Semicon likely to grow 12pc in 2008

Semicon likely to grow 12pc in 2008

If there will be an economic recession, the chip industry (but not all firms) is in the best shape possible to weather the ensuing storm

Pradeep Chakraborty

Wednesday, May 14, 2008

Danger signs to watch out for
So, what are the danger signs one should watch out for? These would be capacity -- it is hard to see how this can spoil 2008, provided unit growth holds up, but there is a need to watch capex. Another factor is demand -- the current IC unit demand is sustainable provided the economy holds up, so there is a need to watch the inventory.

Next comes the economy! The current outlook continues to be uncertain with risks all on the downside. ASPs are the key to recovery, but always the first line of defence. ASPs could still derail 2008, but the trends are encouraging.

What's driving the market?
In semiconductor 7.0 -- or the 7th decade of the transistor revolution, the same things, as always, are driving the market. These are: technology, legislation -- energy saving/conservation and structural -- the relentless analog to digital conversion. All of these are combining to do what the chip industry does best -- enabling something that was previously impossible. Penn contends, "This industry has nowhere near run out of steam!"

New applications continue to drive the market, with automotive, industrial and medical, mobile phones, and PCs and servers, dominating. The PC market is dominating, but going nowhere fast.

Mobile phones have become more interesting, but have conflicting priorities. The challenges are: how to protect the existing cost structure and subscriber base and how to add useful and affordable value-add services! Evidently, "chipset suppliers love the high end, market loves the low end."

There is definitely an increasing automotive semiconductor content. A solid annual growth has been predicted (CAGR 2006-11) for vehicles -- 5.5 percent, systems -- 11.5 percent, and semiconductors -- 13.3 percent. Some other new areas are motor control and energy, as well as lighting and photovoltaic, besides medical electronics. Robotics is yet another interesting area.

Key industry issues
It is clear that more chips per wafer equals less cost per chip and more transistors per die equals more functionality. Several billion transistors gives phenomenal design flexibility as well. Considering total ICs and MOS ICs, in the MOS capacity build out by technology node, there has been no change in volume ramp profile despite the hype.

As for the evolution of the technology node, definitely, 45nm is a revolutionary step from 65nm. In all likelihood, 32nm will be a natural evolutionary. However, Penn cautioned that 22nm would be another ‘difficult’ transition!

There is no doubt that 65nm will be tomorrow’s leading-edge workhorse, having the same basic Si gate/SiO2/MOSFET structure.

Nevertheless, 45nm will herald a totally different structure -- metal gate/high-k/thin FET/deep trench design, etc. Also, 45nm will herald a new way of system design.

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