Semiconductor Contract [Manufacturing

Transcription

SEMICONDUCTOR CONTRACT MANUFACTURING
SERVICES WORLDWIDE 1996
TABLE OF CONTENTS
PERSPECTIVES
9601
5/20/96
1995 Fabless Semiconductor Review
9602
6/3/96
United Microelectronics Corporation
9603
8/26/96
Semiconductor Contract Manufacturing Capacity Update:
Is There a Foundry Capacity Glut Looming?
9604
9/28/96
Worldwide Fabless Semiconductor Company Directory
9605
11/25/96
1996 Semiconductor Cost Model
9606
12/16/96
Semiconductor Contract Manufacturing Market Share
9607
12/16/96
Worldwide Planned IC Manufacturing Capacity Outlook
9608
12/30/96
The Year in Review: Developments in Semiconductor
Contract Manufacturiag in 1996
9609
1/27/97
Legal Issued in Foundry Manufacturing
MARKET TRENDS
9601
5/31/96
Semiconductor Five-Year Forecast Trends -- Spring 1996
9602
12/23/96
Semiconductor Contract Manufacturing Wafer Price
Trends
4/1/96
Semiconductor Contract Manufacturing (Focus Report)
REPORTS
9601
Dataquestj
T p D nr
251 River Oaks Parkway • San Jose • CA • 95134-1913 • Phone 408-468-8000 • Fax 408-954-1780
Worldwide Semiconductor Contract [Manufacturing
(Foundry) IVJaricet to Triple by 2000
Dataquest has completed a comprehensive study of the worldwide semiconductor contract
manufacturing (SCM) industry. SCM consists largely of traditional semiconductor foundry,
with a small amount of OEM/ASIC business. The worldwide SCM market is expected to triple
from U.S.$6.2 billion in 1995 to U.S.$18.5 billion by 2000. Demand for SCM services in 1996
through 2000 is projected to grow in all four regions of the world, with North America
continuing to accotmt for more than half the SCM market. Table 1 shows the projections for
SCM market by region for 1993 through 2000. Strong growth of North America-based fabless
semiconductor companies wiU continue to fuel demand for SCM services in North America. An
emerging fabless industry in Asia/Pacific is also likely to spur the growth of the SCM market.
SCM growth in Japan and Europe will continue to rely on integrated device manufacturers
outsourcing an increasing amount of IC manufacturing to foimdry.
Clients of Dataquest's new Semiconductor Contract Manufacturing Worldwide service should
receive a copy of a Focus Report, "Semiconductor Contract Manufacturing," in the next couple
of weeks. Others wishing to purchase the report should contact their regional Dataquest sales
representative.
Table 1
W o r l d w i d e S C M Market Forecast by Region, 1993-2000 ( M i l l i o n s of U.S. Dollars)
r
Worldwide
North America
Japan
Europe
Asia/Pacific
X993
3,222
1,537
1,367
248
69
1994
4,565
2,200
1,789
471
105
1995
6,219
3,265
2,192
592
170
1996
7,555
4,180
2,483
674
218
1997
9,329
5,313
2,963
765
288
1998
11,655
6,801
3,554
920
380
1999
14,731
8,776
4,278
1,165
513
2000
18,525
11,319
5,082
1,452
672
CAGR (%)
1994-2000
26.3
31.4
19.0
20.6
36.3
Source: Dataquest (April 1996)
SCM Capacity Demand Exceeds Supply into Early 1997
Dataquest also surveyed a large number of SCM suppliers and users for their projected SCM
capacity supply and demand. Analysis of the results reveals a likely reversal of the SCM
April 15,1996
©1996 Dataquest
SCMS-WW-DA-9601
Semiconductor Contract Manufacturing Worldwide
Dataquest Alert
•
undersupply of 1994 through 1996 to an oversupply in 1997 through 1998. The projection of the
SCM supply and demand imbalance for 1995 through 2000 is shown in Figure 1. Undersupply
of SCM capacity m 1995 has been extended to 1996, resulting m a continuation of firm foundry
wafer prices. However, with the recent slowdown m semiconductor demand in specific
segments, the significant increase of capacity added recently in the industry, and the possibility
of rising memory-to-foundry capacity conversion stemming from the transition from 4Mb to
16Mb, there are growing signs of the formation of an oversupply in SCM capacity, specifically
in the higher linewidth geometry (0.6 micron to 0.8 micron and higher). This is expected to
occur durmg 1996. Leading-edge SCM capacity, at 0.5 micron and less, is expected to continue
to be in short supply well into 1997. Moreover, sizable new foundry capacity is being added by
existing and new SCM suppliers in response to the serious shortage of SCM capacity of recent
years. Much of the added capacity — almost all with technology of 0.5 micron and less—will
come into production during 1997 and 1998. Continuation of the SCM capacity ramp-up in
1997, as now planned, will likely lead to significant oversupply of 3 percent in 1998 and 7
percent in 1999. An oversupply will exert downward pressure on foundry wafer prices— a
situation that may spur demand growth that will, in turn, bring more balanced SCM supply
and demand by 2000.
Figure 1
W o r l d w i d e SCM Capacity S u p p l y and D e m a n d Imbalance Projection
Percent MSI
Oversupply or
Undersupply
1995
1995
1997
1998
1999
2000
By Calvin Chang
April 15,1996
©1996 Dataquest
SCMS-WW-DA-9601
CONTACT: Tom McCall
(408) 468-8312
[email protected]
Dataquest Forecasts Worldwide Semiconductor Contract
IVianufacturing IVIarlcet to Tripie by 2000
New Dataquest Program Offers Exclusive Look at This Explosive Market
San Jose, CaHf., April 22,1996—The worldwide semiconductor contract manufacturing (SCM)
market is projected to triple from $6.2 biUion in 1995 to $18.5 biUion by the year 2000, according
to a new Dataquest report. The trend toward SCM is a megatrend similar to those that have
evolved within the electronic equipment markets. The semiconductor contract manufacturing
market consists largely of traditional semiconductor foundry and a smaU amount of a newly
defined segment called OEM/ASIC.
"The strong grow^th of North America-based fabless semiconductor companies wîll continue to
fuel the demand for SCM services," said Calvin Chang, senior industry analyst and program
manager in Dataquest's Worldwide Semiconductor Contract Manufacturing program. "An
emerging fabless industry in the Asia/Pacific region is also Ukely to spur the growth of the
SCM market. On the other hand, SCM growth in Japan and Europe will continue to rely on
integrated device manufacturers outsourcing an increasing amount of IC manufacturing to
foundry."
Demand for SCM services will continue to grow in all four regions of the world. The North
America region will continue to accotint for more than one half of the SCM market through the
year 2000 (see Table 1).
Table 1
Worldwide Semiconductor Contract Manufacturing Market Revenue Estimates and Forecast
(Milliong of U.S. Dollars)
1996
1999
Region
1994
1995
1997
1998
2000
2,200
6,801
8,776
North America
3,265
4,180
5,313
11,319
1,789
2,192
2,483
2,963
3,554
4,278
5,082
Japan
Europe
674
471
592
765
920
1,165
1,452
513
Asia/Pacific
105
170
218
288
380
672
7,555
Worldwide
4,565
6,219
9,329
14,732
18,525
11,655
-MORE-
Dataquest Forecasts Worldwide Semiconductor Contract Manufacturing Market to Triple...Page 2
Additional information about the SCM market is available in the Focus Report titled
Semiconductor Contract Manufacturing.
Dataquest has spent the last year researching and
characterizing the SCM and foundry markets and has issued this new comprehensive report
covering business and technology trends, including wafer pricing. A supply and demand
analysis through the year 2000 is also presented.
"This report represents the only body of research compiled which encompassed both fabless
and nonfabless company demand in a global fashion, including Japan," said Clark Fuhs,
director of Dataquest's Worldwide Semiconductor Manufacturing program. "We have
performed supply analysis at the silicon wafer level to arrive at our conclusion of tight supply
into 1997."
For more information about subscribing to this program, please call 800-419-DATA. More
information about Dataquest's programs, descriptions of recent research reports, and fuU text
of press releases can be found on the Internet at http://www.dataquest.com.
Dataquest is a 25-year-old global market research and consulting company serving the hightechnology and financial communities. The company provides worldwide market coverage on
the senviconductor, computer systems and peripherals, commvmications, document
management, software, and services sectors of the information technology industry. Dataquest
is a Gartner Group Company.
###
Dataquest^
Z ^ ^
^
251 River Oaks Parkway • San Jose • CA • 95134-1913 • Phone 408-468-8000 • Fax 408-954-1780
Worldwide Semiconductor Contract Manufacturing
(Foundry) IVIarket to Triple by 2000
Dataquest has completed a comprehensive study of the wôrldwide semiconductor contract
manufacturing (SCM) industry. SCM consists largely of traditional semiconductor foundry,
with a small amoutnt of OEM/ASIC business. The worldwide SCM market is expected to triple
from U.S.$6.2 billion in 1995 to U.S.$18.5 biUion by 2000. Demand for SCM services in 1996
through 2000 is projected to grow in all four regions of the world, with North America
continuing to account for more than half the SCM market. Table 1 shows the projections for
SCM market by region for 1993 through 2000. Strong growth of North America-based fabless
semiconductor companies will continue to fuel demand for SCM services in North America. An
emerging fabless industry in Asia/Pacific is also likely to spur the growth of the SCM market.
SCM growth in Japan and Europe will continue to rely on integrated device manufacturers
outsourcing an increasing amount of IC manufacturing to foundry.
Clients of Dataquest's new Semiconductor Contract Manufacturing Worldwide service should
receive a copy of a Focus Report, "Semiconductor Contract Manufacturing," in the next couple
of weeks. Others wishing to purchase the report should contact their regional Dataquest sales
representative.
Table 1
W o r l d w i d e S C M Market Forecast b y Region, 1993-2000 ( M i l l i o n s of U.S. Dollars)
Worldwide
North America
Japan
Europe
Asiâcific
1993
3,222
1,537
1,367
248
69
1994
4,565
2,200
1,789
471
105
1995
6,219
3,265
2,192
592
170
1996
7,555
4,180
2,483
674
218
1997
9,329
5,313
2,963
765
288
1998
11,655
6,801
3,554
920
380
1999
14,731
8,776
4,278
1,165
513
2000
18,525
11,319
5,082
1,452
672
CAGR ("/«)
1994-2000
26.3
31.4
19.0
20.6
36.3
SCM Capacity Demand Exceeds Supply into Early 1997
Dataquest also surveyed a large number of SCM suppliers and users for their projected SCM
capacity supply and demand. Analysis of the results reveals a likely reversal of the SCM
undersupply of 1994 through 1996 to an oversupply in 1997 through 1998. The projection of the
April 16, 1996
©1996 Dataquest
SCMS-WW-DA-9601
Dataquest Alert
#
SCM supply and demand imbalance for 1995 through 2000 is shown in Figure 1. Undersupply
of SCM capacity in 1995 has been extended to 1996, resulting in a continuation of firm foundry
wafer prices. However, with the recent slowdown in semiconductor demand in specific
segments, the significant increase of capacity added recently in the industry, and the possibility
of rising memory-to-fotmdry capacity conversion stemming from the transition from 4Mb to
16Mb, there are growing signs of the form.ation of an oversupply in SCM capacity, specifically
in the higher linewidth geometry (0.6 micron to 0.8 micron and higher). This is expected to
occur during 1996. Leading-edge SCM capacity, at 0.5 micron and less, is expected to continue
to be in short supply well into 1997. Moreover, sizable new foundry capacity is being added by
existing and new SCM suppliers in response to the serious shortage of SCM capacity of recent
years. Much of the added capacity—almost all with technology of 0.5 micron and less—will
come into production during 1997 and 1998. Continuation of the SCM capacity ramp-up in
1997, as now planned, will likely lead to significant oversupply of 3 percent in 1998 and 7
percent in 1999. An oversupply will exert downward pressure on fovmdry wafer prices — a
situation that may spur demand grow^th that will, in turn, bring more balanced SCM supply
and demand by 2000.
Figure 1
W o r l d w i d e S C M Capacity S u p p l y and D e m a n d Imbalance Projection
Percent MSI
Oversupply or
Undersupply
1995
1996
199f7
1998
1999
2000
By Calvin Chang
April 16, 1996
©1996 Dataquest
SCI\/iS-WW-DA-9601
DataQuest
Perspective
Semiconductor Contract Manufacturing Services W o r l d w i d e
Competitive Analysis
Legal Issues in Foundry Manufacturing
Abstracti This Perspective examines some important
foundry
manufacturing.
By Calvin Chang
legal precedents in
semiconductor
introduction
The dramatically increased usage of foundries for semiconductor
manufacturing provides a compelling reason to look into some of the
important legal cases that have been raised concerning potential patent
infringement in the context of foundry manufacturing.
Cases in Study
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One of the early and important legal precedents in semiconductor foundry
manufacturing is the 1989 Intel Corporation's filing of a complaint against
Atmel Corporation with the U.S. International Trade Commission (ITC). In
this case, Intel was granted by ITC a so-called section 337 exclusion order on
a finding that defendant Atmel had infringed several of Intel's EPROM
circuitry patents. Atmel was using Sanyo as a foundry for the manufacture
of the allegedly infringing EPROMs. Sanyo at the time held a broad crosslicensing agreement with Intel, which gave Sanyo the right to make "any
Sanyo products" under Intel's patents. Intel argued that Atmel's using Sanyo
to foundry-manufacture Atmel's EPROMs violated Intel's patents. Atmel
pleaded that the Intel-Sanyo licensing agreement permitted Sanyo to act as a
foundry for other companies to manufacture products using Intel's patents.
The U.S. Federal Circuit Court, which reviewed the ITC decision, found the
issue as one of contract interpretation and that only Sanyo-designed
Dataquest
Program: Semiconductor Contract Manufacturing Services Worldwide
Product Code: SCMS-WW-DP-9609
Publication Date: January 27,1997
Filing: Perspective
(For Cross-Technology, file in the Semiconductor Regional Marl<ets and Manufacturing binder)
Semiconductor Contract Manufacturing Services Worldwide
products were covered by the license. Thus, the court ruled in Intel's favor
and affirmed the ITC's decision.
Another important case is 1991's Intel Corporation versus ULSI System
Technology Inc. Intel and Hewlett-Packard had formed a broad crosslicensing agreement with the intent of avoiding litigation with respect to
circuit design technologies. HP subsequently entered into a foundry
agreement with ULSI whereby HP would manufacture ULSI's MathCo 387
coprocessor. In 1991, Intel sought a preliminary injunction against ULSI,
alleging infringement of one of its patents covering an aspect of the
coprocessor. The U.S. Federal District Court for the District of Oregon
granted Intel the injunction. ULSI appealed the ruling with the U.S. Court of
Appeals in Washington, D.C., which in 1993 reversed the lower court
decision. The appellate court found the HP-ULSI foundry-customer contract
provided for the chips manufactured by HP to be "sold" to ULSI. Under such
a construction, ULSI argued that it was protected from patent infringement
by the patent exhaustion doctrine, thus cutting off Intel's patent rights. The
court concluded that the HP-ULSI foundry supply agreement did allow for a
sale of chips from HP to ULSI—not just a provision for fabrication services.
Central to the ruling in the ULSI case is the doctrine of "patent exhaustion."
Patent exhaustion, or "firstsale," is a judicial doctrine that states when a
patented product is sold by the patent holder or by an authorized licensee,
that particular product is no longer subject to the patent and can be legally
used or resold. In the ULSI case, the Federal Circuit Court clarified the use of
patent exhaustion in the foundry context, holding that a customer of a
foundry, broadly licensed to make and sell another's circuitry patent, is
protected against a patent infringement claim by the licensor.
In the ULSI ruling, the appellate court also made the distinction with the
1989 Atmel case. The court determined that the Intel-Sanyo cross-licensing
agreement in the Atmel case extended only to Sanyo products and that
Sanyo could not serve as a foundry for others' products. The court found
that the Intel-HP agreement contained no such restriction. In its discussion,
the court noted that Intel could have retained the right to restrict HP's use as
a foundry for others wishing to use Intel's patents. Because Intel had
received valuable consideration in its very broad cross license with HP, it
could not now renege and avoid the consequences of the contract.
Interestingly, the dissent in the ULSI appellate decision registered stiong
dissenting views countering the majority holding. First, the dissenting judge
reasoned that the sale between HP and ULSI was for fabrication services, not
for the patented invention itself. Second, because the Intel-HP cross-licensing
agreement did not expressly authorize HP to manufacture under Intel's
circuit patents, HP could not make an authorized sale to ULSI. Encouraged
by the strong dissent in the ULSI decision, Intel appealed the appellate
court's ruling with the U.S. Supreme Court, which subsequently (1994)
announced that it would not hear the Intel's appeal. The Suprerne Court's
refusal upheld the appellate court's ruling and rendered it final.'
SCI\/IS-WW-DP-9609
©1997 Dataquest
January 27,1997
Sîconductor Contract Manufacturing Services Worldwide
The ULSI decision has effectively given the green light on the practice—
some called it patent laundering—that by using a licensed foundry, a
customer is protected from patent infringement claims. Despite the
unfortunate connotation, patent laundering is an important practice and is
sanctioned by the nation's courts.
In 1992, in a dispute between Intel and Cyrix involving Intel's patent on
float-point operation design, the U.S. District Court in Sherman, Texas, ruled
that Cyrix's FasMath coprocessors did not violate Intel's patent because the
parts were manufactured by SGS-Thomson, which acquired rights to Intel
patents when it purchased Mostek Corporation in 1985. In 1994, the same
District Court found Cyrix was not violating Intel's so-called 338 systemlevel patent, because it was protected by the cross-licensing agreement
between Intel and SGS-Thomson, which fabricated microprocessors for
Cyrix. These rulings provide Cyrix with the rights to Intel's patents as long
as the fabless Cyrix uses foundries that have cross-license agreement with
Intel.
Dataquest Perspective
Comparing the rulings in the Atmel case, where the foundry customer was
found not shielded under the foundry's licenses, with the ULSI case, where
the customer w a s ruled of having the protection of the licensed foundry, the
most important conclusion is perhaps that precise and specific language
stating the extent of patent coverage to foundry manufacturing should be
used in the licensing agreements between the foundry and the patent holder.
Similarly, precise language should also be adopted in constructing foundry
supply contracts between the licensed foundry and its customers. Indeed,
the Atmel case illustrated that future patent holders can adequately protect
themselves by granting restricted licenses prohibiting foundry use. On the
other hand, foundries should protect themselves by incorporating an
indemnity clause in the foundry supply contracts with the foundry
customers. The purpose of the indemnity clause is to place legal liability
arising from potential infringement of a third party's design patents on the
foundry users.
Finally, it is also important to keep in mind that the applicability of the ULSI
decision may be limited because the technologies at issue in the ULSI case
were circuitry design patents, not process patents. The application of the
ULSI ruling in the context of process patent infringement may produce a
different result.
SCMS-WW-DP-9609
©1997 Dataquest
January 27,1997
Semiconductor Contract Manufacturing Services WoTTdwi.de
For More Information...
