It always gives me great pleasure chatting with Dr. Walden (Wallly) C. Rhines, chairman and CEO, of Mentor Graphics, and vice chairman of the EDA Consortium, USA. 2013 is just round the corner. What lies ahead for the global semiconductor industry is a question on everyone’s lips! How will the EDA industry do next year? For that matter, what should the Indian semiconductor industry look forward to next year?
Three trends for 2013
First, I asked Dr. Wally Rhines regarding the trends in the global semiconductor industry. He cited:
* Growth in communication ICs.
* Growth in the third dimension.
* Accelerated design activity at the leading edge.
Growth in communication ICs: On the macro level, silicon area shipments continue to grow gradually, as do semiconductor unit shipments. However, there’s a major shift in application segments from computing to communications. Communications used to be only one third the size of computing in terms of semiconductor usage.
Communications are expected to surpass computing in terms of semiconductor consumption by 2014 thanks to the rapid growth of wireless applications, the incorporation of computing into communications devices like smart phones and the addition of communications to computing devices like tablet computers.
Growth in the third dimension: Shrinking feature sizes and growing wafer diameters will continue to contribute to the annual 30 percent decrease in the average cost per transistor and average 72 percent unit growth of transistors, but they will do so at a diminished rate. Fortunately, other avenues are emerging that can help sustain the semiconductor industry’s remarkable rate of growth. One largely untapped opportunity is in the third dimension, i.e. growing vertically instead of shrinking in the XY plane.
DRAM stacks of eight or more die are already possible, although they are still more expensive on a cost per bit basis compared to unstacked devices. Complex packaged systems made up of multiple heterogeneous die, memory stacked on logic and interposers to connect the die are evolving rapidly. Layers in the IC manufacturing process continue to increase as well.
Accelerated design activity at the leading edge: Another interesting trend is the recent surge in capital spending among foundries to add capacity at the leading edge. This wave of spending will result in excess capacity, at least initially, which may force foundries to lower prices to boost demand. In fact, capacity utilization data in the last few months shows a dramatic decline in utilization at 28/32nm and 22nm nodes, suggesting that excess capacity is already happening to an extent.
While differences in 28 and 20nm processes—such as double patterning—create challenges, the existing capital equipment is largely compatible with both processes. Such a high volume of wafers and the large available capacity will lead to increasingly aggressive wafer pricing over time. As a result, cost-effective wafers from foundries will encourage totally new designs that would not have been possible at today’s wafer cost.
Industry outlook 2013
So, how is the outlook for 2013 going to shape up? Dr. Rhines said: ”After almost no growth in 2012, most analysts are expecting improvement in semiconductor market growth in the coming year. Currently, the analyst forecasts for the semiconductor industry in 2013 range from 4.2 percent on the low side to 16.6 percent on the high side, with most firms coming in between 6 percent and 10 percent. The average of forecasts among the major semiconductor analyst firms is approximately 8.2 percent.
“However, most semiconductor companies are less optimistic in their published outlooks. This seems to be influenced by the level of uncertainty that exists because of unknown government actions and market conditions in the US, Europe and China.”
Any more consolidations?
It would be interesting to hear Dr. Rhines’ opinion on any further consolidations within the industry. He said: “It is common misperception that the semiconductor industry is consolidating. A closer look at the data shows that the semiconductor industry has been doing the opposite. It has been DE-consolidating for more than 40 years.
“Take the #1 semiconductor supplier, Intel. Intel’s market share is the same today as it was a decade ago. And, the combined market share of the top five semiconductor suppliers has been slowly declining since the 1960s. Similar trends also apply to the top ten and top 50—both are the same or lower than they were a decade, as well as decades, ago. In fact, the combined market share of the top 50 semiconductor companies has decreased 11 points in the last 12 years.
Cadence Design Systems Inc. has released the Allegro/OrCAD 16.6 that provides unmatched, scalable design solutions addressing technology challenges.
Allegro is meant for simple to more complex boards, for the geographically dispersed design teams. They also cater to the personal productivity needs for start-ups and small to medium companies. It provides high-speed, power aware SI, HDI managed design environments, that is meant for medium to large enterprises.
