China will grow significantly. Other countries also want to establish their own data center ecosystem, which will increase the demand for a wide range of semiconductors.
The architecture of notebook computers is expected to change significantly as 5G connectivity and multimedia functionality are integrated to support AI capabilities. The competition between the Arm and x86 architectures will also intensify. These architectures will require much higher processing capabilities than what are currently available as well as lower power consumption. Another area impacted by the changes in the architecture of notebook computers will be the higher gigabyte capacity requirements for DRAM and NAND.
The acceleration in the growing demand for semiconductors in China has a major impact on the supply chain of the semiconductor ecosystem, which is contributing to shortages. The ability Chinese semiconductor vendors is increasing in designing complex semiconductor products, but these companies need access to advanced feature technologies from external companies.
The demand for electricity is also growing rapidly in China, so the shortage of electricity generation capacity in China is a concern. A similar pattern may occur in other countries as big data gains momentum.
The semiconductor industry is expected to continue scaling through 2030, which will include the migration to 2nm, 1.5nm, and 1nm (TSMC’s definition). Additionally, the utilization of 3D packaging will increase, including the support of static RAM (SRAM) planes as well as on-chip and chip-to-chip photonics. While there will be ongoing challenges in reducing transistor costs, the benefits of lower power consumption and higher performance will be the key drivers for ongoing migration to more advanced technologies.
However, the semiconductor industry will become more capital intensive. This will require wafer manufacturers to generate the financial returns required for meeting the wafer capacity requirements to support the needs of the market. The growing capital intensity of the semiconductor market is very positive for equipment manufacturers.
In addition to logic products, the capital intensity of memory will increase. The production of 1β-nm DRAM The production of 1β-nm DRAM will potentially have three mask steps with extreme ultraviolet (EUV) lithography and high-volume production in 2022. Samsung Electronics continues to be the technology leader in DRAM. While the company has approximately 50% market share of DRAM, its market share is higher for advanced DRAM products.
The gigabyte costs for DRAM will potentially plateau unless new DRAM device structures are developed, which may require new materials. It is also expected that there will be additional visibility into 3D DRAM structures in 2022. The DRAM-to-processor interface also continues to be a key challenge from the cost, throughput, and power consumption perspectives, with need for new architectural concepts.
Scaling 3D NAND will continue in 2022 with the initial adoption of three-stacked structures, along with logic being customizable and on a separate plane. However, NAND products need new nonvolatile structures, and there will likely be more visibility into the increasing adoption of magnetoresistive RAM (MRAM) structures in 2022.
Electric vehicle production is projected to grow to nearly 39 million units in 2030 compared to under two million units in 2020. This is resulting in strong demand for power semiconductors, and a key challenge will be access to the required manufacturing capacity. However, the emphasis on expanding manufacturing capacity in power semiconductor products and multichip modules for inverter motor control, onboard charging, and DC-to-DC conversion is low. Conversely, the emphasis on manufacturing capacity for batteries is high. There will also be strong growth of semiconductor demand in charging stations. In addition to power conversion, power semiconductors are necessary for high-frequency applications, including gallium nitride for 5G base stations and other applications.
Imaging will be another area of high growth in 2022. In addition to picture taking, imaging technology will be increasingly used for distance measurement such as time of flight. Imaging technology will also be enhanced for image recognition.
The growth of demand for specialty sensors in digital health and other industries will accelerate in 2022. Leadership for many of these technologies is also in Europe, specifically in imec and CEA-Leti.
The high growth of demand for semiconductors in a wide range of applications will result in the need for the expansion of wafer capacity in a wide range of technologies. It is also important to ensure the expansion of wafer capacity is global and in specialty technologies as well as advanced features.
It is beneficial for the rationalization of the trade dispute between the U.S. and China while recognizing the intensity of the competitive environment in semiconductors. The expectation is that the U.S. and Europe will take additional steps to strengthen their competitiveness in manufacturing. China is also taking several major steps and rapidly strengthening its competitiveness in manufacturing in a number of key areas. As a result, there will be some overcapacity in supply in 2023, but shortages will reemerge in 2024 or 2025 for many products. Consequently, 2022 will be a strong year for the semiconductor industry, but it is important to prepare for a potential downturn in 2023.
It is beneficial for the semiconductor industry to obtain government funding for additional manufacturing capacity and for developing new technologies. However, government involvement in making policy decisions for the semiconductor industry may add additional complexity to the semiconductor industry. Consequently, there will be challenges in managing the relationships between government and industry, with a global perspective on these challenges.
The Global System IC Industry Service provides inputs on the strategic issues that impact the supply and demand of semiconductors, with an emphasis on both short-term and longer-term trends. In its thirty-first (31st) year, the Global Semiconductor Industry Service will provide in-depth information to allow semiconductor vendors to make appropriate decisions on how to obtain good financial returns from their businesses.
For further information regarding the Global System IC Industry Service, contact us.