market briefing · •auto and industrial demand also lukewarm (china automotive ytd sales down...

Market Briefing

2019 Semiconductor Fab, Equipment and Materials

Market: Have we reached the bottom of this cycle?

Lara Chamness, Industry Research and Statistics, SEMI

Copyright © 2019 SEMI®. All Rights Reserved

• Industry Overview

• Year-to-date trends & Industry Headwinds

• Forecasts: Device, Equipment and Materials

• Fab Trends

• Trends in Europe

• Summary

Outline

Industry Overview


Eras of Demand


Megatrends

• 5G

• AI/ML

• Autonomous driving

• Energy

• MedTech

• Broader view

• The workforce of the future

• Automation & robotics

• Circular economy

• Education in technology

• Open source


Semiconductor Industry Revenues

0

50

100

150

200

250

300

350

400

450

500

19

87

198

8

198

9

199

0

199

1

199

2

199

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199

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9

200

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200

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03

200

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201

0

201

1

201

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201

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20

16

201

7

201

8

Sem

iconducto

r R

even

ue

($U

S B

illio

n)

Source: SIA/WSTS historical year end reports

$ 200B

13 years

$ 400B

$ 300B

4 years

$470B

Copyright © SEMI. All rights reserved


Total Equipment Revenue vs. Total Material Revenue Trends

$0

$10

$20

$30

$40

$50

$60

$701987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

US

$ B

illio

ns

Equipment $B Materials $B

Source: Equipment: SEMI/SEAJ

Materials: Rose and Associates 1987-1999, SEMI 2000-present

200 mm ramp

“Irrational

Exuberance”

300 mm ramp

Memory & China


Year-to-Date Trends & Industry

Headwinds


-5%-13%

9M 2019 VS 9M 2018

ASP $1.62ASP $1.77

-35%

-3%

ASP $3.84

ASP $2.57

-3%

-8%

ASP $0.22 ASP $0.24

Quarterly WSTS Data

Source: WSTS


9M19 = 880 B NT$ 9M18 = 879 B NT$

9M18 = 284 B NT$ 9M19 = 308 B NT$

9M18 = 377 B NT$ 9M19 = 279 B NT$

Source: SEMI and Company Reports

Foundry

0% YoY

OSAT

-35% YoY

Fabless

11% YoY


Inventory Level Remains a Concern

2017 Average=$34 B2018 Average=$38 B

2019 Average=$42 B

Average=1.44Average=1.20Average=1.17


Headwinds Continue into 2H2019ue into 2H 2019

Macroeconmic slowdown: China GDP growth dipped to 6% YoY in 3Q19, downward pressure could continue in 4Q19 and 1Q20. China’s 2020 GDP growth could be below 6%

Excess inventory: Weaker than expected market demand in 1H19 and too little supply adjustment worsened the inventory situation

Industry inventory digestion/correction will continue into the second half. It may not come back to the seasonal level until the end of 2019

Trade tensions: Escalation of trade tensions between U.S. and China; Japan-Korea export restrictions


A Mixed Market Outlook

14

Better than expected Mobile/PC/Servers but Weak Auto/Industrial

• High-end smartphone demand resilient: Huawei smartphone shipment remain strong (185M shipped, 26% growth YoY till 3Q); iPhone 11 demand better than expected

• PC demand is constrained by CPU shortage. The situation will continue into early part of 2020

• Auto and Industrial demand also lukewarm (China automotive YTD sales down 10.3% till Sept. 2019)

Memory market remain challenging throughout 2019

• Mobile DRAM ASPs still under pressure with mid-to-high teen% decline in 3Q19; demand soft for Chinese OEMs. Pricing pressure will continue into 4Q19/1Q20 though to a lesser degree;

• Server DRAM demand visibility low, though price erosion has decelerated and customer inventory is normalizing

• NAND ASP stabilizing in 3Q19 after capex and capacity cut; may see some improvement in 4Q19