Clark Fuhs, Director and Prmcipal Analyst
Internet address
Via fax
I j j l I" J l / ^ 1 l ^ - ^ C T
^-^**- * - < l * < i ; * V K J I
A Gartner Group Company
(408) 468-8375
[email protected]
(408)954-1780
The content of this report represents our interpretation and analysis of information generally available to the
public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or
completeness. It does not contain material provided to us in confidence by our clients. Reproduction or
disclosure in whole or in part to other parties shall be made upon the written and express consent of Dataquest.
gjjgg^ Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nielsen Company
Perspective
Market Analysis
Tlie Year in Review: Developments in Semiconductor Contract
Manufacturing in 1996
Abstract: TTM'S Perspective provides a summary of news in semiconductor
manufacturing worldwide for 1996.
By Calvin Chang
contract
January
Synopsys in Partnership witli TSIVIC
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Synopsys' Silicon Architects Business Unit announced a cell-based array
(CBA) partnership with Taiwan Semiconductor Manufacturing Company
Ltd. Under the terms of the agreement, Silicon Architects will make CBA
libraries and design tools based on TSMC's foundry process accessible to the
ASIC design market. TSMC is the latest ASIC partner to adopt the CBA
architecture. Other partners previously announced include Fujitsu
Microelectronics Inc., Matsushita Electronics Corporation, NEC Electronics
Inc., Toshiba Corporation, Kawasaki Steel Corporation, and TriTech
Microelectronics International.
Tower Semiconductor Receives Grants
Tower Semiconductor announced that the Investment Center of the Israeli
Ministry of Industry and Trade has approved the company's application for
additional grants under the Investment Center's Approved Enterprise
program. The Investment Center agreed to fund, in the form of grants, 34
percent of u p to $240 million of future capital expenditure in connection with
Tower's capacity expansion plan. These grants would be in addition to the
approximately $35.5 million in grants already received by Tower in
I>ataQuest
Product Code: SCI\/IS-WW-DP-9608
Publication Date: December 30,1996
Fiiing: Perspective
(For Cross-Technology, file in the Semiconductor Regional Markets and Manufacturing binder)
connection with its original $93.4 million capital investment program. A
formal certificate of approval relating to the program is expected to be issued
by the Investment Center next week. The receipt of grants under the
program is subject to the company's compliance with various conditions
under applicable laws and regulations and to various criteria that will be set
forth in the certificate of approval, when issued.
Adaptec and AT&T in Wafer Pact
Adaptec added another five-year term to a decade-old wafer supply
agreement with AT&T Microelectronics. The five-year, extendible deal with
AT&T Microelectronics is to assure Adaptec a specified supply of wafers in
return for $25 million in capital upgrades to AT&T Microelectronics' wafer
fab in Madrid, Spain, to handle the increase in capacity. First wafers were
expected to be delivered by the end of 1996.
Intel and UMC Settle Suits
Intel Corporation and United Microelectronics Corporation have settled their
legal disputes regarding infringement of Intel's microprocessor patents.
Under the terms of the agreement, UMC will stop making, using, or selling
its version of the 486 microprocessor, will pay Intel an agreed-on sum of
money to cover costs, and withdraw all challenges to the validity of Intel
patents that the company had filed in Germany, France, the United
Kingdom, Taiwan, Hong Kong, and Singapore. The settlement was
reportedly less than U.S.$5 million.
NEC Will Manufacture Sun UltraSPARC
NEC said it will manufacture a new UltraSPARC microprocessor for Sun
Microsystems. The manufacturing agreement is a foundry relationship
where Sun wiU develop and own the masks that produce the new
microprocessor.
February
Rockwell to Transfer 0.5- and O.SS-Micron to SubMicron
Modem IC leader Rockwell Semiconductor will transfer 0.5-micron and later
0.35-micron process technology to SubMicron Technology Ltd. in exchange
for guaranteed capacity from SubMicron's 8-inch fab scheduled to begin
production in the second quarter of 1997. Rockwell will receive in return up
to 20 percent of the foundry's total production over five years.
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Quality Semiconductor Buys AWA Fab
Quality Semiconductor Inc. announced that it has completed its acquisition
of certain assets of AWA Microelectronics Pty. Ltd., a subsidiary of AWA
Limited based in Sydney, Australia. The AW AM assets that were acquired
by a new subsidiary of QSI, Quality Semiconductor Australia Pty. Ltd.,
include a fully operational wafer foundry business and product design
center. The company has also signed a strategic alliance agreement with
AWA Limited to jointly develop new products and technologies.
SCMS-WW-DP-9608
©1996 Dataquest
December 30,1996
Chips & Technologies Signs with LG Semicon
Chips & Technologies entered into a two-year foundry agreement with LG
Semicon of Korea. Since December 1995, Chips has made long-term capacity
arrangements with TSMC, Chartered Semiconductor Manufacturing, and
Samsung. The TSMC and CSM deals were standard foundry supply
contracts involving advance payment for future wafer delivery.
Catalyst in Flash Partnership with UMC
Catalyst Semiconductor announced a broad flash memory manufacturing
partnership with United Microelectronics Corporation. UMC will provide
Catalyst with significant wafer foundry capacity for flash memory products
using a 0.5-micron process to be jointly developed by the two companies.
Sales of the first 0.5-micron product are expected to occur in the fourth
quarter of 1996. On completion of the 0.5-micron development, the
companies will undertake development of an advanced 0.35-micron flash
process. In addition to the development and foundry partnerships, UMC
also has purchased a 10 percent equity interest in Catalyst to strengthen the
relationship between the two companies.
March
Newport Wafer Fab Ltd. Receives Grants for New Fab
Newport Wafer Fab Ltd. has secured nearly £60 million in grants toward the
£230 million expansion of its chip plant in Wales. The centerpiece of NWL's
expansion is a 20,000-square-meter building that will be built by the Welsh
Development Agency and leased to the company at commercial rates. The
line will process 8-inch wafers using 0.5-micron CMOS technology. First
silicon from the new fab is scheduled for the end of 1997, and commercial
ramp-up is targeted for the first quarter of 1998. The first phase will provide
NWL with a capacity of 10,000 wafers a month, but the facility is capable of
accommodating two more modules to bring the capacity up to 30,000 wafers
a month. Separately, NWL is installing a new 6-inch wafer processing line
using 0.5-micron technology; first silicon is expected by the first quarter of
1997. NWL is also proceeding with conversion of its 4-inch wafers to 6
inches. The company expects to cease processing 4-inch wafers by the end of
1996.
COMPASS Announces Passport Partners
COMPASS Design Automation Inc. announced that Chartered
Semiconductor Manufacturing has formalized its participation in the
Passport Foundry Program, a program aimed at verifying foundry process
and characterizing physical libraries to ensure first-time silicon success. CSM
and COMPASS also armounced the signing of a three-year joint marketing
agreement that encompasses mutual customer support and test chip model
extraction. Under the Passport Foundry Program, CSM and COMPASS will
jointly r u n test chips to ensure silicon performance and manufacturabiUty.
Separately, Tower Semiconductor, TSMC, LG Semicon, and European Silicon
Stiuctures were also participants in COMPASS' Passport Foundry Program.
SCI\^S-WW-DP-9608
©1996 Dataquest
December 30,1996
(European Silicon Structures, Aix-en-Provence, France, was later acquired by
Atmel.)
Crosspoint Solutions in Pact witli LG Semicon
Crosspoint Solutions Inc. armounced a new relationship with LG Semicon
involving both licensing and manufacturing of Crosspoint Solutions'
customer-programmable ASICs. Under the terms of the agreement, LG
Semicon will provide manufacturing capacity in 0.8- and 0.6-micron, twoand three-layer metal processes. As part of this agreement, LG Semicon
receives a limited license to manufacture and market Crosspoint's CP20K
field-programmable gate arrays (FPGAs), as well as rights to develop and
market product variations based upon CP20K architecture and technology.
COIViPASS and IVIeta-Software in Joint Development
COMPASS Design Automation and Meta-Software, a major supplier of IC
simulation, timing, and library solutions, announced a joint agreement for
the development of test chips and process modeling for COMPASS' Passport
Foundry Program members. Under the cooperative agreement. Passport
Foundry Program members' process performance will be traced to silicon
using the COMPASS test chip that has been jointly developed with MetaSoftware's Meta-Labs services.
Nintendo of America and TSMC Settle
Nintendo of America Inc. and TSMC agreed to the settlement of all
outstanding claims in litigation that was pending in the U.S. District Court in
Northern California. The settlement ended litigation filed by Nintendo in
1994 claiming that TSMC produced semiconductor chips for its customers
that infringed Nintendo's intellectual property rights. The settlement
provides for long-term cooperation between the parties to ensure protection
of Nintendo's intellectual property rights in the future.
Hewlett-Packard Withdraws from Wafer Fab Project
Hewlett-Packard withdrew from a U.S.$1.2 billion joint venture to set up an
8-inch wafer fab in Taiwan after a major Singapore investor backed out of the
project. Under the original plan, HP would have been the biggest investor in
the venture, named Hwa Ya Technology, with a 30 percent stake. HP
decided to drop the venture after Singapore Technologies Group, which was
to hold 20 percent of the shares, pulled out on grounds that it wants to
concentrate on wafer investment at home.
TSMC Selects U.S. Fab Site
TSMC selected Camas, Washington, as the site of the company's first U.S.
fab. The new fab, to be built by the TSMC joint venture with several of its
customers, including Altera, Analog Devices Inc., and Integrated Silicon
Solution Inc., planned to break ground in mid-1996 and begin production in
the second quarter of 1998, reaching full production in early 2000.
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April
Trident IVIicrosystems in Partnersliip witli Samsung
Trident Microsystems announced the signing of a manufacturing
partnership agreement with Samsung Electronics Corporation. The
agreement's duration is three years, and it provides for Trident's licensing to
Samsung certain designs for inclusion in Samsung's ASIC library. In return,
Samsiong has committed to mutually agreed-on levels of manufacturing
capacity in terms of processed wafers or packaged and tested units. Trident
will ship the first products of this partnership in the second quarter of 1996.
Tseng Laboratories in New Foundry Relationsliips
Tseng Laboratories developed several new foundry relationships in order to
secure supply sources for the company's newly introduced ET6000 advanced
graphics controller chip. Foundry agreements were finalized between Tseng
Labs and Chartered Manufacturing, Tower Semiconductor, and Winbond
Electronics Corporation. Efforts were geared toward bringing these
foundries on line by the middle of 1996.
May
Xilinx Invests in Seiko Epson
Xilinx Inc. announced that it would invest up to U.S.$300 million in a new
semiconductor manufacturing faciUty to be built by Seiko Epson Corporation
in Sakata, Japan. The agreement called for Xilinx to make incremental
advance payments to Seiko Epson over the next two and a half years to help
finance construction of the operation, which will manufacture 8-inch wafers
using advanced 0.35-to-0.25-micron CMOS technology. The advanced
manufacturing processes Xilinx will help develop will allow the company to
quadruple the density of its programmable logic devices into the range of
half a million gates. Production is expected to begin in early 1998. Xilinx will
receive a specified number of wafers from the new line through 2002.
Cyrix Gains Capacity from IBIVI
Cyrix Corporation announced an expansion of its relationship with IBM
Microelectronics. In addition to the wafer capacity made available through
1999 by an April 1994 agreement, IBM will provide Cjrrix with additional
wafer capacity on a foundry basis through December 1997.
TSMC Unveils 0.35-and 0.25-IVIicron Technologies
In a technology workshop held in San Jose, California, TSMC unveiled the
process information, design rules, and Spice models to enable designs for its
0.35-micron technology. Also, company technologists introduced their early
concepts for 0.25-micron geometries. TSMC also announced that it had
begun selectively accepting tape-outs for prototype runs at 0.35 micron and
has produced 16Mb DRAMs, 1Mb SRAMs, and JEDEC logic devices within
the last 60 days. Capacity for 0.35-micron devices was planned to ramp into
production later in the year in the company's new Fab 3. TSMC's Fab 4,
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which is under construction, will go into production at 0.35 micron in the
fourth quarter of 1997 and migrate to 0.25-nucron technology in early 1998.
June
ASPEC Technology Licenses Tools to Winbond
ASPEC Technology Inc. announced that Winbond Electronics Corporation
has licensed ASPEC's Open Design Implementation Technology (Open DIT),
including the densest gate array architecture available, as well as the EDA
design kit and custom compilers for Winbond's 0.5-micron process.
Winbond uses ASPEC's Open DIT to produce PC chipsets, multimedia
products, and Hewlett-Packard PA/RISC-based microcontrollers, as well as
other products that were to be announced at a later date.
Catalyst Extends Relationship with Olci
Catalyst Semiconductor of Santa Clara, CaUfomia, has expanded its existing
10-year partnership with Oki Electric Industry Co. Ltd. of Japan. Under an
agreement that extends the partnership through March of 1998, Oki will
provide Catalyst with more than double the current wafer capacity for both
flash memory and EEPROM products. Flash memory products will be
transferred to a 0.6-micron process, and EEPROM products will be
transferred to a 0.8-micron process.
Tower and Hewlett-Packard Agree to End Supply
Tower Semiconductor and Hewlett-Packard announced that they have come
to terms for ending the agreement for Hewlett-Packard's purchase of wafers
from Tower. Both companies indicated that they had not been able to
achieve their business goals and had therefore agreed to end their
agreement. HP's Integrated Circuit Business Division has been an important
customer of Tower's for the last three years. Both Tower and HP stated that
they have left open the possibility of business relations regarding futuregeneration technologies.
Kanematsu Corporation invests in Extol
Japanese trading house Kanematsu Corporation established a joint-venture
company in California with two U.S. partners slated to start operation in
October 1996 to make microchips to order. The joint venture, named Extel
Semiconductor Inc., called for equal investment by Kanematsu and its
partners—Seaway Semiconductor Inc. and Impala Semiconductor
Manufacturing Corporation. The venture will start producing ASIC and
foundry wafers, with an initial output target of 5,000 to 6,000 six-inch wafers
a month.
TSMC and Fujitsu in DRAIVI Pact
TSMC and Fujitsu Ltd. announced that they had reached an agreement
whereby Fujitsu would assist TSMC in developing 0.35-micron processing
technology for making DRAM chips. In return, TSMC will produce 16Mb
and 64Mb DRAMs for the Japanese company from 1997 through 2000.
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Altera Invests In WaferTech
Altera Corporation announced that its joint venture with TSMC, WaferTech,
was finalized and that Altera has increased its equity investment in the joint
venture. Altera increased its ownership of the joint venture from 16 percent
to 18 percent. Altera will invest $140 million in WaferTech over the next two
years for its 18 percent ownership. Other investors in WaferTech include
Analog Devices, which will also own 18 percent. Integrated Silicon Solution
Inc., which will own 4 percent, and TSMC, which will own 57 percent. Three
percent will be owned by private investors. WaferTech's new 8-inch wafer
fab was to break ground on July 11,1996. Wafer production is expected to
begin in mid-1998 and reach full production capability of 30,000 8-inch
wafers per month in late 1999. Process technology is expected to begin at
0.35 micron and move to 0.25 micron and then to 0.18 micron. WaferTech is
expected to employ about 800 people when at full capacity.
July
Mentor Graphics Introduces TSMC Library
Mentor Graphics Corporation's IC Technology Center introduced a complete
TSMC 0.5-micron library solution for integrated circuit design teams. The
library is an addition to Mentor Graphics' off-the-shelf library portfolio,
which already includes the TSMC 0.8-micron and 0.6-micron libraries.
Mentor Graphics' systems-on-silicon library for the TSMC 0.5-micron process
provides customers with standard cells, memories, data paths, and
input/output (I/O) pads.
The Dll Group Buys Orbit
The DII Group Inc., a global supplier of a broad range of integrated
electronics products and services, and Orbit Semiconductor Inc., a
Sunnjrvale, California, provider of semiconductor manufacturing and
engineering support services, jointly announced the signing of a definitive
agreement for a merger in which Orbit would become a wholly owned
subsidiary of The DII Group.
TSMC Begins 0.35-Micron SRAM
TSMC has begun to offer a 0.35-micron SRAM manufacturing process to its
foundry customers. Full production of 1Mb sjmchronous SRAMs was
scheduled to begin in the fourth quarter.
WaferScale Integration In Pact with Tower
WaferScale Integration Inc., a privately held fabless company, signed a
memorandum of understanding for a long-term technology exchange with
Tower Semiconductor. Under the proposed agreement. Tower and WSI plan
to mutually develop a manufacturing process using WSI's proprietary
nonvolatile memory technology and Tower's 0.6-micron technology
processes. As part of the agreement. Tower would guarantee WSI access to
its wafer fab.
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TSMC Licenses PineDSPCore
TSMC has licensed the PineDSPCore digital signal processor technology
from DSP Group. TSMC will integrate the PineDSPCore into an ASIC cell
library and make the cell library available to its customers. The PineDSPCore
is a 16-bit, general-purpose, low-power, low-voltage, high-speed digital
signal processing (DSP) core designed for speech and audio processing,
telecommunications, digital cellular, and embedded control applications.
August
Interconnect Technology in Partnership with Sharp
Interconnect Technology, a start-up semiconductor manufacturing company
in Sarawak, Malaysia, announced that Sharp Corporation will be its
technology partner and ongoing foundry customer. Sharp is contributing its
state-of-the-art process technology, along with extensive personnel and
equipment training. Sharp was also to enter into a foundry supply
agreement with ICT to take a portion of the fab output, providing a base
load with proven designs that will greatly facilitate a smooth ramp-up.
Sharp undertook to supply process implementation and engineering support
in Sarawak, Malaysia, and extensive training of ICT engineering personnel
in one of Sharp's fabs. ICT's 8-inch, advanced micron manufacturing facility
will be operational by the second quarter 1998 and capable of producing
25,000 wafers per month.
Peregrine Semiconductor Gains Wafer Supply from Asahi
Peregrine Semiconductor, a fabless mixed-signal IC supplier, entered a sixyear foundry arrangement with Asahi Kasei Microsystems. Under the terms
of the accord, AKM will continue to provide wafer fabrication services to
Peregrine in exchange for a nonexclusive license to Peregrine's ultrathinsilicon (UTSi) semiconductor technology.
COMPASS introduces 0.35-Micron Libraries
COMPASS Design Automation annotmced availability of its 0.35-micron
Passport logical and physical libraries. The 0.35-micron (3V) Passport
libraries include COMPASS' Optimum Silicon (OS) standard cells, RAM and
ROM compilers, high-density data path compilers, and an extensive package
of I/Os, with about 100 interface functions available.
UMC in Partnership with COMPASS
UMC announced a partnership with COMPASS Design Automation for the
Passport Foundry Program. UMC will support all of the Passport library
families, including COMPASS' 0.6-micron, 0.5-micron, and 0.35-micron
library product families.
Cadence and TSMC in Joint Support for Device Model
Cadence Design Systems Inc. and TSMC announced their support of the
public domain BSIM3v3 device model. As part of the collaboration between
Cadence and TSMC, the two companies have worked together to extract,
verify, and quaUfy BSIM3v3 models for use by their respective customers.
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December 30,1996
Models for TSMC's 0.5-micron/5V process were to be available for delivery
with Cadence's Advanced Spectre simulator in September 1996. BSIM3v3
models for TSMC's 0.5-micron/3.3V process were to be available for delivery
in October 1996. Models for other process technologies scheduled for joint
development efforts include TSMC's 0.35-micron 5V and 3.3V processes and
0.25-iiucron process.
Rambus Licenses to TSMC
Rambus Inc. announced that its Rambus ASIC Cell (RAC) is available for
customer designs in TSMC's 3.3V, 0.5-micron single-poly, triple-metal CMOS
process.