Allegro, Sigrity and OrCAD – major themes of Allegro PCB 16.6
The major themes of Allegro PCB 16.6 include the first ECAD collaborative environment for work-in-progress (WiP) PCB design using Microsoft SharePoint. It accelerates the timing closure for high-speed interfaces such as DDRx. There is support for advanced miniaturization techniques that embed passive and active components on inner layers of a PCB.
Regarding the percentage of enhanced miniaturization capabilities for embedding dual-sided and vertical components, Hemant Shah, product marketing director, Allegro PCB and FPGA Products, Cadence, said: “Components with dual-sided contacts offer customers the ability to connect to the components pins through the layer above or through the layer below. This provides routing flexibility. It also allows customers who want redundant connections on inner layers.”
There can be accelerated design implementation through flexible PCB team design capability. Leveraging GPUs for faster display, you can pan and zoom on dense PCBs, enabling greater design productivity.
Typical product creation environment includes the best-in-class hardware design environment for implementation, analysis and compliance sign-off. The design team collaboration capability encompasses design-chain partners. Design data can be integrated into corporate systems to manage cost and quality, and provide visibility. It allows on-time release into manufacturing to build products.
Allegro, OrCAD and Sigrity ensure product creation with the best-in-class PCB design environment. Design team collaboration and productivity is integrated at the PCB. Design data integration is done into corporate systems to manage cost and quality. There is on-time release into manufacturing to build products. Allegro, OrCAD and Sigrity are helping create market leading products.
Users can create the first ECAD collaborative environment using Microsoft SharePoint. Design creation and collaboration trends include geographically distributed teams, increase in outsourcing (OEMs-ODMs), product life cycle management tools are not designed/targeted for managing work-in-progress data. For every design engineer, there are 3X-5X collaborators, reviewers, etc.
The Allegro Design workbench integrates seamlessly to SharePoint 2010. The Team Design Authoring cockpit facilitates design data in and out of SharePoint providing WiP design data management. There is block level check-in, check-out, etc. SharePoint is already deployed in many companies. It is scalable from single server to cloud environment. It has rich platform for power users to configure and developers to customize.
By creating the first ECAD collaborative environment, users can reduce the product creation time by up to 40 per cent. Chances of first pass failure are also reduced from 25 per cent to 1 per cent. Users can accelerate the timing closure on high-speed, multi-Gigabit signals.
For the sake of completeness, that is, for a view of the complete 2013 semiconductor sales and sales growth forecast outlook, Mike Cowan, an independent semicon consultant, has extended his model to ‘capture’ the forecast sales numbers for the final two quarters of 2013.
Thus, the second half of 2013 sales forecast estimate came in at $170.6 billion, which represents a 10 percent increase over the (forecasted) 2H-2012 sales of $155.2 billion.
Therefore, the full year 2013 sales forecast outlook becomes $321.1 billion, which yields an expected year-on-year sales growth forecast estimate of 7.7 percent for 2013.
Quarterly, half year and full year forecast results for 2011, 2012, and 2013 are provided in the following table.
As noted, all forecast numbers are italicized. Also note that a line has been included that provides the most recent (June 2012′s Spring 2012 Forecast Update) WSTS/SIA forecast results for comparative purposes.
NXP Semiconductors N.V. has announced the first NWP ISO 11898-6 and AUTOSAR R3.2.1 compliant solution supporting CAN Partial Networking.
The stand-alone TJA1145 CAN transceiver and integrated system basis chip UJA1168 – the world’s first highly integrated solution to support CAN Partial Networking – give design engineers precision control over a vehicle’s bus communication network. By intelligently de-activating electronic control units (ECUs) that are currently not needed, engineers can significantly reduce vehicle fuel consumption and CO2 emissions without sacrificing performance or consumer experience.
Reducing CO2, improving energy efficiency
So, how will the NXP solution reduce CO2 and improve energy efficiency in vehicles? Karsten Penno, business development manager, Business Unit Automotive, NXP, said: “In current CAN networks, all ECUs are always active and consuming power when the vehicle is in use. This is the case even if the applications they control aren’t continuously required, such as seat positioning, sun roof operation, park assistance systems, etc.
“CAN Partial Networking changes this model by activating only those ECUs that are functionally required, while other ECUs remain in a low-power mode until needed. This results in significant savings in power/fuel consumption, reducing costs, wiring and CO2 emissions. CAN Partial Networking is also extremely beneficial for electric and hybrid vehicles as it helps extending their operating range and optimizing charging time. Saving potential: 0.11l fuel savings/100km and 2.6g CO2 reduction/km.”
