Next wave of chip growth

The global industry - now in its fifth consecutive year of expansion - appears to have shaken off the cycle of boom and bust that characterised its earlier stages said Scott Jewler, chief strategy officer for STATS ChipPAC.

He noted there were fewer companies with the technology and financial resources to invest in 300 mm 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.

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

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

Stanley Myers, president and CEO of the Semiconductor Equipment and Materials International (SEMI), told the Semicon Singapore 2006 conference that SEMI expects the market as a whole to expand by up to 10% 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% in 2006.

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

Koh claimed that China will continue its rise, accounting for nearly 60% of the industry by 2010, but that more developed markets like Taiwan and Singapore are expected to remain relatively "flat."