Interconnect Announces Klaus Wiemer as President and COO
InterCormect Technology annoiinced that Klaus Wiemer, former president
and COO of TSMC and former president and CEO of Chartered
Semiconductor, was named president and COO of Interconnect Technology.
Austria Mikro Systeme Invests in Thesys
Austria Mikro Systeme International AG, a significant European foundry
provider, entered into an agreement to acquire a majority interest in Thesys
Gesellschaft fur Mikroelektronik GmbH. On ratification of the pact, AMS
would have a 51 percent interest in the Erfurt-based manufacturer of ASICs
and application-specific standard products (ASSPs). The selling shareholder
was the German state of Thuringia, which was to divest 51 percent of its
total holding, retaining a 49 percent share. LSI Logic Corporation of Milpitas,
California, a former 10 percent shareholder, will relinquish its share in the
company. AMS is the No. 1 ranked European supplier of cell-based mixedsignal analog/digital ASICs at this time.
September
Interconnect Acquires IVIicroUnity Fab in United States
Interconnect Technology annoiinced that it agreed to acquire a 23,000square-foot clearuroom Class 1 microelectronics facility in Sunnyvale,
Califorrua, previously owned by U.S.-based MicroUnity Systems
Engineering Inc. The U.S. fab represents about a $160 million total
investment by Interconnect and will allow InterCormect to begin delivering
0.35-micron, 8-inch wafers nine months to one year before its Kuching,
Sarawak, Malaysia facility goes online. It will take Interconnect about six
months to install and turn on the 200mm toolset, including upgrading the
facility from a 6-inch line to an 8-inch line. In the fourth quarter of 1997,
Interconnect was to begin producing 3,000 8-inch wafers per month in the
Sunnyvale facility, with the ability to double its production within one year.
Interconnect will use Sharp's 0.35-micron CMOS process in its U.S. fab as
well as in Kuching.
Chartered Launches 0.35-Micron Processes
Chartered Semiconductor Manufacturing has announced that its 0.35-micron
polycide and salicide process technologies are now available for customer
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10
designs. The new process offers up to 40 percent reduction in chip area over
0.5-micron geometries.
Samsung Semiconductor Rolls Out Embedded DRAM
Samsung Semiconductor announced the introduction of the first in a new
family of deep-submicron, "high integration" ASICs, which offers large,
embedded, customer-configurable DRAM. The lead product in the family is
the EDL60, which is fabricated around 0.5-micron design rules, with an
effective channel length of 0.46 micron. The EDL60 provides 60,000 gates of
random logic and 1Mb of on-chip DRAM. Following the EDL60 will be the
single-chip integration of 100,000 gates and 4Mb of DRAM, slated to debut
in 1997. From there, Samsung will quickly move to a 0.35-micron process,
featuring 400,000 gates with 16Mb of embedded DRAM.
TSMC Unveils Virtual Fab
TSMC announced the unveiling of the Virtual Fab, the latest in automation
technology that provides customers with complete access to their production
and shipping schedules. The Total Order Management system (TOM) is the
first step toward the ultimate realization of the Virtual Fab. TOM provides
customers with increased flexibility and control over booking procedures
help, achieving the same level of information access that they would require
for their own in-house fab. With the newly implemented TOM system,
customers will be able to track their production and shipping schedules and
make adjustments as needed to their orders, enabling TSMC to control and
allocate its capacity more efficiently.
RF Micro Devices to Build New GaAs Fab
RF Micro Devices Inc., a fabless semiconductor company in the wireless
market, revealed plans to build its first wafer fabrication facility as well as to
triple capacity from its current foundry supplier. RFMD will build a U.S.$35
million gallium arsenide (GaAs) wafer fab in Greensboro, North Carolina.
The new fab will provide 25,000 4-inch GaAs heterojunction bipolar
transistor (HBT) wafers per year. TRW, in Redondo Beach, California, is
currently RFMD's sole manufacturing source for 3-inch GaAs HBT wafers.
RFMD said it plans to invest an undisclosed sum that will triple capacity
from TRW.
Cirrus Logic and Lucent Form Cirent
With the official naming of Cirent Semiconductor, Lucent Technologies'
Microelectronics Group and Cirrus Logic Inc. have completed a joint-venture
manufacturing agreement that both comparues announced in October 1995.
The new joint venture will operate as a separate entity with a five-member
board of governors (three from Lucent Technologies and two from Cirrus
Logic) and newly appointed president Dr. Peter Panousis, the vice president
of silicon manufacturing and development for Lucent Technologies. The
facility is undergoing a $600 million expansion over the next two years.
Construction of a new cleanroom for the manufacture of integrated circuits
on 8-inch silicon wafers is now complete, and production is expected to
begin in early 1997.
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11
October
UMC Unveils 0.35- and 0.25-l\/licron Technologies
At its Foundry Technology Workshop, UMC showcased its 0.25-micron and
0.35-micron process technologies, which are in the pilot engineering and
production stages, respectively. UMC's 0.25-micron technology will be
available to strategic customers beginning in late 1997. UMC also provides
its customers with a design support center, which provides ASIC cell
libraries, embedded memory technology, and megacell or intellectual
property technology, as well as customer interface and technical support,
design methodology consultation, and maskmaking services.
Chartered and Excellent Design in Partnership
Chartered Semiconductor Manufacturing and Excellent Design Inc. have
disclosed a comprehensive three-year agreement covering joint technical and
marketing activities between the two comparues. Excellent is headquartered
in Yokohama, Japan. Both companies have U.S. operations in Silicon Valley.
The agreement calls for Chartered to deliver design rules. Spice models, and
process data to Excellent, which will then create the methodology and tools
to generate libraries optimized for Chartered's deep submicron process.
Traditionally, this procedure is done serially: A new process was refined,
then the libraries, tools, and services were developed and delivered to
engineers for the design of product prototypes. Through the open exchange
of data. Chartered and Excellent can help systems engineers accelerate time
to production for their new products by providing early access to new
manufacturing processes.
UIVIC to Become Dedicated Foundry
UMC announced that it will spin off its standard product divisions and
become a dedicated foundry, focusing orvly on manufacturing customers'
products rather than offering its own product line. During 1996, UMC has
spun off its computer and communications product divisions to private U.S.
companies. The company planned to do the same with its remaining
memory, consume, and multimedia product divisions by June 1997,
completing its transition to a pure-play foundry and eliminating the issue of
UMC's competing with its customers' products.
Texas Instruments and Anam Industrial in Wafer Pact
Texas Instruments Inc., Anam Industrial Co. Ltd. of Korea, and Amkor
Electronics Inc., Westchester, Pennsylvania, today announced a long-term
cooperative agreement for the production of wafers for advanced logic
semiconductors. Under the terms of the agreement, Anam Industrial and
Amkor Electronics will establish a new subsidiary and build a new
semiconductor wafer fabrication facility with a 6,000-square-meter
cleanroom in the Republic of Korea. The new facility will be financed
completely by Anam, with TI providing technical assistance to the new
company. There are no patent licenses involved in the project. Anam will use
TI's 0.35-micron CMOS technology in the new facility, which will have
sufficient capacity to produce 15,000 to 25,000 200mm wafers per month. TI
will have the right to purchase up to 70 percent of the output from Anam,
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12
and Anam will sell the remaining output on the world market. Production is
expected to begin in the first half of 1998.
Winbond's Fire Has No Impact on Foundry Production
There was a fire at Winbond Electrorucs' new Fab 3 in Hsin Chu, Taiwan.
Winbond assured its customers, including foundry users, that their products
wUl not be affected because all current Winbond production is in Fab 1 and
Fab 2, which were not affected by the fire. About 30 percent of Winbond's
capacity is allocated to foundry manufacturing.
November
ASPEC Technology Announces 0.35-Micron Libraries
ASPEC Technology announced the availability of its comprehensive 0.35micron Design Implementation Technology (DIT) to several major foundries,
including Chartered Semiconductor Manufacturing, IBM, TSMC, and UMC.
The release of the new ASPEC DIT marked the beginning of mass adoption
of the new, advanced 0.35-micron technology for IC/ASSP companies. In
addition to its patented High-Density (HD) families of gate array (HDA) and
standard cell (HDC) libraries, ASPEC's 0.35-micron DIT has been expanded
to include special I/O libraries and customized memory conipiler tools that
support a wide range of applications.
QuickLogic in Partnership with TSMC
QuickLogic Corporation, a leading supplier of FPGA silicon and
Verilog/VHDL design tool solutions, announced that it has established a
manufacturing partnership with TSMC. TSMC will work jointly with
QuickLogic to install QuickLogic's proprietary amorphous silicon antifuse
technology into TSMC's 0.5-micron, three-layer metal CMOS process and
subsequent smaller geometries. By migrating devices from a 0.65-micron to a
0.5-micron process, QuickLogic is reducing its die sizes by 44 percent.
UMC Invests in DRAM Design
UMC has taken a minority stake in Taiwan Memory Technology Inc., a
Taiwan DRAM fabless company. Taiwan Memory has begun shipping a line
of 4Mb DRAMs in volume, with 16Mb parts due early in 1997. Taiwan
Memory's DRAMs will be manufactured by two foundries, UMC and TSMC.
Orbit Semiconductor Buys Paradigm Fab
Orbit Semiconductor, a wholly owned subsidiary of The DII Group Inc.
announced that it has significantly expanded its manufacturing capability
with the acquisition of the semiconductor manufacturing assets of Paradigm
Technology Inc. located in San Jose, California. This includes a 62,000square-foot production facility with a 6-inch wafer fabrication line and a 0.6micron process technology. The total purchase price of the Paradigm
manufacturing assets acquisition is about $20,000,000, consisting of $6.6
million in cash, $7.6 million in debt assumption, and a $5.8 million shortterm note. Also, Orbit has established a relationship with Chartered
Semiconductor Manufacturing to provide production of 0.5-micron IC
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1^
designs for Orbit's ENCORE! gate array program. Chartered has been
providing 0.8-rmcron wafer production to meet Orbit's increased capacity
needs since August 1996.
December
COMPASS Announces New Acting President
COMPASS Design Automation announced that Jeff Hilbert, previously the
vice president of engineering and development, will serve as temporary
acting president. He replaces Dieter Mezger, who will continue as a
consultant to the company.
Silicon IVIagic and OIci Electric in DRAM Development
Silicon Magic, a fabless supplier of high-speed DRAMs, announced a joint
technology agreement with Oki Electric. Under the agreement, Silicon Magic
can access Oki's advanced DRAM processes and wafer fabrication, and Oki
Electric will obtain unspecified product rights, as well as influence over
product development and direction at Silicon Magic. The two comparues are
developing a proprietary process to allow significant amounts of DRAM to
be embedded with logic gates without the die-size penalty of a standard,
four-poly, two-metal DRAM process. This embedded DRAM process will
enable the companies to design application-specific standard products that
integrate the appropriate amount of memory at the speed required by highbandwidth applications. Potential applications include disc drive caching,
audio controllers, frame buffer memories for graphics applications, and
network switching.
Samsung Has Foundry Capacity
According to Samsimg's U.S. foundry representative, Omni Microelectronics,
Samsung has capacity of up to 20,000 6-inch wafers out per month available
for foundry. Samsung plans to allocate additional capacity of 6,000 6-inch
and 9,000 8-inch wafers per month over the course of 1997. Samsung offers
foundry customers 0.5-micron and 0.35-micron process technologies, and
0.25 micron by the end of 1997.
Shanghai Hua Hong Microelectronics Seeks Technology Partners
With financing, land and high-level government support all in place,
Shanghai Hua Hong Microelectrorucs, China's U.S.$1.2 billion wafer foundry
project, continues to search for foreign technology partners.
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Semiconductor Contract Manufacturing Seri/ices Worldwirfe
14
Calvin Chang, Senior Industry Analyst
Internet address
Via fax
Dataquest
(408) 468-8605
[email protected]
(408)954-1780
The content of this report represents our interpretation and analysis of iivformation generally available to the
©1996 Dataquest—Reproduction Prohibited
Perspective
M a r k e t Analysis
Worldwide Planned IC Manufacturing Capacity Outlook
Abstract: 77i»s Perspective provides a summary of the worldwide planned IC wafer fah
activities from now to the year 2000, including statistics and tables. We highlight how the
8-inch wafer standard will continue to be the de facto standard, and review reasons why
somefabs have been delayed and why production ramp-up is expected to he drawn out
longer. This document also reviews how Asia/Pacific is projected to increase its presence in
semiconductor manufacturing, and why foundry fabs are expected to gain popularity.
By Calvin Chang
From Capacity Constraint to Surpius—Wliat Happened?
The year 1995 was a banner year for the worldwide semiconductor industry. Semiconductor revenue in 1995 grew 37 percent as demand outstripped
supply and DRAM average selling prices (ASPs) remained firm. Representing nearly 30 percent of the total IC market, DRAM revenue growth
reached 81 percent in 1995. However, this megagrowth came to a screeching halt in early 1996 as DRAM ASPs begin to fall. On top of this, excess
inventories, slowing end markets, and a weaker yen combined to take
Dataquest's semiconductor forecast for 1996 to a 9 percent revenue
decline—the first decline for the industry in 10 years. Figure 1 presents the
latest Dataquest forecast for the worldwide semiconductor market.
The strong demand for semiconductor products in 1995 produced a
tight constraint in the industry's overall manufacturing capacity.
Chipmakers responded by boosting capital investments and launched the
largest fab-construction programs in the history of the IC industry. More
than 100 8-inch billion-dollar-class fabs are expected to enter into production in the ensuing years. Just as the industry is embracing the era of 8-inch
DataQuest
Publication Date: December 16, 1996
Filing: Perspective
(For Cross-Teclinology, file in the Semiconductor Regional Markets and Manufacturing
binder.)
Figure 1
Worldwide Semiconductor Market, Historical and Projection (Billions of U.S. Dollars)
Billions of U.S. Dollars
300-ri
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
9SB612
Source: Dataquest (December 1996)
sub-0.5-micron IC mass production, the long-delayed transition of 4Mb
DRAM to 16Mb DRAM entered to put an instant cut on the demand of
manufacturing capacity. The 4Mb-to-16Mb changeover means the 67 percent bit growth in 1996 will require only a 7 percent growth in silicon area
consumption. The 7 percent increase is more than met by an increase of
15 percent in industry wafer-processing capacity (more than 20 percent if
one factors in linewidth shrink). Thus, a ballooning capacity investment on
the supply side, slowing consumption and inventory correction on the
demand side, unfortunately coincidenced with a DRAM transition,
resulted in a surplus in the industry's manufacturing output.
Dataquest believes that for next few years, the health of the industry will
depend in large measure on the management of the industry's continued
capacity expansion in face of the current surplus. In the following,
Dataquest presents an examination of the planned fab activities that have
been put in place by the semiconductor industry.
New Fabs: How Many, How Much Capacity, and Where?
Dataquest has just completed a survey of planned fab projects around the
world. A detailed Kst of planned fabs is presented in a table at the end of
this Perspective. Based on an analysis of the announced planned fabs. Figure 2 shows the new fab capacity that is being added by the industry, measured in million square inch (MSI) of silicon processing per month.
Beginning in 1993, and coming off a global economic recession, the IC manufacturing industry worldwide has been rapidly adding new fab capacity
in recent years. Table 1 shows the number of announced new fab projects in
the four regions of the world during 1987 to 2000. In particular, the number
of new fabs added by the industry has increased dramatically in recent
years—from 30 in 1994,42 in 1995, to 48 and 47 in 1996 and 1997,
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December 16,1996
respectively. Moreover, there was also the migration of 6-inch to 8-inch
wafer size that took place in 1994, the year in which the 8-inch wafer size
accounted, for the first time, the majority (55 percent) of the new capacity
built in a year.
Eight-Inch Wafer Rules
In 1995 and 1996, nearly 90 percent of the new fab capacity has been in the
8-inch wafer standard. The 8-inch wafer has become, and will remain, the
de facto standard, given that nearly all new fabs to come on line in the
remainder of this decade are expected to be in 8-inch. Adoption of the
8-inch wafer size has given rise to larger fabs with ever-greater silicon processing capacity. Indeed, as shown in Figure 2, the rate at which the semiconductor industry is building new fab capacity is increasing at a compund
annual rate (CAGR) of 29 percent from 1994 to 1997. In 1996 alone, 48 new
fabs with a combined eventual output of 33.3 MSI/month have been constructed; this is equivalent to a new capacity of 685,000 8-inch wafers out
per month.
Memories of 1996 Cause Caution
The year 1996 has been a difficult year for many semiconductor manufacturers, especially those that are in the memory IC market. Poor memory IC
revenue, a result of an approximate 75 percent drop in memory IC ASP, has
led to companies' decisions to push out the building of sonie new fab
projects. There are an estimated nine push-out fabs, while a greater many
more of the recently-built new fabs have pared back production ramp-up.
Although construction of the 47 new fabs slated for production start in 1997
is likely to proceed as scheduled, Dataquest believes that companies building the new fabs will remain cautious and the actual production ramp-up
will be drawn out over a greater period of time. Table 1 shows that the
number of new fab projects is projected to fall off sharply in the years after
Figure 2
N e w Semiconductor Fab Capacity A d d e d Worldwide (MSI per Month)
New Capacity (MSI Si/Month)
1987
1988
1
;— 1994-1997 CAGR = 29%
1990
1991
1992
1993
1994
1995
1996
1997
|
1998
2J
After
1998
Note: Fab capacity is based on tine projected maximum capacity of each fab.
SCI\/IS-WW-DP-9607
©1996 Dataquest
December 16,1996
V)
Table 1
Announced Fab Projects by Region
1987
o
"O
I
CO
at
(=)
Americas
Asia/Pacific
Europe
Japan
Worldwide
16
0
11
13
40
1988
19
10
4
17
50
1989
1990
1991
1992
1993
1994
1995
1996
1997
15
8
5
13
41
13
6
4
24
47
15
6
6
18
45
8
9
3
11
31
7
6
3
15
31
10
5
4
11
30
15
11
8
8
42
13
10
12
12
48
12
13
6
14
47
1998 1998-200
10
8
2
5
25
Notes: Fab projects include greenfield new tabs, new fab modules, and wafer size upgrades on existing plants. Push-out tabs are indicated as 'oii ftplpt^*
Since 1994, a majority of the new tabs are 8-inch wafer standard.
@
CO
CO
C35
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CO
C35
1997. This could be because of the limited visibility for future new fabs as
plans for new fabs are usually not made public until two to three years
before their scheduled production date. On the other hand, the spate of new
fab buildup in recent years (1994 to 1997) could be establishing an excess in
the industry's manufacturing capacity so that no significant new buildup
will be required from 1998 to 2000.
Dataquest wUl continue to monitor new fab announcements, and by 1998,
should be able to report on all the new capacity that will come into production before the end of the century.
Asia/Pacific Gains Ground
Besides the migration to the new 8-inch wafer standard, there is another
important reason for the continued increase in the industry's fab capacity—
the rise of the Asia/Pacific nations in becoming a significant manufacturing
base of semiconductors. Thirty-three new fabs are planned during 1996 to
2000 in Taiwan, Singapore, Thailand, and other parts of Southeast Asia, on
top of the continual production expansion in South Korea. Figure 3 shows
the regional distribution in the industry's new fab capacity building. The
major trend of the next several years on the supply-side of semiconductor
manufacturing is that Asia/Pacific and North America will be the principal
beneficiaries of the capital investment dollars from not just the chipmakers
in their respective regions, but also from the Japanese chipmakers who are
shifting investment from home to the consumption markets—namely, the
United States and the Asia/Pacific nations.