Why not before?
Now, if the CAN Partial Networking solution is so novel, why wasn’t it thought of before?
Penno said: “Innovations like CAN Partial Networking always require a broad industry acceptance and standardization. The CAN bus system – as key component of in-vehicles networks – has been around for many years (introduced in early ’90s). However, only with the rising awareness on CO2 emissions and overall vehicle efficiency – along with growing CAN node counts – came the need for a more efficient CAN standard. NXP is innovation leader in this area and is chairs the standardizing working group within ISO.” Read more…
Despite all the talk of semicon/VLSI going around in India, is the correct curriculum really being taught in the various institutes? Is the academia able to prepare students to be better equipped to tackle today’s world’s problems? Does the student have sufficient skills that the Indian (and global) semicon industry recruiters are looking for? Is the student, and the academia semiconductor-industry ready sufficiently?
There was a lively panel discussion titled: Forging win-win industry-academia collaboration in VLSI education during the post lunch session of CDNLive India University conference.
I remember last year’s CDNLive India panel discussion quite clearly! There was an entertaining session on how to prepare the students to be semiconductor industry read. It remains a top read till date!
This year’s panel discussion was moderated by Dr. C.P. Ravikumar, technical director, University Relations, Texas Instruments India.
The panelists were:
* Prof Ajit Kumar Panda, NIST Behrampur, Orissa.
* K Krishna Moorthy, MD, National Semiconductor India
* Dr K. Radhakrishna Rao, head, analog training, TI.
* R. Parthasarathy, managing director, CADD Centre.
Starting the discussion, Dr. Ravikumar said that the semicon industry is currently seeing fast paced growth. New knowledge is getting added every year. The semicon industry has been present in India for over 25 years now, and counting.
There is a varied expectations from the academia in India. For instance, should they teach fundamentals or skills? Do they have silicon experience, or can the institute bring this about on its own? What is important — going up or down the abstraction level?
Or, should VLSI education be introduced at the graduate level or should it be in the Masters leel? There are several gaps in the curriculum itself. What can the industry do about those gaps?
Dr. Ravikumar said: “TI is celebrating 25 years. The kinds of problems TI is working on today are vastly different from the times when it had started in India. Today, it is doing large SoCs. The industry has hige expectations from the academia.
People, he added. seem to have diverse opinion on VLSI. Even at abstraction levels, we can talk about power, circuit design, larger blocks, etc. You will likely hear different sort of viewpoints depending on who you are talking to.
He said: “A lot of effort is being put into the formation of new M Tech programs in VLSI across various institutes. Wheher the students passing out from these institutes will find employment in the Indian semiconductor industry- is also a point of debate. Again, I’ve seen VLSI being talked about in the graduate level as well.”
Since there were four panelists, I shall add their views in a separate post. Stay tuned, folks!
According to Malcom Penn, chairman and CEO, Future Horizons, 2010 — a barnstroming year — will likely see the global semiconductor industry grow by 31+ percent. He was delivering the company’s forecast at the ongoing 19th International Electronics Forum (IEF) 2010 in Dresden, Germany, which ends here tomorrow. He said it would take a disaster of the scale of Lehmann Brothers to derail this now!
Some of the other forecasts made by Malcolm Penn include:
* 2011: +28 percent; based on: peak of the structural cyclical boom (could stretch into 2012).
* 2012: +18 percent; based on: normal cyclical trash cycle starting 2H-2012 (1H-2013?).
* 2013: +3 percent based on: market correction in full flow (could be negative, cap ex overspend and inventory build depending).
* 2014: +12 percent; based on: start of the next cyclical recovery (single digit, if 2013 is negative).
The forecast track record of Future Horizons is quite interesting. As per forecasts made during the IFS2010 in Jan.2010, the chip fundamentals was said to be in very good shape. The industry was starting its recovery with shortages. Also, the ASPs had already stopped faling. The inventory levels were at an all-tme low. Finally, the capacity was tight, and spending, weak!
All of this added up to two years of very strong growth in prospect. Penn had said: “It doesn’t get much better than this. But, despite what the numbers say, still no-one believes beyond the next quarter! “Ah but” is still driving the industry consensus!
