SANTA CLARA, USA: Following the general trend of the semiconductor manufacturing food chain, the market for silicon on insulator (SOI) experienced a slowdown in sales growth in 2007. According to VLSI Research, revenues for the year totaled $654M, representing an increase of 6% from 2006. This single digit growth pales in comparison to the 46% and greater expansions in each of the three previous years.

Soitec continues to be the dominant force in the SOI market with a 67% worldwide share. Shin Etsu Handotai, which licenses Soitec's Smart Cut technology for the production of its thin SOI wafers, remains the number two player in this market.

In 2007, SOI wafers represented only about 1.4% of total silicon demand (in terms of area); yet this number is already nearly three times what it was in 2002. Because SOI technology is primarily used in high-end consumer devices, demand can be unpredictable, especially when consumer disposable income diminishes. However, the market as a whole is very healthy, as it has been growing at a compounded annual growth rate (CAGR) of 36% for the past three years.

The growth of the SOI market is driven by major node transitions. Acting as a technological enabler, SOI becomes the solution because of its ability to create less complicated isolation structures on a circuit. Consequently, more higher-end devices can be built with each new node transition using SOI.

Although sales in 2008 are expected to be slightly down from 2007, the following years will see double-digit growths stimulated by the 45nm transition by existing SOI users as well as potential new customers.

VLSI Research anticipates that the SOI market will continue to grow at a healthy rate in the coming years. After 2007, the SOI market is predicted to grow at a CAGR of 11% and reach $1.1B by 2012.

Source: VLSI Research