Figure 3
Regional Distribution of Semiconductor N e w Fab Capacity
n
s
Japan
•
Asia/Pacific
m
Europe
Americas
1
I
\
\ i Y
"T
T
T" 1
\
r
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 After
1998
SCI\/iS-WW-DP-9607
©1996 Dataquest
December 16,1996
As a result, more than 60 percent of the industry's new fab capacity to be
added in 1996 to 2000 will be in the Americas and Asia/Pacific, with Asia/
Pacific representing the largest, receiving more than one-third of the industry's total new fab construction. Japan and Europe, on the other hand, will
each account for 20 percent of the new capacity.
The new fabs to be built in Europe will be located in the United Kingdom,
Germany, Italy, and a few in France, Israel (a member of the EEC), Ireland,
and the Netherlands. New fabs in North America are concentrated in
Texas (10) and Oregon (6), with the rest to be located in states including
Arizona, Washington, Idaho, Virginia, and Utah. Investment in new IC
capacity in Japan reached a peak level during the latter part of 1995 and the
first half of 1996. However, the recent surge of investment in Japan is not
expected to continue in the near term as the memory IC market remains
uncertain. Moreover, the long-term outiook on Japan as an IC production
base suggests a continual decrease in its share of the world's semiconductor
manufacturing. This is largely because Japanese chipmakers are moving
their IC production to regions outside of Japan.
New Fab Capacity by Product Type
Based on new fab projects announced by November 1996,125 new IC fabs
are expected to go into production starting 1996 and the few years beyond.
The combined capacity of these new fabs, in terms of the area (MSI) of processed wafers out per month, is 92.3 MSI per month (1,107.6 MSI armually),
which is equivalent to 1.9 million 8-inch wafers out per month. Compared
with the total industry output at the end of 1995, measured purely in terms
of total wafer output (that is, die reduction from line width shrink and metal
layers not considered), the new fabs represent an increase of 43 percent in
the indusfry's total manufacturing capacity by about mid-1999. Moreover,
much of the new capacity being added is leading-edge process technology:
More than 90 percent of the new capacity will have 0.5-micron or smaller
Unewidth technology, making advanced memory such as 64Mb/256Mb
DRAM, high-end logic/ASIC and microprocessors products.
Foundry Capacity Expected to Increase
Table 2 shows the segmentation of the new fab capacity by different product t5ês. Memory products, including DRAM, and nonvolatile memory,
remain the recipient of the largest capacity investment. The recent spate of
new foundry fabs announcements, by botii existing and new enfrants,
means a significant portion of the IC indusfry's nonmemory manufacturing
output will be in foundry by the end of the decade. The new foundry capacity being added will boost the percentage of the indusfry's overall capacity
in foundry, which stands at about 4 percent today. Additionally, the actual
available foundry in the future may well grow beyond the 13 percent of the
total new capacity earmarked for dedicated foundry. This stems from the
possibility of nortfoiindry new capacity fransitioning to foundry manufacturing. Memory and logic capacity can be converted to foundry production,
especially at times when market demand for standard products is weak,
and there is mounting pressure to keep fabs running. Such scenarios will be
likely if today's market conditions persist with memory IC production
remaining in surplus and ASPs staying depressed.
SCMS-WW-DP-9607
©1996 Dataquest
December16,1996
Table 2
N e w Fab* Capacity b y Product Type
Product Type
Dedicated Foundry
MPU
Logic, ASIC, ASSP, MCU, SRAM
Memory (DRAM, EEPROM, Flash)
Others (Analog, Power, Discrete, and Others)
New Fab Capacity
(Percentage of Total)
13
7
19
59
2
'Based on new fabs announced to date
Although factors that are adding to the supply side of foundry capacity
may lead to an extended oversupply in foundry manufacturing, there are
reasons to be optimistic about the foundry industry. Reasons include the
following:
• The continued above-average growth of the fabless companies
• The proven cost-competitiveness of foundry manufacturing
• The shrinking gap in foundries' process technologies from that of the
industry leaders
• The growing acceptance by IDMs of foundry manufacturing as the solution for meeting production needs
Table 3 lists the new fab projects that will come into production form 1996
to 2000.
SCMS-WW-DP-9607
©1996 Dataquest
December 16,1996
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SCMS-WW-DP-9607
©1996Dataquest
December 16,1996
•
CO
o
cyj
Table 3 (ConHnued)
New Fab Projects to Come into Production 1996-2000
Production
Start
Initial
Start
(Wafers/
Month)
CMOS
1996
10,000
16Mb/64Mb
DRAM
CMOS
1996
10,000
U.S.
MCU
CMOS
1997
Japan
64Mb DRAM
CMOS
1998
Japan
64Mb DRAM
CMOS
1998
Singapore
64Mb DRAM
CMOS
1998
Hsinchu
Taiwan
MCU ASIC
Nonvolatile
CMOS
On Hold
Shanghai
China
Foundry
CMOS
1998
Shaoxing
China
Consumer ICs
ASIC
CMOS
1998
Fab 2
Wuxi
China
Telecom, consumer, auto ICs
ASIC dis.
CMOS
1997
Korea
Fab 6
Ichon
KyoungkiDo
Korea
64Mb DRAM
CMOS
1996
Hyundai
Korea
Fab 7
Ichon
KyoungkiDo
Korea
16Mb/64Mb
DRAM
CMOS
1997
Hyundai
Korea
Oregon Fab
Eugene
OR
U.S.
16Mb/64Mb
DRAM
CMOS
1998
IBM Microelectronics
U.S
AMF
CorbeilEssonnes
France
64Mb DRAM
CMOS
1997
IBM/Toshiba
u.s
integrated Device
Technology
U.S
o
"O
Prefecture/
State
Country
Products
Proc^ses.
Hitachinaka-Shi
Ibaraki
Japan
16Mb/64Mb
DRAM
N2-2
Hitachinaka-Shi
Ibaraki
Japan
Japan
U3
Irving
TX
Japan
Chitose 2
Chitose Shi
Hokkaido
Hitachi
Japan
N3/2F
Hitachinaka-Shi
Ibaraki
Hitachi/
Nippon Stoel
Semicondw^:
Japan
Tampins
Singapore
Holtek
Taiwan
Fab 2
Science Park
Hua Hong Microelectronics
China
Poudong
Hua Yue Microelecb-onicsCo. Ltd,
China
Fab 3
Huajing Electrcnics
Group
China
Hyundai
I
CO
OJ
Company
Headquarters
Fab Name
City
-J
Hitachi
Japan
N2/3F
Hitachi
Japan
Hitachi
[litaehi
o
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CO
a>
a
K.
(U
X3
CT
CD
CO
CO
05
Fab 4
Manassas
VA
U.S.
64Mb DRAM
CMOS
1997
Hillsboro
OR
U.S.
Logic SRAM
CMOS
1996
Intel
U.S
Fab 14
Leixlip
Ireland
X86MPU
BiCMOS
1996
Entei
u.s
Fab 15
Aloha
OR
U.S.
X86MPU
BiCMOS
1996
Intel
U.S
Fab 12
Chandler
AZ
U.S.
X86MPU
BiCMOS
1996
Intel
U.S
Die
Ronler
Acres
OR
U.S.
x86 MPU
CMOS BiCMOS
1997
Intel
U.S
Fab 18
Kiryat Gat
Israel
Flash Memory
BiCMOS
1997
Intel
U.S
Fab 16
Fort Worth
TX
U.S.
X86MPU
BiCMOS
1998
2,000
21,000
3,000
15,000
M
CO
o
C/J
Table 3 (Continued)
o
"D
Initial
Start
(Wafers/
Month)
Prefecture/
State
Country
ProdlKts
Sama Jaya
Trade
Zone
Sarawak
Malajfsia
Foundry
Phase 2
Utsunomiya
-Shi
Tochigi
Japan
SRAM arrays
CMOS
1997
U.S./Japan
Fab 2
NishiwakiShi
Hyogo
Japan
16Mb/64Mb
DRAM ASIC
CMOS
1997
LG Semicon
Korea
CI Phase 3
ChongjuCity
Chungcheongbuk-do
Korea
16Mb/64Mb
DRAM
CMOS
1997
LG Semicon
Korea
G2
Gumi-City
Kyeongsansbuk-do
Korea
64Mb DRAM
CMOS
1997
Linear Technology
U.S
Fab 3
Camas
WA
U.S.
Linear
CMOS BiCMOS Bipolar
1996
CO
CO
I.,SI Logic
U.S
Fabl
Gresham
OR
U.S.
ASIC CBIC MPU
MPRSRAM
CMOS BiCMOS
1997
S-
Cirrent (Cirrus Log^c/
LuccntJV)
U.S
OR 2
Orlando
FL
U.S.
DSP logic ASIC
CMOS
1997
200
MactOTiix Lnc.
Taiwan
Fab 2
Science Park
Hsinchu
Taiwan
ROM EPROM
logic
CMOS
1997
5,000
Macronix Inc.
Taiwan
Fab 3
Science Park
Hsinchu
Taiwan
ROM EPROM
logic
CMOS
After 1998
Malaysian Institute
of Microelectronit
Systems
Malaysia
Phase 1
Johor Baru
Malaysia
ASIC
Matsushita
Japan
FabB
Tonami-Shi
Toyama
Japan
16Mb DRAM
16-bit MCU
CMOS
1996
Matsushita
Japan
FabC
Tonami-Shi
Toyama
Japan
16Mb DRAM
CMOS
1996
Matsushita
Japan
FabD
Tonami-Shi
Toyama
Japan
16Mb/64Mb
DRAM
CMOS
1997
Matsushita
Japan
FabD
Puyallup
WA
U.S.
DRAM l ^ t c
CMOS
1998
Microchip
Technology
U.S
Fab 3
Chandler
AZ
U.S.
MCUOTP
CMOS
1998
Micron Technology
U.S
Fabl
Boise
ID
U.S.
4Mb/16Mb
DRAM, VR/UVt,
SRAM
CMOS
1996
Micron Technology
U.S
Fab 2
Boise
ID
U.S.
4Mb/16Mb
DRAM, VRAM*
SRAM
CMOS
1996
Microm Technology
U.S
Fab 3
Lehi
LIT
U.S.
Memory
CMOS
After 1998
I
CD
05
Company
Headquarters
o
InteiConnect
Technology
Malaysia
Kawasaki Steel
Japan
KTI Semiconductor
-vl
@
05
(U
-O
a
CD
O
CD
3
CD
CO
Oi
Fab Name
City
• ^tSpitUf^;
Production
Start
1998
3,000
1996
10,000
M
O)
en
Table 3 (Continued)
Company
Headquarters
Mitsubishi
Japan
Mitsubishi
Japan
Mitsubishi
Japan
Miteubishi
Japan
Mitsubishi
Japan
Fab Name
Dly
Counhfy
Products
Taiwan
16Mb DRAM
CMOS
1996
Kumamoto
Japan
16Mb DRAM
CMOS
1996
Japan
4K/16K/64K
FRAM
CMOS
1997
Japan
64Mb DRAM
EDRAM
CMOS
1997
Germany
4Mb/16Mb
DRAM
CMOS
1997
CMOS
1997
Shin chu
D-lF-2
KikuchiGun
(Japan)
SAIF
Saijo-Shi
Ehime
Alsdorf
Mitsumi
Japan
Motorola
U.S
MOS-17
Tianjin
Motorola
US
Power Rect
Phoenix
Motorola
U.S
MOS19
Research
Triangle
Park
Motorola
u,s
MOS19
Phase 2
Motorola /Siemens
U.S
Nan Ya Tedmology
Processes
1,000
10,000
1997
Japan
Logic, power
China
Telecom ASIC RF
SmartMOS
AZ
U.S.
Rectifiers
NC
U.S.
MPU MCU Logic
CMOSBiCMOS
On Hold
480
Research
Triangle
Park
NC
U.S.
PowerPC MPU
CMOS
On Hold
4,800
MOS18
Richmond
VA
U.S.
64Mb/256Mb
DRAM
CMOS
1998
1,000
Taiwan
Fabl
Tao Yuan
Taiwan
16Mb/64Mb
DRAM
CMOS
1996
2,000
National
Semiconductor
U.S
Fab2A
Arlington
TX
U.S.
LAN, audio, PC
products
CMOSBiCMOS
1996
Natiortal
Semicondtidijr
U.S
New 8" Fab
South
Portland
ME
U.S.
Log Array
CMOSBiCMOS
1997
NEC
Japan
Dif-2
Higashi
Hiroshim
a-Shi
Hiroshima
Japan
16Mb/64Mb
DRAM ASIC
RISC
CMOS
1996
?JEC
Japan
2 Phase
Livingston
Scotland
U.K.
16Mb/64Mb
DRAM
CMOS
1996
NEC
Japan
Kamigori
Hyogo
Japan
NEC
Japan
Roseville
CA
VS.
64Mb/256Mb
DRAM
CMOS
1998
NEC
Japan
China
MCU Logic 4Mb
DRAM ASIC
CMOS
After 1998
Japan
Analog op. amp.
opto.
Bipolar
1996
New
SagtOiUal^.
Japan
Atsugi-Shi
Production
Start
Prefecture/
State
Initial
Start
(Wafers/
Month)
G-Line
Kanagawa
Beijing
Fabl
Kamihikuoka-Shi
Saitama
1998
1997
1,000
M
CO
o
a
-o
I
to
Table 3 (Continued)
Prefecture/
Stale
Country
Pra ducts
Newport
Wales
U.K.
Foundry
CMOS
1996
Newport
Wales
U.K.
Foundry
CMOS
1997
Company
Keadquarteia
Fab Name
aty
F21
Pracesses
Production
Start
Initial
Start
(Wafers/
Month)
Newport Wafer Fj3?
Hong Kong
Newport Wafer Fab
Hong Kong
Nippon Steel
Semiconductor
Japan
Nl
TateyamaShi
Chiba
Japan
16Mb DRAM
CMOS
1997
Oki
Japan
52
KurokawaGun
Miyagi
Japan
16Mb/64Mb
DRAM
CMOS
1996
Orbit Semiconductor
Inc.
U.S
Fab 2
Sunnyvale
CA
U.S.
F<Jundry arrays
mixed-signal
ASIC
CMOS
1996
Orbit SemiconduclDr
Inc.
U.S
Israel
Foundry arrays
mixed-signal
ASIC
CMOS
On Hold
@
Philips
Netherlands
Bipolar 1
U.K.
Power transistors
Bipolar
1996
24,000
CO
CO
C35
Stockport
Cheshire
Piiilip^
Netherlands
MOS4
Nijmegen
Netherlands
Consumer ICs
CMOS
1996
10,000
Powerctiip
(ElitegroupJ
Japan/Taiwan
Fabl
Science Park
Hsinchu
Taiwan
16Mb DRAM
CMOS
1996
5,000
Promos (Mosel
Vitelic/ Siemens ]V)
Taiwan
ProMos
Science Park
Hsinchu
Taiwan
64Mb/256Mb
DRAM SRAM
CMOS
1998
5,000
Rockwell Semiconductor System
U.S
Fab Vin
Colorado
Springs
CO
U.S,
DSP, analog,
mixed-signal
ontrollere
CMOS
1997
Rockwell Semiconductor System
U.S
Fab IX
Colorado
Springs
CO
U.S.
DSP, analog,
mixed-signal
ontroUers
CMOS
After 1998
Samsung
Korea
Fab 7
Kiheung-Up
Kyungki-Do
Korea
16Mb/64Mb
DRAM
CMOS
1996
Samsung
Korea
Fab 8
Kiheung-Up
Kyur^ki-Do
Korea
64Mb DRAM
CMOS
1997
Samsung
Korea
Austin
TX
U.S.
64Mb DRAM
CMOS
1998
Seiko Epson
Japan
Sakata-Shi
Yamagata
Japan
Logic SRAM tel&
com PIJDs
FPGAs
Semiconductor Laser
Internationa!
U.S
Endicott
NY
U.S.
High-powered
diode lasers
(HPDl.)
GaAs/in-V
1996
SGS-Thomson
Italy/France
M5 Phase 2
Catania
Sicily
Italy
Log lin custom
smart power
CMOS
1996
SGS-Thomson
Italy/France
M5 Phase 3
Catania
Sicily
Italy
EFROM Flash.
Memory
CMOS
1996
OJ
C3
-Nl
CU
I—I-
Ol
CT
CD
CO
CO
03
Eilat
England
1997
5,000
5,000
15,000
10,000
M
13
Semiconductor Contract IVianufacturing Services Worldwide
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©1996Dataquest
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December 16,1996
CO
o
Table 3 (Continued)
Production
Start
Initial
Start
(Wafera/
Month)
CMOS BiCMOS
1997
5,000
Foundry
CMOS
1998
3,000
Taiwan
Foundry
CMOS BiCMOS
1998
5,000
TX
U.S.
16.Mb/MMb
DRAM
CMOS
1996
10,000
Science Park
Hsinchu
Taiwan
Foundry memory
ASIC MPU logic
CMOS
1997
1,000
Fabl
Science Park
Hsinchu
Taiwan
Foundry SRAM
ROM logic MPU
MPR
CMOS
1996
4,000
Taiwan
Fabl
Science Park
Hsinchu
Taiwan
Foundry
CMOS
On Hold
Vanguard
Intenriationai
Taiwan
Fab 2
Science Park
Hsinchu
Taiwan
4Mb/ 16Mb
DRAM, 1Mb
Sync SRAM
CMOS
On Hold
Vanguard
[ntemational
Taiwan
Fab IB
Science Park
Hsinchu
Taiwan
16Mb DRAM
CMOS
On Hold
VLSI Technology
U.S
Module D
San Antonio
TX
U.S.
Arrays C B I C M P P
telecom ICs
CMOS
1996
Winbond
Taiwan
Fab 3
Science Park
Hsinchu
Taiwan
SRAM logic
CMOS
1997
Winbond
Taiwan
Fab 4
Science Park
Hsinchu
Taiwan
DRAM
CMOS
On Hold
1,000
Yamaha
Japan
Building 11-2
ToyookaMura
Shizuoka
Japan
ASIC MPR
CMOS
1996
5,000
Yamaha
Japan
NA
ToyookaMura
Shizuoka
Japan
ASIC ASSP
CMOS
1998
a
"O
CO
C5
O
-vl
@
(£3
CO
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Company
Headquarters
Fab Name
aty
Prefecture/
State
Country
Products
Processes
TSMC
Taiwan/
Netherlands
Fab 4
Science Park
Hsinchu
Taiwan
Foundry
Wafierteth (TSMC/
AliEra JV)
Taiwan/
Netherlands
Fab 6
Camas
WA
U.S.
TSMC
Taiwan/
Netherlands
Fab 5
Science Park
Hsinchu
T Winstar
Seini conductor
Japan/U.S.
Twinstar
Richardson
United IC
Corporation
Taiwan
Fabl
United Semiconductor Corporation
Taiwan
United Silicon
Corporation
Ma
(W
5,000
5,000
Notes: New fab projects include greenfield new tabs, new fab modules, and wafer size upgrades on existing plants. Year of production start Is indicated in th
IVIIcron Technology's Fab 1 and Fab 2 are wafer size upgrades.
Also listed are fabs that have been put "on hold."
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Internet address
Via fax
^^
IpOTO/î I^Cf
*^^*^ M l V ^ M V - i J L
A Gartner Group Com pany
(408) 468-8605
[email protected]
(408) 954-1780
The content of this report represents our interpretation and analysis of information generally available to the public
or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness.