Industry fundamentals don’t lie — believe in them or die! The capacity famine was instigated two+ years ago — well before the crasj, today’s shortage was inevitable. The recovery dynamics will continue to strengthen. Future Horizons’ forecast is now +31 percent ~$300 billion. The next trash dynamic has still not yet triggered. It is unlikely to happen before 2011, meaning, 2012 impact. However, the economic uncertainty remains the biggest risk. Also, the global financial system is fundamentally flawed. Read more…
The fact that the ongoing economic gloom has brought some doom for the global chip market is well known. H1-2008 held up well, better than most had predicted. However, now, the economic gloom in the global financial system has managed to nick the US, and Europe, and lately, Japan, into recessionary conditions, taking the global chip industry along with it!
Some fear that the recession will be as bad as 2001 and that 2009 could re-enact 2001! However, Future Horizons’ Malcolm Penn differs, and I’d agree with him. In 2001, there was this huge dotcom collapse, coupled with the unfortunate happenings of 9/11, and a ‘massive inventory burn just as a huge amount of excess capacity was coming on stream.’
What’s the situation now? There’s no serious overcapacity, and the pre-slowdown utilization rate were in the 90 percent region. Capex was already in retrenchment, well before the slowdown. Nor are there any serious excess inventory in the supply chain.
So, that only leaves the problem of the global financial gloom. Lot of money is being thrown about at the problem, hoping that it would pull the world out of the mess it currently finds itself in.
But, can the industry afford to NOT innovate? This is the time to innovate and find new ways to come out of the hole it finds itself in. The industry must also reconcile to single-digit growths mostly, from now on, I guess.
There has been no new ‘killer device of mass use’ like the mobile phone. Simply, no one has been able to come up with any new device of such mass appeal! The mobile phone, as we knew it, was only meant for voice. Now, it ports a camera, an MP3 player, Internet browsing, email, etc. It gave birth to PDAs, and probably, now, mobile Internet devices (MIDs).
It amuses me a lot when I find companies talking about providing full Internet experience on the mobile phone. It amuses me even further when I find a lot of people and companies talking about how they expect people to be on the Internet all the time! Surely, there are other things to do in one’s life than simply staying hooked to the Internet! Or maybe, they have a crystal ball to gaze in, all the time!
The industry needs to be careful about all the predictions and technologies. Not all will succeed. What they should try their hand at is at being innovative! Or, has innovation completely gone out of the window?
Early this year, during the IEF 2008 at Dubai, Future Horizons’ CEO, Malcolm Penn, had forecast a 12 percent growth for the global semiconductor industry, and that we were all dealing with an industry in ‘deep trauma’!
Soon after, the chip market started showing some signs of recovery and actually started to buzz again. This was in early June. Later, in July, the semiconductor industry numbers started indicating that this may not be a bad year after all! It also came to light that lousy memory numbers were holding back overall market numbers.
With the memory market not showing much signs of recovery, several analysts revised their forecasts in August and September, including Future Horizons. In early September, Penn forecast that the global semiconductor industry would probably grow at 4-8 percent.
However, now, with a global slowdown now in place, Penn says that Future Horizons’ January (and July) forecast assumptions, and chip market forecasts, are no longer valid. He adds, “We have not yet had chance to fully crunch the numbers, but at first sight, 2008 now looks set to come in at between 4 and 5 percent, with 2009 in the 4-6 percent range.”
This is very unfortunate! Just when it seemed a little while ago that the global semiconductor industry was in some stage of a small recovery, the global financial turmoil has more or less, ended that hope!
Penn cautions: “2009, however, could slip negative, depending on what happens to IC unit growth. At the moment we think this highly unlikely, given the 6.1 percent advanced and developing market GDP growth forecast and the fact there have only been two years of negative IC unit growth in the last 23 years, namely 1985 and 2001, both triggered by a massive inventory build.”
Obviously, a slowing world economy is bad news for the chip industry! However, the coupling, he notes, is not as strong as one might be lulled into intuitively believing. There have been seven instances in the last 22 years where the chip market has grown in value during a period of slowing economic growth and two occasions when the market has declined in a period of GDP growth.
“IC units have exhibited three periods when they grew in the face of a GDP decline and five occasions when the units declined despite growth in the world GDP. The economy is, thus, not quite king; inventory, excess capacity and ASPs also play a role,” adds Penn in his monthly report.