A Mixed Market Outlook into 2H 2019

Forecasts: Device, Equipment & Fab

Materials

15


2019 Semiconductors Forecasts – Downward Revision

Jan-19, 2.6%

Jan-19, -1.4%

Dec-19, 5.6%

Nov-18, 2.9%

Dec-18, 2.0%

Dec-18, 2.6%

Aug-19, -13.3%

Aug-19, -10.7%

Sep-19, -12.7%

Jun-19, -12.5%

Aug-19, -12.0%

July-19, -9.6%

-15% -10% -5% 0% 5% 10%

WSTS

VLSI Research

Cowan LRA

IHS Markit

IC Insights

Gartner

Mid-Year Initial

Initial Forecast Average = 2.4%

Current Average = -11.8%

Source: October 2019, SEMI


2020 Semiconductor Forecasts – Positive Outlook

WSTS (Aug-19),4.8%

IHS Markit (Jun-19), 5.5%

IC Insights (Aug-19), 6.0%

UBS (Jun-19), 6.8%

Cowan (Oct-19), 8.7%

VLSI Research IC (Nov-19), 9.2%

Gartner (Apr-19), 11.7%

0% 2% 4% 6% 8% 10% 12% 14%

Source: November 2019, SEMI 2020 Forecast Average = 7.5%


SEMI® 2019 September Total Equipment Forecast

By Market Region

New equipment, includes wafer fab, test, and A&P. Totals may not add due to rounding

Source: Equipment Market Data Subscription, September 2019

• 2019 Memory weakness is

negatively impacting capital

expenditures

• Taiwan and North America are

expected to see some growth in

2019

• Taiwan will be the largest

equipment market in 2019

• China could become the largest

equipment market in 2020

13%

37%

14%

-19%

7%

$0

$10

$20

$30

$40

$50

$60

$70

2016 2017 2018 2019E 2020F

US

$ B

illio

n

SEA/ROW Europe North America

Japan Korea Taiwan


$55.82$41.24 $56.62 $64.53 $52.10


Materials Forecast By Segment

Source: SEMI Materials Market Data Subscription August 2019

43 43

35

4547

4543 44 43 43

47

53 5254

$0

$10

$20

$30

$40

$50

$60

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F

US

$ B

illio

ns

Wafer Fab Materials Packaging Materials Total


13%

17%

-1%

3%

5%3%

0%

• 2018 surpassed the

market peak set in 2011

• Silicon market under

pressure in 2019

• Volumes down in 2019

• Packaging materials

market is facing

headwinds

2%


Silicon Wafer MarketRecovery in Aggregated Average Selling Price

Annual Silicon Wafer Trends

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

MSI Revenue ($M) ASP


• Peak revenues back in 2007

• Several year period of

declining ASPs while shipments

increased

• 2017 rebound in ASPs to

propel +17% revenue growth

• Even with rebound in pricing,

ASPs remain well below 2007

peak

Declining ASPs

Record shipments

Source: Materials Market Data Subscription, August 2019, SEMI

Fab Update


Fab Investment – Correction in 2019

$0

$10

$20

$30

$40

$50

$60

$70

$80

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

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20

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10

20

11

20

12

20

13

20

14

20

15

20

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20

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20

18

20

19

20

20

US$ Billion

Source: Prelim. World Fab Forecast Report, Prelim. Nov. 2019, SEMI

Fab Equipment & Construction Spending, 1995-2020

• Strong years tend to be

followed by weaker growth

for 2-3 years

• 2019 will see spending

correction by ~15% due to

near-term demand

weakness and excess

inventory throughout the

supply chain

• 2020 recovery may be

healthier than previously

anticipated with double

digit increase supported by

memory capex recovery

and China projects


Regional Fab Capacity by Diameter Regional Fab Capacity by Product

2019 Global Fab Trends

Source: World Fab Forecast, August 2019, SEMI

Trends in Europe


2019 Semiconductor Segments: Europe

Source: Materials Market Data Subscription, August 2019, World Fab Forecast, August 2019,

Equipment Market Data Subscription, September 2019, WSTS, August 2019


Fab Capacity in Europe

Source: World Fab Forecast, August 2019, SEMI

• Fab Capacity will increase

25% in Europe from 2017-

2020

• The biggest additions from:

Infineon, Intel, Xfab, Bosch


• 7 Construction Projects

– Bosch 300mm Dresden

– Infineon Villach 300mm

– Intel: Fab 24 (expansion) Ireland

– Intel: Fab 38 Israel

– ST Micro Agrate

– ST Micro 200mm GaN pilot Fab

– Murata Vantaa Fab 3 (6”)

Fab Activity in Europe 2018-2020

Investments = $2.6 billion


Summary

• Semiconductor Industry Outlook– Headwinds continue into 2H19, rebound expected in 2020

– Weakness is memory and trade tensions impacting near term

– Longer term prospects are positive as technology innovation advances

• Forecasts– Device

• 2019 down 12%

• 2020 up 8%

– Equipment

• 2019 down teens

• 2020 up 7%

– Materials

• 2019 flat, with downside potential

• 2020 up 3%

• Fab Trends– In 2019, Taiwan has the most capacity, followed by Korea, then Japan & China

– 7 construction projects in Europe

– Fab capacity will increase 25% from 2017 to 2020

Thank you!

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