It does not contain material provided to us in confidence by our clients. Reproduction or disclosure in whole or in
part to other parties shall be made upon the written and express consent of Dataquest.
V
Perspective
Market Analysis
Semiconductor Contract Manufacturing Marl(et Sliare
Abstract: This Perspective lists 1995 semiconductor contract manufacturing revenue and
market share estimates for foundry providers worldwide. We look at the players in the
young but fast-growing SCM industry—and we examine how the market is presently
dominated by serveral large providers, many of whom come from Asia/Pacific and Japan.
By Calvin Chang
Industry Overview
The semiconductor contract manufacturing business has attracted many new
players in recent years as word has spread about the profits available in the
burgeoning foundry industry. Although Dataquest forecasts an overcapacity
in the industry beginning as early as this year and continuing for the next
few years, we believe that the escalating costs of new fabs will convince IC
companies from building their ow^n. Furthermore, the continued robust
growth of the fabless companies and their growing wafer demand merit
optimism for the long-term outlook of foundries.
Dataquest, which began tracking the semiconductor contract manufacturing
(SCM) industry this year, has completed the first-ever semiconductor
contract manufacturing (SCM) revenue estimate for the foundry providers of
the world in 1995. Overall, the industry is dominated by a handful of large
players, many of whom come from Asia/Pacific and Japan, which we will
discuss in further detail later in this report.
Dataquest
Product Code; SCMS-WW-DP-9606
Filing: Perspective
(For Cross-Technology, file in the Semiconductor Regional l\/larl<ets and IVIanufacturing binder)
Who's Who in the Industry
Table 1 lists the SCM providers and estimates of their 1995 revenue and
respective market share. As shown in the table, Taiwan Semiconductor
Manufacturing Company (TSMC) is the world's largest SCM provider with
over U.S.$1 billion in SCM revenue in 1995. Following TSMC are three
integrated device manufacturers (IDMs) who supply foundry manufacturing
in addition to producing their own brand semiconductor products. In second
place is LG Semicon with over U.S.$500 million in SCM sales, largely from its
foundry manufacturing of DRAM for Hitachi. Toshiba, active in pursuing
foundry business with fabless and system vendors, is the third-largest SCM
vendor. Fourth-place IBM is a leading-edge SCM supplier of logic devices,
using deep subhalf-micron and up to five-level metal interconnect
capabilities. Chartered Semiconductor Manufacturing Inc., which has grown
quickly since becoming a dedicated foundry in 1991, is now the world's
second-largest dedicated foundry. A long-time supplier of foundry
manufacturing. United Microelectronics Corporation (UMC), has announced
it will focus on SCM as its sole business by spinning off its product divisions
and becoming a dedicated foundry. Seiko/Epson, perhaps the best-known
Japanese SCM supplier, has been a long-time foundry supplier to U.S.
fabless companies.
In addition to the 45 or so SCM suppliers worldwide listed in this
Perspective, there are a ntm-iber of other IDMs that are believed to have
revenue receipts from foundry business. These companies have been noted
as "others" and their collective revenue has been estimated.
Top Players Dominate SCM Market
Market share estimates presented in Table 1 also show that the SCM market
in 1995 was largely dominated by the major SCM suppliers. The top six SCM
vendors own 50 percent of the total SCM market. The top 10 and top 20 SCM
suppliers hold 66 percent and 84 percent of the market, respectively. The
relatively high concentration of market share (compared to the overall
semiconductor market) in SCM does not, however, indicate a maturing of
the industry. In fact the SCM industry is quite young, with the largest and
the oldest dedicated foundry, TSMC, not yet 10 years old. The large market
share enjoyed by today's major SCM suppliers is really indicative of the
success that early entrants, such as TSMC and Chartered Semiconductor, can
enjoy when they grasp the opporttmities presented by a new burgeorung
market such as SCM.
SCI\/IS-WW-DP-9606
©1996 Dataquest
December 16,1996
Semiconductor Contract IVIanufacturing Services Worldwide
Table 1
1995 Semiconductor Contract Manufacturing Supplier Revenue and Market Share
Estimates (Millions of U.S. Dollars)
SCM
Revenue
SCM Market
Share (Percent)
1,085
18.2
547
9.2
Japan
480
8.0
U.S.
320
5.4
Dedicated
Singapore
285
4.8
NMB (Nittetsu)
IDM
Japan
266
4.5
United Microelectronics
IDM
Taiwan
262
4.4
Seiko/Epson
IDM
Japan
260
4.4
NEC
IDM
Japan
210
3.5
Sharp
IDM
Japan
200
3.4
Fujitsu
IDM
Japan
180
3.0
Winbond Electronics
IDM
Taiwan
155
2.6
Mitsubishi
IDM
Japan
140
2.3
Hitachi
IDM
Japan
130
2.2
Oki
IDM
Japan
120
2.0
Tower Semiconductor
Dedicated
Israel
100
1.7
American Microsystems (Gould AMI)
IDM
U.S.
77
1.3
SGS-Thomson
IDM
France
75
1.3
Rohm
IDM
Japan
75
1.3
Sony
IDM
Japan
65
1.1
Foundry Type
Country
Taiwan Semiconductor Manufacturing Company
Dedicated
Taiwan
LG Semicon
IDM
Korea
Toshiba
IDM
IBM
IDM
Chartered Semiconductor Manufacturing
Company
Austrian Mikro System
IDM
Austria
60
1.0
Kawasaki Semiconductor
IDM
Japan
60
1.0
Matsushita
IDM
Japan
60
1.0
Sanyo
IDM
Japan
55
0.9
IMP
IDM
U.S.
50
0.8
AT&T
IDM
U.S.
45
0.8
Ricoh
IDM
Japan
45
0.8
Orbit Semiconductor
Dedicated
U.S.
44
0.7
Yamaha
IDM
Japan
40
0.7
Thesys Gesellschaft fur Mikroelektronik GmbH
IDM
Germany
34
0.6
Samsvmg
IDM
Korea
30
0.5
Newport Wafer Fab Ltd.
Dedicated
U.K.
30
0.5
Mitel
IDM
Canada
25
0.4
Asahi Kasei Micro Systems
IDM
Japan
25
0.4
Advanced Semiconductor Manufacturing Corporation
Dedicated
China
20
0.3
IC Works
IDM
U.S.
18
0.3
Holtek
IDM
Taiwan
17
0.3
Standard Microsystems
IDM
U.S.
16
0.3
GMT Microelectronics
Dedicated
U.S.
15
0.3
(Continued)
SCMS-WW-DP-9606
©1996Dataquest
December 16,1996
Table 1 (Continued)
1995 Semiconductor Contract Manufacturing Supplier Revenue and Market Share
Estimates (Millions of U.S. Dollars)
SCM
Revenue
SCM Market
Share (Percent)
U.S.
15
0.3
IDM
Taiwan
15
0.3
IDM
U.S.
7
0.1
Company
Foundry Type
Country
Micrel
IDM
Hualon Microelectronics Corporation
VLSI Technology
Atmel
IDM
U.S.
5
0.1
Daewoo
IDM
Korea
4
0.1
Allegro Microsystems
IDM
U.S.
3
0.1
Dongsung
IDM
Korea
0
0
Hyundai
IDM
Korea
0
0
Others
IDM
Total
200
3.4
5,970
100
Asia/Pacific and Japan Are Popular Homes for SCM Vendors
Geographically, Asia/Pacific—home of TSMC, LG Semicon, Chartered
Semiconductor, UMC, and Winbond—is the largest source of SCM
manufacturing. As illustrated in Figure 1, Asia/Pacific SCM vendors
garnered 45 percent of the total 1995 SCM revenue. Japanese SCM suppliers,
which include nearly all the Japanese semiconductor companies, earned 40
percent of worldwide SCM sales. IBM and a handful of smaller U.S. and
Canadian SCM suppliers made up the 11 percent that Americas contributed
to the SCM supply. European SCM providers made up the remaining 4
percent of the market.
Figure 1
1995 SCM Market by Region of Supplier Base
Americas ^ ^
(11%) /
\
/
/
Japan
(40%)
Asia/Pacific
(457=)
•
m
Europe (4%) _ ^ ' ' ^ * ^ ^ ^
seeese
SCIVIS-WW-DP-9606
©1996 Dataquest
December 16,1996
T»
Table 1 reveals that there are probably more than 50 SCM suppliers
worldwide in 1995. Only seven are dedicated foundries and the rest are IDM
foundries. Although representing orUy about one-seventh of the SCM
suppliers, the dedicated foundries contributed 29 percent of the overall SCM
revenue in 1996 (shown in Figure 2). With many new dedicated foundries,
such as SubMicron Technology (Thailand), Interconnect Technology
(Malaysia), Anam Semiconductor (Korea), and the UMC joint ventures—
scheduled to enter into the SCM market starting in 1997 with their newly
built fabs equipped with advanced processing equipment—the dedicated
foundries are expected to take on a greater share of the growing SCM
market.
Figure 2
1995 SCM Revenue by Foundry Type
Dedicated
Foundries
(29%)
\
\
\
\
1
IDM Foundries
(71%)
968687
SCMS-WW-DP-9606
©1996 Dataquest
December 16,1996
f
For More information...
Internet address
Via fax
IJ O T ^ O l l ^ ^ S t
^^~—
(408) 468-8605
[email protected]
(408)954-1780
disclosure in whole or in part to other parties shall be made upon the written and express coment of Dataquest.
Perspective
Market Analysis
1996 Semiconductor Cost Model
AbStrSCfc This Perspective presents a semiconductor cost model useful for projecting the
costs of finished ICs. Following a description of the cost model, detailed examples of the
16Mb DRAM and a typical gate array cost structures, incorporating the latest component
cost forecast, are presented.
By Calvin Chang and Mark Giudici
Dataquest Semiconductor Cost Model Synopsis
Consumers of large quantities of semiconductors, electronic system manufacturers are very concerned with the costs of the semiconductor components in their electronic products. Electronic system manufacturers'
procurement departments often use cost model analysis in two ways: for
near-term cost/price optimization and for aiding long-range system cost
analysis. Electronic system vendors also use semiconductor cost models
during years of technology transition (for example, DRAM product configuration crossover) to position their procurement strategies in line with a
company's system offering.
The Dataquest semiconductor cost model uses 15 variables of semiconductor manufacture. These variables represent the significant cost influencers/
contributors along the long IC manufacturing process. The cost model is an
algorithmic portrayal of the value accrual process because a semiconductor
part is manufactured from processed wafer to wafer test, to chip assembly,
to final test, and to mark, pack, and ship.
Dataqyest
Program: Semiconductor Contract Manufacturing Services Woridwide
Publication Date: November 25, 1996
Filing: Perspective
(For Cross-Technology, file in the Semiconductor Regional Markets and Manufacturing
binder.)
Cost Model Applications
Semiconductor cost models are predominantly used to compile costs for
use in near-term contract negotiations. By identifying cost reduction areas,
price negotiation results often benefit the parts buyer. Applying experiencecurve theory to cost model applications can provide both short- and longterm cost/price scenarios, which can be a basis for strategic planning.
Strategic use of cost models in long-range planning has been underused
because of the indirect influence of cost over price as the time horizon
expands. Some users apply different learning curves to individual variables
in the model in combination with price forecast analysis. In this way, one
can better understand future trends and have alternative strategies at hand
if any variable actually differs from its expected trend line. We suggest this
use of cost modeling as a part of a proactive strategic procurement plan.
Cost versus Price
In a competitive market, semiconductor manufacturers pass cost reductions
on to their customers. Therefore, a knowledge of semiconductor costs and
cost trends is useful for projecting long-term procurement costs and
selecting the most cost-effective semiconductor device for a particular
application.
The cost/price relationship for semiconductor products varies from
product to product and from company to company with time as a function
of business conditions. One way to perform cost/price analysis is to monitor prices and costs over a period of several years for selected product types
and identify the average gross margin for these types. By using this procedure, semiconductor users can develop a good feel for the cost/price
relationship for the semiconductor products they buy.
Cost Factors
As mentioned earlier, the key factors affecting the cost of a finished semiconductor device are the semiconductor process, wafer size, die size, sort
yield, package type, and final test 5n[eld. The cost of a semiconductor incrementally increases by adding the cost of each step in the manufacturing
process to the finished product. Figure 1 illustrates the typical manufacturing process flow for semiconductor devices. The Dataquest cost model
categorizes costs into the following four areas:
• Wafer processing and die sort
• Assembly
• Final test
• Screening, qualification, mark, pack, and ship
The manufacturing process begins with a raw, improcessed silicon wafer
that costs from under $15 (100mm wafer) to about $120 (200mm wafer).
After completing more than 100 processing steps, the cost of a processed
wafer is 10 to 30 times the initial cost of the unprocessed wafer. The cost of a
processed wafer is a function of the following:
• Wafer size
• The number of masks
SCMS-WW-DP-9605
©1996 Dataquest
November 25,1996
• Technology requirements: process type (CMOS, BiCMOS, or bipolar),
process technology (for example, SRAM, logic, mbced-signal, DRAM,
dual voltage and others), process line width (for example, 0.5 micron),
number of interconnection layers (for example, two to four metal layers),
and number of poly layers
• Special process requirements: Tungsten plugs, salicide, chemical mechanical polishing layers, epitaxial wafers, additional poly and/or interconnect layers, and other special or custom processes
Complex relationships exist among all of these elements and the end cost of
the product. These interacting relationships also involve, in addition to
direct material and labor costs, the depreciation of the fabrication equipment (which accounts for over half of the total cost of a modem IC fab).
Other elements in the cost structure may include wafer output, capacity
utilization, process learrung curves within a fab, back-end test cost amortization, and royalty pajonents, if applicable, by process or device type.
Figure 1
Commercial and MIL-STD Manufacturing Flow
Commercial
Standard
Product
Silicon Waler
T
Processed Wafer
X
X
Military 201OE
Class B
1
Wafer Sort 100%
Commercial Wafer Prolie
T
Commercial Visual Inspection
I
Scrilse arid Assembly
I^^House
Specifications
Plastic
Package
Commercial Visual Inspection
I
Seal
Plastic
Mold
Visual Sort
Military
X
Assembly in
Hermetic Package
Military
24-Hour 150°C Bake
10 Temp. Cycles Constant
Acceleration 30K Gs,
Fine and Gross Leak
Class B
T
Bake 6 Hours 150°C
I
Final Test
Electrical 25°C
Go/No Go Test
Class B
Bum-in 160 Hours
Class B
Commercial
Limits
I
Final Visual inspection
T
aS'C DC Electricals
5% PDA
Class B
125»C and -SS'C DC Screen
and 25''C AC Screen
Class B
Mark, Pack. Ship
X
External Visual
* Key Cost Points
Military
961036
Source: Dataquest (October 1996)
SCMS-WW-DP-9605
©1996 Dataquest
November 25,1996
In general, the cost of a wafer increases with each mask layer required.
Additional mask layers could introduce more defects and decrease yields.
Naturally more complex processes result in more expensive dies. Table 1
lists the typical number of mask layers for many of ttie IC manufacturing
processes. Representing the vast majority of the world's IC production
capacity, CMOS is by far the most common of all the processes. Current
state-of-the-art CMOS processes are capable of manufacturing up to four
layers of poly for DRAM processes or up to five layers of metal interconnect
for logic device production. Today's multilayer-metal CMOS can be as complex as requiring more than 20 mask layers.
Wafer costs also increase as device features become smaller. However,
smaller features result in more die per wafer. Although the wafer cost will
be higher, the cost per function per chip often will be lower because of the
increased density.
Table 1
Number of IC Process Mask Layers
Process
Schottky TTL
Bipolar Linear
ECL
NMOS
HMOS
CMOS
HCMOS
BiCMOS
Single -Layer Metal
7
7 to 9
8
8
9
10
11
14
Multilay er Metal
9
9 to 11
10
10
11
12 to 22
13 to 16
16 to 20
Package Costs
The type of packaging a semiconductor device often makes up a large portion of the overall semiconductor cost. For example, going from a ceramic to
a plastic package using the same die will often halve the manufacturing
cost and related price. Table 2 shows the latest cost estimates for semiconductor packaging in 1996. This table highlights how different packaging
options can alter finished semiconductor pricing.
Cost Model Formula
Dataquest's semiconductor cost model uses the variables and algorithms
shown in Table 3 to estimate semiconductor costs. Because of the flexibility
of the model, a variety of semiconductor devices can be cost-modeled by
assigning the appropriate values to the variables indicated in Table 3 (wafer
size, geometry, processed wafer cost, die area, defect density, test cost, test
seconds, test heads, package cost, assembly yield, final test time, final test
cost, and final test yield).