Underlying good news for chip industry
The underlying good news for the chip industry is that all of the other industry trends are good. Inventories do not seem to be seriously bloated; wafer fab capacity utilization levels are high; capital expenditure is low, and has been now for several quarters; and ASPs are in the midst of a long-term structural recovery phase.
Thus, while 2009 IC unit demand must inevitably slow, this slowing will coincide with an inevitable parallel slowing in new capacity additions, itself the result of a significant 2008 and prior Cap Ex cutbacks. The combined effect ought to be a relatively benign decrease in capacity utilisation rates, helping to cushion the inevitable near-term ASP pressures.
Looking at the near-term ASP trends, ASPs overall have been falling during 2008, but they have been falling much slower than the 2007 rate. This means that ASPs are actually increasing when measured on annualised basis.
Slowdown bound to impact ASPs
According to Penn, the economic (demand) slowdown is bound to negatively impact ASPs. What is more important from a market growth perspective however is not that they are falling but how fast they are compared with the same period last year.
While the ASP recovery trend might wobble next year, the underlying trends still look good, providing the world does not slip into global recession.
The immediate world government policy challenge is to stabilize the global financial markets, while nursing economies through a global downturn and keeping inflation under control. “That is quite a steep challenge (it has never before been called upon to be done); the great danger being, aside from the risk of failing, is a return to vested self-interests and protectionism and the impact that this will have on globalisation and future world growth. There is a real danger this is the precursor of World War 3, with economics as the fire-power,” he adds.
Penn advises: “Over a longer horizon, policymakers will be looking to rebuild firm underpinnings for financial intermediation and will be considering how to reduce cyclical tendencies in the global economy and strengthen supply/demand responses in commodity markets.
“The electronics industry would also do well to divorce itself from the financial market’s casino driven addiction by starting to plan for its longer-term growth needs not the previous (and now seriously discredited) Wall Street greed/bonus-driven quarterly hysteria.”
This has indeed been a topsy-turvy year! Apple’s iPhone 3G and now, Google’s G1 phone have hit the markets. Intel demonstated its Moorestown platform at the IDF in Taipei, promising great things in 2009! Intel also spoke a lot about mobile Intenet devices (MIDs) and what great things these can do.
However, no one, it seems, is able to point out confidently that the cheer in Christmas spend will be back! Or, how, 2009, will pan out! When will the global semiconductor industry see light at the end of the tunnel?
There is an interesting piece of news on Digitimes, Taiwan, which says that Samsung has recently told its downstream customers that it will start reducing supply of NAND flash chips from July as Apple, Samsung’s key customer, has placed a large batch of orders.
Will this move do anything to the NAND flash market? In the earlier blog, I had highlighted what Future Horizon’s Malcolm Penn had mentioned — that the impact of the Apple iPhone has been minimal so far on the chip market. “It’s just one item in a very large and complex mix of products. The overall iPhone volume is miniscule,” he says. I would probably go with that statement.
Even Semico, in its recent report, has said that the NAND market has not experienced the ‘Apple effect’ as has been seen in previous years, so far in 2008, despite the upcoming 3G iPhone (with up to 16GB of storage) and the SSD option for the MacBook Air.
With a majority of the analyst community yet to give the green signal about an industry revival of sorts, everything depends largely on how the new iPhone will do! However, even if it does do well, it just may not be enough!
The consumer confidence is still quite low, and rising oil prices are not really helping. Will these factors have any effect on the consumer electronics segment in the long run? Too early to say though, and do bear in mind that one product or one brand can find it a tough ask to turn around, rather, lead the memory market, and the consumer electronics industry to huge growths.
All of us in the semiconductor/chip industry keep hoping that a strong rebound does happen, and that the industry remains on course of a strong growth in 2008. However, it is not right to pin faith on one product or one brand to lead a revival.
We are probably either to hung up about numbers or about technologies. Especially, whenever a new product or technology comes around, we start banking on that product or technology to revive the industry’s fortunes. Great technologies do not essentially lead to market revivals. We have seen that happen umpteen number of times.
Perhaps, it’d be wiser to let the industry have a ‘free fall’ or ‘free growth’, if you may, for some time, and let corrections happen over time, rather than bank on something or the other to carry the industry’s fortunes forward.