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Asia seen driving next wave of chip growth

Posted: 11 May 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Jonathan Hopfner? semiconductor? Semicon Singapore? Semiconductor Equipment and Materials International? SEMI?

The global semiconductor industry can look forward to a period of steady growth, much of it driven by Asia's emerging economies, analysts and industry representatives said at the Semicon Singapore 2006 conference.

Stanley Myers, president and CEO of the Semiconductor Equipment and Materials International (SEMI), said at the conference that SEMI expects the market as a whole to expand by up to 10 percent this year, driven mainly by growing demand for consumer gadgets such as mobile phones and digital audio players.

SEMI is predicting that the global IC equipment market will grow by about $3.12 billion to $36.12 billion this year. The market for chip materials is expected to rise from $31.38 billion to $34.51 billion.

Asia will lead the charge, SEMI said, with growth outpacing the global average. SEMI said China's semiconductor materials and equipment markets are both expected to expand by over 20 percent in 2006.

Philip Koh, research vice president for semiconductors at Gartner here, said it expects the industry to register a compound annual growth rate of 7.9 percent over the next five years, with surging demand for 3G phones and storage devices making up for "saturation" in the PC market.

Already the world's leading chip market, China will continue its rise, accounting for nearly 60 percent of the industry by 2010, Koh noted. But more developed markets like Taiwan and Singapore are expected to remain relatively "flat."

In addition to moving manufacturing operations to China, Koh said an increasing number of mainly Taiwanese companies are also shifting R&D activities to the mainland.

While there are "still problems in [China's] IC and system design industry," Gartner expects electronics manufacturers to continue to invest aggressively there, which is also working harder to produce homegrown standards and technologies.

Scott Jewler, chief strategy officer for STATS ChipPAC, told the conference that the global industrynow in its fifth consecutive year of expansionappears to have shaken off the cycle of boom and bust that characterized its earlier stages.

He noted there were fewer companies with the technology and financial resources to invest in 300mm wafer fabs or leading-edge packaging solutions, leading to less "double booking" of capacity and "less irrational capital investment."

But Jewler said more advanced consumer devices and the convergence of technologies would also present challenges.

Companies will have little choice but to collaborate as few own the intellectual property needed to produce devices such as mobile phones. Moreover, integrated design manufacturing (IDM) processes are growing increasingly complex, he said. There are also questions about the ability of smaller niche players, historically the source of many of the industry's innovations, to survive in a capital-intensive market.

IP rights protection and industry standards will become "bigger issues over the next three to five years," Jewler predicted, especially with manufacturing shifting to locations like China.

Jewler forecast that by 2015 nanotechnology will dominate the semiconductor market, with the emergence of ICs smaller than 45nm and the use of materials such as nanowires and carbon nanotubes. He also predicted the emergence of 450mm wafer fabs, though such a facility would cost up to $10 billion.

He also advised companies to keep an eye on China-based IDMs, noting that some were already "competing on the leading edge" and that the Chinese industry is seeking to "replace imported chips with local designs."

- Jonathan Hopfner
EE Times

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