SCI\/IS-WW-DP-9605
©1996 Dataquest
November 25,1996
CO
o
tn
a
-D
I
(O
O)
Table 2
Total (Die-Free) Assembled Package Cost, 1996 (Dollars per Package) Volume Production, More than
No. of
Viva
Plastic
DIP
CER
DIP
SideBraze
Ceramic
PGA
PlasUc
PGA
Plastic
Chip
Carrier
PLCC
Ceramic
Chip
Carrier
(Leadless)
LLCC
Ceramic
Chip
Carrier
(Uaded)
LCC
o
8
0.07
0.21
1.25
CJl
14
0.09
0.22
1.65
16
0.11
0.26
1.65
18
0,12
0.30
1.80
20
0.15
OJO
ZIO
22
0.18
0.35
Z55
1.20
24
0.20
0.41
185
IJO
1.75
28
0.23
0.49
3.40
0.21
1.50
32
032
0.68
3.95
0.29
40
0.35
1.00
4.95
44
0.36
48
0.50
@
52
CO
56
05
64
a>
o
CD
V)
TQFP
SOJ
SOIC
TSOP
lypel
0.06
0.20
1.15
0.10
0.20
0.90
1.20
0.11
0.19
1.00
1.30
0.19
1.10
1.45
0.31
6.20
•raop
lypell
ssop
0.55
0.21
0.14
0.29
0.28
0.15
0.40
030
0.21
0.47
0.34
0.22
0.50
0.55
037
105
0.38
035
0.55
0.63
0.43
1.70
2.40
0.40
035
0.60
0.70
2.30
190
0.40
0.42
0.72
2.45
3.25
4.65
1.52
TQFP
Irmn
Body
Ceramic
UAD
Metal
QUAD
0.46
0.75
0.50
0.58
053
0.61
0,60
0.60
3.10
3.75
Bod;
0.45
1.08
0.64
0.60
lj4i]iin
0.55
2.70
0.45
Plastic
QUAD
4.55
0.68
0.75
5.95
0.75
68
3.30
4.90
Z13
0.56
3.90
0.90
0.70
84
4.00
6.05
4.39
0.68
4.80
0.95
0.78
100
7.50
5.70
5.30
1.30
128
9.50
7.42
1.40
6.92
11.80
4.00
1.70
13.60
6.78
1.80
15.90
1.13
132
10.00
8.03
1.55
1.98
17.50
a93
144
10.90
9.58
1.80
1.99
19.50
9.75
160
15.20
10.64
25.40
1210
164
169
255
184
196
208
2,40
17.85
3.00
13y83
225
ia90
2.95
19.20
232
240
244
O
<
3
CD
308
lO
CJl
313
324
(Continued)
16.23
3.85
3i65
39.60
21.76
17.51
46.10
304
C3-
CO
C£>
<T)
21.30
256
296
30.90
3.25
50.10
5,80
24.47
CO
o
00
o
Table 2 (Continued)
Total (Die-Free) Assembled Package Cost, 1996 (Dollars per Package) Volume Production, More than
TJ
I
CO
ND.OF
en
o
352
Ol
36]
Fiiu
PluUc
DIP
CER
DIP
SideBiue
Ceramic
PGA
Plastic
PGA
Plastic
Chip
Cairier
PLCC
Ceramic
Chip
Cairier
(Leadlesa)
LLCC
Ceramic
Chip
Carrier
(Leaded)
LCC
SOJ
SOIC
TSOP
•lypel
TSOP
Type II
Plastic
SSOP QUAD
TQFP
1.4min
Body
TQFP
1mm
Body
Ceramic
UAD
Metal
QUAD
l
/
1
390.00
363
57.80
376
1
460.00
442
2
475
480
5m
80.64
55.44
39.56
3
3
A42
A42
A42
Cu
C151
@
CD
Lead Form
o
Wire
Ud
X3
Preform
TH
TH
TH
TH
J
O
<
3
aCD
ro
en
(O
CO
O)
J
A42/
LDCC
C194
Gull/
None
Gull/J
A42/
Cu
A42/
Cu
Cu
Gull/J
Gull
Gull
Gull
Gull
Gull
Au
a94
A42
Cu
Cu
A42
Cu
wit
GuU
Gull
Gull
AlCap
Au
Al
Au
Au/
Kovar
Au
Al
Au
Epoxy
Au/Kovar
Epolty
Epooty
Au
Epoxy
Au
Epoxy
Au
Epoxy
Al
Au/
Epoxy
Au
Epoxy
M
Cera
mic
Al
Au/
Kovar
Au
Opoxy
Upoxy
Epolty
Al
Au/
NA
Class
Au/Sn
Au/Sn
NA
NA
Au/Sn
NA
NA
NA
NA
NA
NA
NA
NA
Au/Sn
NA » Not applicable
CD
2
672
Package Materials
C194
Leadframe
(D
a>
44.45
625
Au
FCovar
NA
Semi conductor Contract Manufacturing Services Worldwide
Table 3
Semiconductor Cost Model
Section
Wafer Sort
Wafer Size (Diameter in Inches)
Capacity Utilization (%)
Geometry (Microns)
Processed Wafer Cost ($)
Die Area (Square MiUimeters)
Defect Derwity (Defect per Square Centimeter)
Gross Die per Wafer
Processed Wafer Cost per Gross Die ($)
Test Cost per Hour ($)
Test Seconds per Die
Test Heads
Wafers Tested per Hour
Wafer Sort Cost per Gross Die ($)
Cost per Gross Die at Wafer Sort ($)
Wafer Sort Yield (%)
Cost per Sorted Die ($)
Assembly
Material Cost/Sorted Die + Package Cost ($)
Number of Package Pins
Assembly Yield (%)
Cost per Assembled Die ($)
Final Test
Test Time per Die (Seconds)
Cost per Hour of Testing
Test Cost per Die (USD$)
Final Test Yield (percent)
Cost per Final Tested Unit (USD$)
Mark, Pack, and Ship
Cost at 99 Percent Yield (Percent)
Total Fabrication Cost per Unit ($)
Foreign Market Value (FMV) Formiila Adders
R&D Expense (15 Percent)
SG&A Expense (10 Percent)
Profit (8 Percent)
Constructed FMV
Algorithm or Variable
=A
=B
=C
=D
=E
=F
= G = (0.8*pi*(A/2)^2»(25.14)^2)/E
= H = (D/G)
=1
=J
=K
= L = 3600*K/(G*J)
= M = a / L) /G
= N = (H+M)
= O = ((l-exp(-F*E»0.01))/(F*E»0.01))^2 *100
= P = N*100/O
=Q
=R
=S
= T = (P+Q)/S*100
=U
=v
= W = U*V/3600
=x
= Y = (T+W)/X*100
= Z = (Y*0.01)
= AA = Y+Z
= AB = 0.15*AA
= AC = (AA + AB) * 0.10
= AD = (AA+AB+AO* 0.08
= AE = (AA+AB+AC+AD)
SCMS-WW-DP-9605
©1996 Dataquest
November 25,1996
Cost Model Examples
Tables 4 and 5 illustrate how the cost models can highlight the cost differentials for two very different product types: a 60,000-gate ASIC versus a 16Mb
DRAM (projected over the bulk lifetime of the part from 1995 to 1998).
These models substitute variables with values fliat Dataquest believes to be
most reflective of current market/industry conditions. Projected values for
future years are based on line width shrirJic, defect density improvement,
and test cost forecast that are in part based on historical trends of previous
product generations.
Table 4
1996 ASIC Cost Model (60^00 Gates; Excludes Nonrecurring Engineering Charges)
Wafer Sort
Wafer Size (Inches Diameter)
Die Area (Square Millimeters)
Number of Masks
Defect Density (Defect per Square cm)
Gross Die per Wafer
Processed Wafer Cost per Gross Die ($)
Wafer Sort Yield (%)
Assembly
Material Cost/Sorted Die ($)
Number of Pins
Assembly Yield (%)
Final Test
Test lime per Die (Sec.)
Cost per Hour of Testing ($)
Test Cost per Die ($)
Final Test Yield (%)
Cost per Final Tested Unit ($)
Cost at 99 Percent Yield (%)
Total Fabricated Cost per Net Unit ($)
Price Formula Adders
R & D Expense (35 Percent)
S G & A Expense (15 Percent)
Profit (30 Percent)
Constructed Foreign Market Value (FMV)
PQFP-208 0.8
Micron CMOS
PQFP-208 0.5
Micron CMOS
PQFP-208 0.8
Micron CMOS
PQFP-208 0.5
Micron CMOS
6
350
70
16
0.30
204
1.71
76
15
1.18
0.32
2.03
81
2.50
6
450
45
16
0.35
318
1.42
76
15
0.76
0.32
1.73
86
2.02
8
700
70
16
0.25
363
1.93
76
15
0.66
0.32
2.24
84
2.67
8
900
45
16
0.30
565
1.59
76
15
0.42
0.32
1.91
88
2.18
2.40
208
90
5.44
2.40
208
90
4.92
2.40
208
90
5.63
2.40
208
90
5.09
10
76.00
0.21
90
6.28
10
76.00
0.21
90
5.70
10
76.00
0.21
90
6.49
10
76.00
0.21
90
5.89
0.06
6.34
0.06
5.75
0.06
6.56
0.06
5.95
2.22
1.28
2.95
12.80
2.01
1.17
2.68
11.61
2.29
1.33
3.05
13.23
2.08
1.21
2.77
12.01
SCI\/lS-WW-DP-9605
©1996 Dataquest
November 25,1996
Table 5
16MB DRAM Cost Model, 1995-1996
Wafer Sort
Wafer Size (Inches Diameter)
Capacity Utilization (%)
Geometry (Microns)
Die Area (Square Millimeters)
Active Area Factor
Defect Density (Defect per Square cm)
Gross Die per Wafer
Processed Wafer Cost per gross Die ($)
Test Heads
Wafer Sort Yield (Percent)
Assembly
Material Cost/Sorted Die- SOJ Package ($)
Number of Pins
Assembly Yield (%)
Final Test
Test Time per Die (Second)
Cost per Hour of Testing ($)
Test Cost per Die ($)
Final Test Yield (%)
Cost per Final Tested Unit ($)
Cost at 99 Percent Yield (%)
Total Fabricated Cost per Net Unit ($)
1995
1996
1997
1998
8
100
0.6
1400
95
1.0
0.70
268
5.2
110.0
170
4
0.317
1.3
6.5
53
1224
8
100
0.40
1150
80
1.0
0.25
318
3.6
100.0
160
4
0.283
1.1
4.7
82
5.76
8
100
0.35
1200
65
1.0
0.17
391
3.1
90.0
160
4
0.230
1.0
4.1
90
4.54
8
100
0.30
1300
60
1.0
0.11
424
3.1
80.0
160
4
0.212
0.9
4.0
94
4.23
0.38
26
99
12.75
0.38
26
99
6.20
0.38
26
99
4.97
0.38
26
99
4.65
30
90
0.75
85
15.88
30
90
0.75
90
7.72
20
90
0.50
95
5.76
20
90
0.50
95
5.42
0.16
16.04
0.08
7.80
0.06
5.82
0.05
5.48
Dataquest Perspective
The individual unit cost of a semiconductor is the most tangible variable in
the total cost of a semiconductor device. Understanding cost models and
the variables that go into a model allows for more efficient and educated
allocation of resources, both in plaiming and in the execution of those plans.
By appljdng different assumptions to different variables in the model, one
may uncover areas of cost not considered important initially. Often, many
different "what if scenarios are required to best use cost modeling in longrange system analysis. As different suppliers improve yields and lower
costs, individual company price points can hint at efficiency gains or losses
for differing technologies (ASICs) or the next-generation products.
SCMS-WW-DP-9605
©1996 Dataquest
November 25,1996
10
Models are inherently flexible. If historical data differs from calculated
model results, updates quickly correct inconsistencies. Checking and
updating a model against known data ensures that the model is correct and
current. Revisions to the existing algorithms to match reality should better
be made only when basic changes occur, not for perturbations that deviate
from the norm.
Those in procurement use cost modeling and experience-curve analysis for
both short-term and long-term contract negotiations. The current transition
in market dynamics from a seller's to a more balanced market again allows
use of cost-base pricing. Good communication with suppliers regarding
yield improvements or other cost savings in combination with cost model
use can potentially allow price reductions for astute procurement groups.
Periodic "reality checks" of the model assure planners that they used the
best information available at the time. Using cost modeling in this way provides a tangible benchmark for procurement groups to use with their suppliers in terms of cost and price reduction for critical semiconductor parts.
Internet address
Via fax
Dataquest
(408) 468-8605
[email protected]
(408) 954-1780
The content of this report represertfs our interpretation and analysis of information genially available to the public
It does not contain material provided to us in cor\fidence by our clients. Reproduction or disclosure in whole or in
©1996 Dataquest—^Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nidsen Company
Perspective
UJ
3
N
2
111
Competitive Analysis
> •
Q.
^
8<
LU CC
d <
Worldwide Fabless Semiconductor Company Directory
Abstract: One of the fastest-growing sectors of the semiconductor industry, the fabless
semiconductor companies have seen their ranks swell during the past several years. Nearly
200 fabless companies, encompassing North America, Asia/Pacific, and Europe, are featured
in the 1996 Dataquest Worldwide Fabless Semiconductor Company Directory.
By Calvin Chang
Worldwide Fabless Directory
Table 1 shows North American fabless companies and their products.
Table 1
North American Fabless Companies (Millions of U.S. Dollars)
Company
3Dfx Interactive Inc.
415 Clyde Ave.
Suite 105
Mountain View, California 94043
8x8 Inc. (IIT—Integrated
Information Technology)
2445 Mission College Blvd.
Santa Clara, California 95054
ACC Microelectronics
2500 Augustine Dr.
Actel Corporation
955 East Arques Ave.
Sunnyvale, California 94086
Year
Country Founded
1994
U.S.
IPO Stock
Year Symbol
P
1995
Revenue
U.S.
1987
P
44
U.S.
1987
P
40
U.S.
1994 ACTL
108
Product and Market
3-D graphics accelerators
exclusively for the
entertainment market, for
video games only
MPAs for multimedia and
commuiucations systems
Microcomponents
FPGAs
(Continued)
DataQuest
Publication Date: September 23,1996
Filing: Perspective
(For Cross-Technology, file in the Semiconductor Regional Markets and Manufacturing binder)
Table 1 (Continued)
Company
Adaptec Inc.
691 S. Milpitas Blvd.
Milpitas, California 95035
Advanced MOS Technology, Inc.
2345 Harris Way
San Jose, California 95131
Advanced Photonix Inc.
1240 Avenida Acaso
Camarillo, California 93012
AHA (Advanced Hardware
Architectures)
2365 NE Hopkins Court
Pullman, Washington 99163-5601
Alesis Semiconductor Corporation
3630 Holdrege Ave.
Los Angeles, California 90016
Alliance Semiconductor
3099 North First St.
Altera Corporation
2610 Orchard Parkway
San Jose, California 95134-2020
AMP Sensors
470 Friendship Road
Harrisburg, Pennsylvania 17111
Aptek Williams
700 NW 12th Ave.
Deerfield Beach, Florida 33442
Aptix Corporation
2880 North First St.
Aptos Semiconductor
2254 North First Street
Year
Country Founded
1981
U.S.
U.S.
1991
U.S.
1988
U.S.
1988
IPO Stock
Year Symbol
1986 ADPT
1995
Revenue
124
S
API
6.8
P
Product and Market
Accelerators and controllers
for multimedia, database
backup, and networking
DSPs for sound add-in
cards, motherboards, and
musical instruments
LAAPD, VAPDs,
Photodiodes for light
1
detection used in industrial,' > J
medical, military, space,
science, and commercial
applications
Coprocessors for error
correction coding
t
u"7
U.S.
1985
U.S.
1985
P
'J
1
T ^
1993 ALSC
1988 ALTR
U.S.
220
402
,P
U.S.
U.S.
1969
U.S.
1989
U.S.
1993
Arcus Technology Inc.
U.S.
1885 Lundy Ave.
Arithmos Inc.
U.S.
2730 San Tomas Expwy., Ste. 210
Santa Clara, California 95051-0952
Array Microsystems Inc.
U.S.
987 University Ave.
Los Gatos, California 95030
1987
P
Sensors
4
Thick-film hybrid circuits,
communications
components
FPICs
P
SRAMs, high-speed
miniprocessors, speech and
speaker recognition, neural
net technology circuits
Custom ICs, MPEGs
P
Mixed-signal, chipsets for
video compression
applicatioiis
DSP, ICC, MEC
1993
1990
High-performance memory
and memory-intensive logic <
products
PLDs
(Continued)
SCMS-WW-DP-9604
©1996Dataquest
September 23,1996
1^
Table 1 (Continued)
Company
ASPEC Technology Inc.
830 E. Arques Ave.
Year
Country Founded
U.S.
1991
IPO Stock
Year Symbol
P
1995
Revenue
ATY
ATI Technologies
33 Commerce Valley Dr. East
Thomhill, Ontario, L3T 7N6
Aura Vision Corporation
47865 Fremont Blvd.
Fremont, California 94538
Aureal Semiconductor
(Formerly Media Vision)
4245 Technology Dr.
Benchmarq Microelectronics Inc.
17919 Waterview Parkwray
Dallas, Texas 75252
Canada
1985
U.S.
mm
U.S.
^
U.S.
1989
1995 BMRQ
Brooktree Corporation
9868 Scranton Road
San Diego, California 92121
U.S.
1981
1991 BTRE
120
C-Cube Microsystems
1778 McCarthy Blvd.
U.S.
1988
1994 CUBE
124.6
1985
1993 CATS
49
California ASIC (Division of Jaymar ) U.S.
13845 Alton Parkway, Suite B
Irvine, California 92718
Catalyst Semiconductor
U.S.
(LS2—Logical Silicon Solutions)
1250 Borregas Avenue
Celerix Inc.
U.S.
370 N. Westlake Blvd, Ste. 220
Westlake Village, California 91362
Chip Express
U.S.
2323 Owen St.
Chips & Technologies Inc.
U.S.
2950 Zanker Road
Chromatic Research Inc.
U.S.
615 Tasman Dr.
Sunnyvale, California 94089-1707
Video processors
Audio/visual ICs for 3-D
audio technology
AURL
1996
1989
1984
1993
Product and Market
ASICs for physical cell
libraries for EDA software,
memory, and FIFO
compilers
Graphics accelerators
Battery management
products, NVSRAM
products, RTC products,
mixed-signal (analog and
digital) ICs
High-performance digital
and mixed-signal ICs for
graphics, imaging,
multimedia, and
communications
Processors, decoders, and
encoders for video and still
images in consumer
electronics, computers, and
communications
Gate arrays. X-ray
lithography
EEPROMs, NVRAMs, and
flash memories
High-performance analog
and mixed-signal ASICs
P
1985 CHPS
P
High-performance ASICs
138
Video/graphics controllers
and accelerators, chipsets for
PCs
Media processors
(Continued)
SCi\/IS-WW-DP-9604
©1996Dataquest
September 23,1996
Table 1 (Continued)
Company
Chrontel Inc.
2210 O'Toole Ave.
Cirrus Logic Inc.
3100 W. Warren Ave.
Fremont, California 94538-6423
Qarkspur Design Inc.
12930 Saratoda Ave.
Suite B9, Saratoga, California
95070-4661
Colorado Micro Display
55 Roberts Road, Bldg. G
Los Gatos, California 95030
Comlinear Corp.
4800 Wheaton Dr.
Fort Collins, Colorado 80525
CommQuest Technologies Inc.
527 Encinitas Blvd.
Encinitas, California 92024-3740
CORSAIR Microsystems
2005 Hamilton Ave.
Suite 130, San Jose, California
95125
CPU Technology Inc.
4900 Hopyard Road
Suite 300, Pleasanton, California
94588
CREE Research Inc.
2810 Meridian Parkway
E>urham, North Carolina 27713
Crosspoint Solutions
694 Tasman Dr.
Cubic Memory Inc.
27 Janis Way
Scotts Valley, California 95066
Cyrix Corporation
2703 N. Central Expressway
Richardson, Texas 75085-0118
Datapath Systems Inc. (DPS)
2334 Walsh Ave.
Dialight Corporation
1913 Atlantic Ave.
Manasquan, New Jersey 08736
Year
Country Founded
U.S.
1986
IPO Stock
Year Symbol
U.S.
1984
1988 CRUS
U.S.
1988
P
U.S.
1996
P
Semiconductors for flat
panel displays
F
Mixed-signal, linear
U.S.
U.S.
1991
U.S.
1994
U.S.
1989
U.S.
1987
1995
Revenue
16
1,002
10+
Product and Market
Mixed-signal ICs for
graphics, video, and audio,
high-performance clocks
Multimedia,
communications, mass
storage, and data acquisition
ICs
DSP cores for modems,
voice mail, and disk drivers
ICs for v^dreless voice and
data, cordless telephony,
interactive cable modem,
and satellite
communications
Cache memory for PCs
Processors
Silicon carbide (SiC) ICs
(LEDs)
1993 CREE
•
U.S.
2
U.S.
1989
U.S.
1988
U.S.
1994
P
1993 CYRX
P
U.S.
FPGAs (customerprogrammable ASICs)
Memories for PCs
212
High-performance
processors
CMOS and BiCMOS mixedsignal VLSI circuits
LED indicators for
telecommunications, data
processing, industrial,
computer, diagnostic, and
bacldightine applications
(Continued)
SCIVIS-WW-DP-9604
©1996Dataquest
September 23,1996
Semiconductor Contract iVianufacturing Services Worldwide
Table 1 (Continued)
Company
Displaytech Inc.
2200 Central Ave.
Boulder, Colorado 80301
DSP Group Inc.
3120 Scott Blvd.
Edge Semiconductor
9868 Scranton Road
Electronic Designs Inc.
(EDI, Division of Crystallume)
One Research Dr.
Westborough, Massachusetts
01581
Emulex
3535 Harbor Blvd.
Costa Mesa, California 92626
ESS Technology Inc.
48401 Fremont Blvd.
ETEQ Microsystems Inc.
1900 McCarthy Blvd.
Suite 110, Milpitas, California
95035-7413
EXAR Corporation
48720 Kato Road
Exponential Technology
2075 Zanker Road
Focam Technology
3050 Blvd. Cartier West
Laval, Quebec, H7V 1J4
Focus Semiconductor Inc.
768 N. Bethlehem Pike, Ste. 301
Lower Gwynedd, Pennsylvania
19002-2659
G-Link Technology
2701 Northwestern Parkway
Galileo Technology Inc.
1735 N. First St., Suite 308
Year
Country Founded
1984
U.S.
U.S.
1987
U.S.
1994
IPO Stock
Year Symbol
P
1994 DSPG
EDIX
43
EMLX
1979
1995 ESST
U.S.
60
P
U.S.
U.S.
1995
Revenue
106
7
U.S.
Product and Market
High-performance electrooptic components
Digital sigrial processing ICs
for digital speech
ATE (Bipolar and CMOS)
High-density, highperformance memory
devices for communications
(SRAMs and monolithic
devices)
Communication
coprocessors, SCSI chipsets,
LAN and WAN
components, data storage
collectors
Highly integrated, mixedsignal ICs for multimedia
Microcomponents
Analog, digital, mixedsignal, and SCF ICs
U.S.
1971
146
U.S.
1993
14
Canada
1992
P
Analog, digital, and mixedsigrial ICs, ASICs
U.S.
1994
$
Mixed-signal ICs for ASIC
market
U.S.
1994
U.S.
1993
Microprocessors for highperformance power PCs
Enabling technologies:
memory and logic for
computers, multimedia,
mass storage, and telecom
markets (SRAMs, DRAMs);
nonmemory ASIC products
High-performance core
logic, data communications
controllers, ASM buffers
(Continued)
SCI\/IS-WW-DP-9604
©1996Dataquest
September 23,1996
Table 1 (Continued)
Company
Genesis Microchip Inc.
200 Town Centre Blvd., Suite 400
Markham, Ontario L3R 8G5
Gennum Corporation
PO Box 489, Station A
Burlington, Ontario, L7R 3Y3
I-Cube Inc.
2605 S. Winchester Blvd.
Campbell, California 95008
Ideal Semiconductor
816 North Swing
Liberty Lake, Washington 99019
ICT Inc. (Formerly International
CMOS Technology Inc.)
2123 lUngwood Ave.
Information Storage Devices Inc.
(ISD)
2045 Hamilton Ave.
Integrated Circuit Systems Inc.
(ICSInc.)
1271 Parkmore Ave.
Integrated Silicon Solution Inc.
(ISSI)
680 Almanor Ave.
Year
Country Founded
1987
Canada
IPO Stock
Year Symbol
1995
Revenue
36
Canada
1973
U.S.
1990
p
U.S.
1987
P
U.S.
1983
P
U.S.
1987
1995 ISDI
55.5
U.S.
1976
1991 ICST
96
1995 ISSI
158
U.S.
Integrated Telecom Technology Inc. U.S.
(IgT)
18310 Montgomery Village
Gaithersburg, Maryland 20879
Irvine Sensors Corp.
U.S.
3001 Red Hill Ave., Bldg. 3
IXYS Corporation
U.S.
3540BassettSt.
1991
1980
1983
P
1982 IRSN
P
Product and Market
ICs for high-performance,
graphics/visualization and
imaging
High-performance ICs for
video and signal processing
ASIC switch sets and PSIDs
for telecommunications,
networking, DSPs, image
processing, ATE
Digital and analog
microcircuits
17
Logic
High-density storage and
mixed-signal ICs for voice
recording and playback and
batteryless message storage
Mixed-signal ICs for clocks,
ASICs, multimedia, and data
communications
High-performance SRAMs;
EPROM, EEPROM, flash for
networking, PCs,
teleconununications, data
communications,
instrumentation, and
consumer products
Memory, microcomponents,
logic, mixed-signal, linear,
discretes, ATM switches,
some software
Optical smart sensors, 3-D
stack memory, stack
processors
MOSFETs, IGBTs, FREDs,
smart power ICs, thyristors,
rectifiers, and diodes for the
motion control and power
conversion industries
(Continued)
SCMS-WW-DP-9604
(g>1996Dataquest
September 23,1996
Semiconductor Contract IVlanufacturing Services Worldwide
Table 1 (Continued)
Company
Lattice Semiconductor
5555 Northeast Moore Court
Hillsboro, Oregon 97124-6421
Year
Country Founded
1983
U.S.
IPO Stock
Year Symbol
LSCC
1995
Revenue
187
Product and Market
ISPs, E2CMOS PLDs for
conununications, data
processing, computer
peripherals,
instrumentation, industrial
controls, and military
systems
ASSPs: Analog and digital
mixed-signal ICs for
networks, wireless, cable,
telephony, digital Internet
access, LAN, WAN, highspeed transmissions
High-performance, digital
ICs: DSPs and SRAMs
Level One Communications
9750 Goethe Road
Sacramento, California 95827
U.S.
1985
1993 LEVL
78
Logic Devices Inc.
628 E. Evelyn Ave.
Maxford Semiconductor
1762 Technology Dr., Suite 128
Medianinx Semiconductor Inc.
100 View St., Suite 101
Mountain View;, California 94041
Micro Linear Corporation
2092 Concourse Dr.
U.S.
1983
LOGC
18
Micron Quantum Devices
(Parent: Micron Technology Inc.)
2338 Walsh Ave.
MMC Networks
2855 Kifer Road, Suite 200
MOSAID Technologies Inc.
2171 McGee Side Road
Carp, Ontario KOA ILO
MoSys Incorporated
2670 Seely Road
Music Semiconductors Inc.
1150 Academy Park Loop
Suite 202
Colorado Springs, Colorado 80910
U.S.
and mixed-signal ICs to
communications, computer,
and industrial markets
(bipolar, CMOS, BiCMOS)
for networks, video, power
supply, battery
management, motor
controllers
Flash designer
U.S.
ATM switch chipsets
U.S.
U.S.
1994
U.S.
1983
Canada
1975
U.S.
1991
U.S.
1986
P
Communications ICs
P
Digital signal processors for
consumer audio applications
1994 MLIN
MSD
54
Memory ICs: DRAM, ASM,
HDRAM
Memory ICs: DRAM,
MDRAM for PC graphics
P
ICs for electronic and
computer industries
(Continued)
SCI\/IS-WW-DP-9604
©1996 Dataquest
September 23,1996
8
Table 1 (Continued)
Company
NeoMagic Corporation
3260 Jay St.
Year
Country Founded
1993
U.S.
IPO Stock
Year Symbol
1995
Revenue
Product and Market
Memory/logic ICs (DRAM)
for notebook computers,
graphics and video
accelerator ICs for notebook
and desktop PCs
Content-Addressable
Memories for networking
applications
Analog and mixed-signal
ICs for wireless, infrared
communications
U.S.
1995
U.S.
1995
S
U.S.
1994
S
3-D technology for PC
games
U.S.
1993
P
U.S.
1987
OPTi Inc.
888 Tasman Dr.
U.S.
1989
Pacific Coast Engineering (PCE)
PO Box 1956
Thousand Oaks, California 91358
U.S.
1989
Peregrine Semiconductor Corp.
6175 Nancy Ridge Drive
U.S.
1990
Pericom Semiconductor
2380 Bering Dr.
U.S.:
1990
PMC-Sierra (Subsidiary of Sierra
Semiconductor)
105-855 Baxter Place
Bumaby, British Columbia
V5A4V7
Canada
1992
Multimedia accelerator ICs
for PCs for 2-D and 3-D
graphics
Graphics controllers
(SVGA); CD-ROM
controllers; MPEGs for
optical storage,
compression / imaging,
video/graphics and PC
audio
Core logic and multimedia
chipsets and graphics
controllers for audio,
graphics, and storage
Low-frequency ICs in
wireless receivers and
transmitter systems for
satellite TV reception and
wireless TV antennas
High-performance ICs
(FPGA and SRAM);
frequency synthesizer ICs
(microcommunicators) for
wireless systems
High-performance digital
PCs, workstations,
peripherals, and networking
PDH interface ICs;
SONET/SDH interface ICs;
ATM interfaces
Nova Logic Inc.
465A Fairchild Dr., Suite 101
Novalog Inc.
(Parent: Irvine Sensors Co.)
151 Kalmus Drive, Unit Kl
Nu Vision Technologies Inc.
(Subsidiary of Vikay Industrial)
1815 NW 169th Place, Bldg. 3060
Beaverton, Oregon 97006
NVidia Corp.
1226 Tiros Way
Oak Technology
139 Kifer Court
Surmyvale, California 94086
1995 OAKT
OPTI
84
167
Sole P.
25
S
(Continued)
SCMS-WW-DP-9604
©1996Dataquest
September 23,1996
Table 1 (Continued)
Company
Power Senuconductors Inc.
6352 Corte del Abeto, Suite F
Carlsbad, California 92009
Purdy Electronics
720 Palonaar Ave.
QLogic Corp. (Formerly Emulex
Micro Devices—HMD)
3545 Harbor Blvd.
Quality Semiconductor (QSI)
851 Martin Ave.
Year
Country Founded
U.S.
1968
IPO Stock
Year Symbol
P
1995
Revenue
Product and Market
Power semiconductors
U.S.
1995
U.S.
1980
1994 QLGC
57.6
U.S.
1988
1994 QUAL
m
QT Opto Electronics
(Formerly Quality Technologies
Corp.)
610 N. Mary Ave.
QuickLogic Corp.
2933 Bunker Hill Lane, Ste. lOOA
Rambus Inc.
2465 Latham St.
Rendition Inc.
1675 N. Shoreline Blvd.
RF Monolithics Inc.
4441 Sigma Road
Dallas, Texas 75244
U.S.
1978
60
LEDs, LCDs for computers,
medical, and industrial
instrumentation
Controllers, processors for
minicomputers,
workstations, and high-end
PCs
High-performance logic
(FCT) and logic-intensive
specialty memory ICs
(RAMs) for networking, PC,
workstations
Optical ICs
U.S.
1988
16
FPGAs
U.S.
1990
DRAMs for graphics and
video in PCs
U.S.
1993
U.S.
1979
1994 RFMI
Ross Technology Inc.
5316 Highway 290 W., Suite 500
Austin, Texas 78735
U.S.
1988
1995 RTEC
3-D graphics processors for
PCs and multimedia-based
systems
SAW devices and RF
modules for low-power
wireless, high-frequency
timing, and
telecommunications
RISC microprocessors for
SPARC workstations,
servers, and embedded
applications serving
computationally intensive
markets (scientific,
engineering, file server, and
high-end commercial
markets)
S3 Inc.
U.S.
2770 San Tomas Expressway
1989
1993 Sill
P
39
315
Multimedia acceleration
solutions for PCs
(Continued)
SCMS-WW-DP-9604
(g)1996Dataquest
September 23,1996
10
Semiconductor Contract !\/lanufacturing Services Worldwide
Table 1 (Continued)
Company
SanDisk Corporation
140 Caspian Court
Year
Country Founded
1988
U.S.
Seeq Technology Corporation
47200 Bayside Parkway
U.S.
1981
Sensory Circuits Inc.
U.S.
1994
Sierra Semiconductor
2075 N. Capitol Ave.
U.S.
1984
Silicon Engines Inc.
844 E. Charleston, Suite 200
Palo Alto, California 94303
Silicon Magic Corp.
20300 Stevens Creek Blvd.
Suite 400
Cupertino, California 95014
Silicon Storage Technology Inc.
(SST)
1171 Sonora Court
Single Chip Systems Corp. (SCS)
16885 W. Bernardo Dr., Ste 295
U.S.
1986
U.S.
1994
IPO Stock
Year Symbol
1995 SNDK
1995
Revenue
27
1983 SEEQ
P
141
1991 SERA
2.5
P
•
U.S.
1989
U.S.
1992
P
Siquest Inc.
1731 Technology Dr., Suite 550
U.S.
1991
P
SiRF Technology Inc.
107 San Zeno Way
U.S.
1995
Solidas Corp.
100 Century Centre Court
Suite 503
U.S.
1992
1995 SSTI
39
Product and Market
Flash memory data storage
products for industrial,
communications, highly
portable computing, and
consumer electronics
LAN ICs for networking
connectivity (controllers,
media interface adapters,
and transceivers)
Interactive Speech ICs for
speech recognition, speech
and music synthesis, voice
recording and playback,
speaker verification
ICs for broadband
infrastructure, LAN, and
network access or user
interface
High-performance parallel
processors for visual
computing systems
EDODRAMsfor
graphic/video applications
EEPROMs and flash
memories
Interactive identification
(I/I) in inventory control,
asset management,
document management, and
ticketing systems for highvolume identification
markets
CMOS gate arrays, FPEG
conversions for consumer
electronics,
telecommunications, and
industrial controls and ATE
Chipsets and DSP chips for
consumer GPS navigation
and wireless
communications markets
ZRAM for video, chipsets,
DSPs, HDD files, and
graphics chip memories
(Continued)
SCI\/IS-WW-DP-9604
©1996Dataquest
September 23,1996
11
Table 1 (Continued)
Company
Space Electronics Inc.
4031 Sorrento Valley Blvd.
Space Power Electronic Inc.
305 Jeffrey Lane
Glen Gardner, New Jersey 08826
Stanford Telecom
1221 Grossman Ave.
Swift Microelectronics Corp.
San Jose, Califorrua 95134
Syclone Semiconductor
2115 De Le Cruz Blvd.
Teltone Corporation
22121 20th Ave. SE
Bothell, Washington 98021
The Engineering Consortium Inc.
3130B Coronado Dr.
TranSwitch Corp.
8 Progress Dr.
Shelton, Connecticut 06484
Year
Country Founded
U.S.
1992
IPO Stock
Year Symbol
E
1995
Revenue
3
U.S.
1960
U.S.
1973
U.S.
1992
P
Single mask, customization
gate arrays
U.S.
1995
S
SRAMs
U.S.
1968
U.S.
1983
U.S.
1988
1995 TXCC
17.4
Trident MicroSystems Inc.
U.S.
189 N. Bernardo Ave.
Tseng Labs Inc.
U.S.
6 Terry Dr.
Newtown, Peiuisylvania 18940
1987
1992 TRID
139
1984
TSNG
105
Tundra Semiconductor Corp.
603 March Road
KaIâta, Ontario K2K 2M5
Ultra Sound Technology Assoc.
644 Towle Place
Palo Alto, California 94306
1995
Canada
U.S.
P
Product and Market
Advanced function, highest
density, monolithic,
radiation-hardened ICs
(memory and
microprocessor) for
spacecraft
Microwave and discrete
signal ICs
All technologies required for
communications systems
1983 STEL
DSPs, analog ICs for
telecommunications
TTNC
P
:p
Mixed-signal ICs for hearing
devices, modems, and
military smart power
High-speed, mixed-signal
and digital ICs for
broadband
telecommunications and
data communications
applications
Video/graphics accelerators,
controllers, and multimedia
video processors for IBM
PCs
Video graphics controller
and processor ICs for
advanced graphics and
multimedia applications in
PCs
Bus bridging and encryption
ICs for high-speed data
ciphering systems
Radiation-hardened custom
and ASIC ICs, semicustom
and military-standard VLSIs
to external high-reliability
aerospace and defense
companies
(Continued)
SCMS-WW-DP-9604
©1996Dataquest
September 23,1996
Semiconductor Contract l\/lanufacturing Services Worldwide
12
Table 1 (Continued)
Year
Company
Country Founded
Unichip Inc.
1991
U.S.
244 E. Capitol Ave.
United Technology Microelectronics U.S.
1980
Co. (UTMC)
1 Financial Plaza
Hartford, Connecticut 06101
US MikroChips (USM)
15 Sutton Road
Webster, Massachusetts 01570
V3 Semiconductor Inc.
2348 Walsh Ave., Suite G
Vadem Ltd.
1960 Zanker Road
U.S.
1993
1995
Revenue
UTX
1983
U.S.
1987
U.S.
1995
Vivid Semiconductor Inc.
7400 W. Detroit St., Suite 100
Chandler, Arizorw 85226
U.S.
1993
WSI (Formerly WaferScale
Integration Inc.)
47280 Kato Road
U.S.
1984
P
Weitek Corporation
2801 Orchard Parkway
U.S.
1991
Western Design Center Inc. (WDC)
2166 E. Brown Road
Mesa, Arizona 85213
U.S.
1978
P
P
37
WWTK
P
Product and Market
MOS logic ASICs for PCs
Semicustom and military
standard VLSIs, radiationhardened custom and ASICs
to military and space
systems
High-volume Hall-effect
sensors and power transistor
arrays
Chipsets for RISC processors
U.S.
U.S.
Via Technologies Inc.
5020 Brandin Court
ViComp Technology Inc.
1580 Oakland Rd, Suite C-206
IPO Stock
Year Symbol
37
Microprocessors, display
controllers, PCMCIA host
adapters, and PC card
controllers for portable
systems
Chipsets for multiprocessor,
desktop, and portable PC
systems
MPEGs in consumer and
computer systems for video,
PC multimedia, satellite and
cable receiver boxes,
compressed video and audio
data
Extended voltage-range
column drivers for LCD
panels for notebook and
CRT replacement flat-panel
displays
High-performance, fieldprogrammable/MCU
peripheral ICs (PSD
microcontrollers, PROMs,
EPROMs) for
technologically advanced
electronics companies
Processors and controllers to
accelerate the performance
of PCs, workstatioris, and
laser printers
Microprocessors and
controllers for high-volume
or special-purpose solutions
(Continued)
SCl\/IS-WW-DP-9604
©1996Dataquest
September 23,1996
13
Table 1 (Continued)
Company
Western Digital Corporation
8105 Irvine Center Dr.
Irvine, California 92718
Xilinx Inc.
2100 Logic Dr.
Year
Country Founded
U.S.
IPO Stock
Year Symbol
U.S.
1984
1990 XLNX
Zoran Corporation
2041 Mission College Blvd.
Suite 255
U.S.
issi
ZRAN
Zycad Corporation
47100 Bayside Parkway
Fremont, California 94538-9942
U.S.
mt
ZCAD
1995
Revenue
239
520
2
Product and Market
Microcomponents
FPGAs and CPLDs for
computers peripherals,
telecommunications,
industrial control, and
instrumentation and military
markets
High-performance DSPs for
leading-edge compression
solutions to high-volume PC
and consumer applications
CPEGs, MPEGs, and AC-3s)
FPGAs
P = Privately held company
S = Subsidiary
Source: Dataquest (Septemt)er 1996)
Table 2 shows European fabless companies and their products.
Table 2
European Fabless Companies (Millions of U.S. Dollars)
IPO
Founded Year
1994 P
Company
3D Labs Inc.
181 Metro Drive, Suite 520
Country
United
Kingdom
ARM (Advanced RISC Machines
Ltd.)
CSEMIC Design
Jaquet-Droz 1
Neuchatel, CH-2007
United
Kingdom
Switzerland
TCS (Parent: Thomson-CSF)
38521 Saint Egreve
Calex, France
France
1995
Revenue Product and Market
3-D graphics processors and
accelerators and software for
multimedia, CAD, simulation,
virtual reality, interactive TV,
and video games
Microprocessors
Analog CMOS and BiCMOS;
high-performance, mixed-mode
signal processing ICs; lowpower/low-voltage ICs
100 Microprocessors, optical,
discretes, ASIC, mixed signal,
linear
P = Privately held company
Source: Dataquest (September 1996)
SCIViS-WW-DP-9604
©1996 Dataquest
September 23,1996
14
Table 3 shows Asia/Pacific fabless companies and their products.
Table 3
Asia/Pacific Fabless Companies (Millions of U.S. Dollars)
1995
Founded Revenue Product and Market
Company
South Korea
Anam Semiconductor & Technology
Anam Bldg., 154-17 Samsung-dong, Kangnam-gu
Seoul, South Korea
ASIC Plasa
734-11 Yeoksam-dong, Kangnam-gu
Seoul, South Korea
C&S Technology
6F Haejoo BIdg., 175-4 Nonh}ain-dong
Kangnam-gu
Seoul, South Korea
Seodoo Logic
647-5 Yeoksam-dong, Kangnam-gu
Seoul, South Korea
Singapore
Tritech Microelectronics International
16A Science Park Dr. No. 04-01/02
The Pascal, Science Park
Singapore
Taiwan
Acer Laboratories Inc.
5F., No. 156, Tung Hsing St.
Taipei, Taiwan
Advance Reality Technology Inc.
3F, No. 609, Kuang Fu Rd., Sec. 1
Hsin Chu, Taiwan
Analog Integrations Co.
4F. No. 9, Industry Rd. 9
Science-Based Industrial Park
Hsin Chu, Taiwan
Aplus Intergrated Circuits Inc.
6F.-3 No. 7,75 Lane, Ta An Rd.
Taipei, Taiwan
Aslic Microelectronics Co.
5F. No 317, Sung Chiang Rd.
Taipei, Taiwan
Chesen Electronics Co.
5F-2, No. 94, Pao Chung Rd.
Hsin Tien, Taiwan
Chip Design Technology Inc.
4F-3, No. 26, Wu Chuan 2nd Rd.
Wu Ku Industry District, Wu Ku
Shing Chuang, Taiwan
E-CMOSCo.
IF, No. 58, Park Ave. 2
Hsin Chu, Taiwan
1987
20 ASICs for CDMA, DVD, set-top boxes
1995
a
1993
% ASICs for multimedia/communications,
chipsets for pagers
1990
4 Controllers for set-top boxes
1990
1987
NA
ASICs for peripherals, set-top boxes, and
LEDs
Design and production of ASSPs and CISC
79 Chipsets, ASICs, I/O peripherals,
graphics, multimedia
1994
NA
Communications, consumer ICs
1992
NA
Monolithic and hybrid analog ICs
1992
NA Audio ICs
1987
NA Consumer ICs, encoders, decoders
1984
13 Communcations ICs
1985
NA
Consumer ICs
1987
NA
Memory ICs, PC I/O ICs, consumer ICs
(Continued)
SCMS-WW-DP-9604
©1996Dataquest
September 23,1996
15
Semiconductor Contract IVIanufacturing Services Woridwide
Table 3 (Continued)
Company
Elan Microelectronics Co.
7F-1, No. 9, Prosperity Rd. I
Hsin Chu, Taiwan
Eplus Co.
2F-2, No. 2,253 Lane, Fu Shing S. Rd., Sec. 1
Taipei, Taiwan
Etron Technology Inc.
IF., No. 1, Prosperity Rd. I
Hsin Chu, Taiwan
Faraday Technology Co.
7F-3, No. 9, Prosperity Rd. I
Hsin Chu, Taiwan
Ginjet Technology Co.
No. 18-1,76 Lane, Long Chiang Rd.
Taipei, Taiwan
Holylite Microelectronics Co.
lOF-2, No. 67, Chih Hu Rd.
Hsin Chu, Taiwan
Hwa Mye Electronic Co. Ltd.
8F, No. 80, Sung Te Rd.
Taipei, Taiwan
Inno Technology Ltd.
7F. No. 181, Yung Chi Rd.
Taipei, Taiwan
IF, No. 10 Prosperity Rd. II
Hsin Chu, Taiwan
Memory Technology Inc.
No. 3 R&D Rd I
Hsin Chu, Taiwan
Micro Advance Technology Co. Ltd
8F, No. 26,204 Lane, Sung San Rd.
Taipei, Taiwan
Micro Electronic Co. Ltd.
5F-5, No 12, 609 Lane, Chung Shing Rd. Sec. 5
San Chung, Taiwan
MOS Design Semiconductor Co.
6F-5, No. 10,609 Lane, Chung Shin Rd.
San Chung, Taiwan
MOSART Semiconductor Co.
llF-2, No. 33, Ming Shen Rd., Sec. 1
Pan Chiao, Taiwan
1995
42 Neural-fuzzy ICs, digital signal
1994
processors, DSPs, 8-bit MCUs, ASICs
1989
1991
NA PIR
53 SRAM, DRAM, ASICs
1993
NA ASICs
1989
NA Communications ICs
1992
NA Melody, analog ICs, mixed MOD
1988
NA ASICs
1993
NA Corosumer ICs
1990
107 EEPROM, flash, SRAM, DSPs, voice
EPROMs
1993
18 DRAM, SRAM
1992
NA ASICs
1991
NA Consumer ICs
1988
NA Melody, audio ICs
1993
NA Communications, consumer ICs
(Continued)
SCIVIS-WW-DP-9604
©1996Dataquest
September 23,1996
16
Table 3 (Continued)
Company
Myson Technology Inc.
No. 2, Industry E Rd. 3
Hsin Chu, Taiwan
Princeton Technology Co.
2F. No. 233-1, Pao Chiao Rd.
Hsin Tien, Taiwan
Progate Group Co.
14F, No. 482, Chung Hsiao E. Rd.
Taipei, Taiwan
Realtek Semiconductor Co. Ltd.
IF, No. 11, Industry E Rd. 9
Hsin Chu, Taiwan
SARC Technology Co.
15F-1, No. 159, Sung Te Rd.
Taipei, Taiwan
Silicon Integrated Systems Co.
2F, No. 17, Innovation Rd. I
Hsin Chu, Taiwan
Sun Plus Technology Co. Ltd.
IF, No. 21, R&D Rd. II
Hsin Chu, Taiwan
Syntek Design Technology Ltd.
IF. No. 40, Park Ave. II
Hsin Chu, Taiwan
Tamarack Microelectronics Inc.
16F-4, Fu Shing N. Rd.
Taipei, Taiwan
Utron Technology Inc.
IF, No. 11, R&D Rd. II
Hsin Chu, Taiwan
VIA Technologies Inc.
8F, No. 533, Chun Zan Rd.
Hsin Tien, Taiwan
VLSI Technology Asia Ltd.
Room C, 15F, No. 170, Tun Hua N. Rd.
Taipei, Taiwan
Weltrend Semiconductor Inc.
2F., No. 24, Industry E. Rd. 9
Hsin Chu, Taiwan
Yuban Co.
5F. No. 29, Jen Ai Rd., Sec. 3
Taipei, Taiwan
1995
1991
14 ASICs, consumer ICs, monitor ICs, LAN
ICs, bipolar ICs
1986
1991
1987
33 Consumer ICs
NA
ASICs
42 Video/graphic ICs, consumer ICs, LAN
ICs, ASICs
1989
NA ASICs
1987
149 Chipsets
1990
54 DSPs, ASICs, consumer ICs, voice and
music sjmthesizers, multimedia-related
ICs
1992
14 Microcomputer peripheral ICs
1987
6 Hybrid ICs, ASICs, LAN chipsets
1993
15 ASIC, SRAM
1987
89 Chipsets, ISA/PCI/PCMCIA LAN chips
1990
1989
1993
NA
Chipsets
18 Customers' ASICs, mtdtisync monitor
discriminator ICs, consumer ICs
NA
DRAM, SRAM
NA = Not available
SCMS-WW-DP-9604
©1996 Dataquest
September 23,1996
18
Internet address
Via fax
I J?iT?lC31.1CST
. o
»^ ^ ^ * ^
(408) 468-8605
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Perspective
Dataquest Predicts
Semiconductor Contract Manufacturing Capacity Update:
Is Tliere A Foundry Capacity Glut Looming?
Abstract: Dedicated semiconductor contract manufacturing (foundry) capacity is projected
to dramatically increase over the next several years. Ambitious fab capacity build-up is
under way, carried out by both existing and aspiring foundry companies. Although aimed at
providing advanced IC manufacturing, the surge in fab expansion could result in excess
supply extended over the next few years.
By Calvin Chang
Dedicated Foundry Fab Build-Up
Emboldened by their spectacular success of the past few years, dedicated
foundry houses such as Taiwan Semiconductor Mfg. Co. and Chartered
Semiconductor Manufacturing Inc. are expanding fab capacity to foster
continual growth in their semiconductor contract manufacturing (SCM)
business. However, new foundry ventures are being launched in Asia and
the United States, each with a grand plan to btiild state-of-the-art IC fabs to
catch a piece of the burgeoning semiconductor foundry business. These
developments will result in a dramatic increase in overall dedicated IC
foundry capacity over the next several years. Dataquest's latest study shows
that from 1996 through 1999, new fabs being built or planned will increase
the world's dedicated foundry output to more than 4.5 times the 1995 level.
Moreover, the vast majority of the new capacity to be added in foundry will
be of advanced technologies, with linewidth capabilities extending from 0.5
micron to 0.25 micron. Figure 1 reveals the rise in dedicated foundry
capacity measured in millions of square inches (MSI) of silicon wafer area.
By the year 2000, worldwide dedicated foundry output will reach 300 MSI,
Dataquest
Publication Date: August 26,1996
Filing: Perspective
(For Cross-Teciinology, file in the Semiconductor Regional Markets and Manufacturing binder)
equivalent to 25 8-inch fabs, each capable of 20,000 wafers-per-month. As
seen in the figure, nearly all the new dedicated capacity will possess
linewidth capability of 0.5 micron or smaller.
Figure 1
Worldwide Semiconductor Foundry Capacity Ramp-Up
Capacity (MSI)
•sou -n
300-
B
i 0.S micron
250-
^
> 0.5 micron
20015010050-
1994
^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^
^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^
im
1
1996
f
1997
1998
1999
2000
96SS72
Source: Dataquest (August 1996)
There are now 16 dedicated foundry companies worldwide, compared to
only five just a few years ago. The fantastically profitable enterprise of IC
semiconductor contract manufacturing, as demonstrated by the hefty
earnings garnered by leading foundries, such as TSMC, has attracted many
new entrants. Many of these have considerable funding support from
governments intent on using IC foundry as the vehicle to propel their
nations into the modem industry of IC manufacturing. Some of the new
enterprises are joint ventures formed by foundries and their customers in a
strategic supply relationship. Table 1 shows the dedicated foundry
companies and their new fabs scheduled to come into production from 1996
through 1999. As shown in the table, 17 new fabs are planned by the
dedicated foundries. Most of the new fabs are 8-inch facilities; the rest are 6inch fabs.
With the surge in fab capacity slated for the next several years, dedicated
foundries will constitute more than 40 percent of the world's total
semiconductor contract manufacturing output by the year 2000, compared
with only 18 percent in 1995. Figure 2 projects the makeup of the world's
semiconductor foundry capacity supply from 1994 to 2000. Integrated device
manufacturers (IDMs), using excess fab capacity for fotmdry services, have
historically been the predominant source of the world's foundry supply. In
particular, Japanese IDMs, pioneers in adapting depredated DRAM fabs to
foundry work, own the majority of the IDM foundry supply. However, most
of the Japanese IDM foundry output is sold to other Japanese companies and
does not compete outside the Japanese market. The Japanese IDM foundry
SCIVIS-WW-DP-9603
©1996 Dataquest
August 26,1996
supply is projected to increase from the continual migration of spent DRAM
capacity to foundry. Non-Japanese IDM foundry providers, including IBM
SCM Services, LSI Logic, VLSI Technology, SGS-Thomson, the Korean giants
Samsung and LG Semicon, and United Microelectronics Corp. and Winbond
in Taiwan, are expanding or entering significantly into the semiconductor
foundry services market.
Table 1
The Dedicated Foundries' New Fab Build-Up, 1996-1999
Dedicated Foundry Company
Advanced Semiconductor Mfg. Co.
AS Electronics
Champlain Semiconductor Mfg. Co.
Extel Semiconductor
GMT Microelectronics
Interconnect Technology
Midwest Microelectronics
Newport Wafexfab Ltd.
SubMicron Technology
Taiwan Semiconductor Mfg. Co.
Tower Semiconductor
United IC Corp. (UMC JV No. 2)
United Semiconductor Corp. (UMC JV No. 1)
United Silicon Corp. (UMC JV No. 3)
WaferTech(TSMCJV)
Total New Fabs
Country
China
South Korea
United States
Singapore
United States
United States
Malaysia
United States
United Kingdom
Thailand
Taiwan
Israel
Taiwan
Taiwan
Taiwan
United States
New Fab (Wafer Size)
Fab 2 (6 inch)
Fab 1 (8 inch)
Fab 1 (8 inch)
Fab 3 (8 inch)
Fab 1 (6 inch)
Fab 2 (6 inch)
Fab 1 (8 inch)
Fab 1 (6 inch). Fab 2 (8 inch)
Fab 2 (6 inch). Fab 3 (8 inch)
Fab 1 (8 inch)
Fab 4 (8 inch), Fab 5 (8 inch)
-
Fab 1 (8 inch)
Fab 1 (8 inch)
Fab 1 (8 inch)
Fab 1 (8 inch)
17 (12 8 inch, five 6 inch)
Table 2 shows projected supply and demand in SCM capacity. Also shown is
the estimated source of the supply and demand. Strong growth in dedicated
SCM supply, on top of the continual moderate increase in IDM SCM output,
is causing the overall SCM supply to soar at a compound annual growth rate
(CAGR) of over 21 percent. However, demand for SCM services is projected
to grow at an 18.3 percent CAGR, significantly slower than supply. The
mismatch between the SCM supply and demand will most likely result in an
overabxindance of foundry capacity over the next few years. The surplus in
SCM supply will begin to be felt starting this year, initially in the trailingedge segments—0.6-micron and 0.8-micron and larger linewidth CMCDS.
With much new capacity still to come on line, the oversupply could worsen
and extend into the 0.5-micron regime by next year.
Dataquest Predicts
Figure 3 presents Dataquest's current outlook on the worldwide SCM
capacity imbalance. (The projection has factored in the inefficiencies inherent
SCIVIS-WW-DP-9603
©1996 Dataquest
August 26,1996
in the market, caused by mismatches between a buyer's requirements and a
supplier's capabilities in technology, volume, and yield, among other factors.
The inefficiencies range from 2.5 percent to 5 percent.) An oversupply in
SCM capacity is projected to emerge in 1996 and continue over the next three
years, leading to an even higher level of oversupply.
Figure 2
Worldwide Semiconductor Foundry Capacity Ramp-Up
Capacity (MSI)
800700-
^
Dedicated Foundries
600-
9 1 Non~Japanes6 IDM Foundries
500-
Japanese IDM Foundries
400-
1001995
1994
1996
1997
1998
1999
2000
965S73
Table 2
Semiconductor Contract Manufacturing Supply and Demand Sources, 1994-2000 (MSI)
Fabless Companies
IDMs
System OEMs
Total Demand
1994
47.1
162.3
3.9
213.3
1995
66.1
189.8
5.3
261.2
1996
83.7
225.9
6.9
316.5
1997
105.5
258.5
8.8
372.8
1998
132.9
290.0
11.1
434.0
1999
162.9
328.2
14.1
505.2
2000
210.7
376.0
18.9
605.6
CAGR (%>
1995-2000
26.1
14.6
29.1
18.3
Dedicated SCM Supply
IDM SCM Supply
Total Supply
36.5
176.8
213.3
47.8
218.8
266.6
77.5
246.7
324.2
128.2
283.5
411.7
219.6
326.5
546.1
286.1
374.3
660.3
300.4
407.3
707.7
44.4
13.
21.6
Source: Dataquest (August 1996}
What does oversupply mean? For a start, it means that foundry customers
unable to find sufficient foundry supply in past years will now find a
plentiful supply of foundry manufacturing. This will result in a buyer's
market, accompanied by downward pressure on foundry wafer prices. An
oversupply, even at the 0.5-micron technology level (which was much in
demand vmtil just several months ago), will likely arrive sooner rather than
later. Dataquest predicts that an excess supply of 0.5-micron foundry
capacity will emerge as early as the third quarter of 1996. This surplus in
SCMS-WW-DP-96Q3
©1996 Dataquest
August 26,1996
mainstream foundry supply will soon translate into foundry wafer price
competition. An estimated 15 percent decline in the price of 8-inch, 3-metallevel, 0.5-micron processed foundry wafers can be reasonably expected
before the end of 1996.
The oversupply and price decline in SCM services do not, however, mean an
end of the growth of the SCM industry. The economics of semiconductor
manufacturing and the continual escalation in the cost of new fabs will
dissuade more IC companies from building fabs of their own. This trend will
remain intact and continue to favor SCM as a business model. Not only are
the fabless companies, with their growing chip revenues, continuing to drive
foundry consumption, but an increasing number of IDMs are also deplojdng
a long-term strategy of greater reliance of semiconductor foundry for future
IC manufacturing capacity. Indeed, Dataquest expects that it is also the
IDMs, not just the fabless companies, that will drive the future growth of the
foundry business. Moreover, the growing abundance of SCM supply,
coupled with the likelihood of continually moderating foundry prices, will
present a compelling case for greater use of SCM services.
Figure 3
Worldwide Semiconductor Contract Manufacturing Capacity Imbalance Projection
MSI Oversupply/Undersupply (%)
25 H
2015105
°- vMmm •
-5
199&
1996
1997
1998
1999
2000
96SS?t
SCI\/IS-WW-DP-9603
©1996 Dataquest
August 26,1996
•
Internet address
Via fax
Dataquest
(408) 468-8605
[email protected]
(408)954-1780
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completeness. It does not contain material provided to us in confidence by oiu: clients. Reproduction or
Perspective
Vendor Analysis
Abstract: Armed toith three new foundry joint ventures and an impressive f ah expansion
plan, UMC is aggressively pitrsuing a product transition strategy that ivill make it a major
world-class semiconductor foundry service provider.
By Calvin Chang
Corporate Management
Headquarters
Hsinchu, Taiwan
Chairman and CEO
Robert Tsao
President
John Hsuan
Business Group I President
Ing-Dar Liu
Business Group n President
Ming-Kai Tsai
Business Group HI Senior Vice President
J.S. Aur
Senior Director, Foundry Marketing a n d Sales
H-YLiu
1995 Revenue
U.S.$900 million
Fiscal Year-End
December 31
Employees
3,150
Founded
1980
DataQuest
Program: Semiconductor Contract Manufacturing Worldwide
Publication Date: June 3,1996
Filing: Perspective
•
(For Cross-Technology, file in the Senniconductor Regional Markets and Manufacturing
binder.)
Company Overview
Founded in 1980, United Microelectronics Corporation (UMC) is Taiwan's
first IC production company. UMC came to being as a result of a government-sponsored project by the Industrial Technology Research Institute.
UMCs commercial IC production began in April 1982 at its 4-inch Fab 1
facility. In July 1985 UMC became the first publicly traded IC company in
Taiwan with the enlisting of its stock on the Taiwan Stock Exchange. UMC
captured another Taiwan first in June 1989 when it began IC production on
6-inch wafers at its Fab II facility. Principally a maker of consumer ICs in its
early days, UMC has successfully expanded its product portfolio over the
past 10 years to include communications, computer, and peripheral and
memory ICs. In recent years UMC has begun a major product transition
that is aimed to transform the company into a major, world-class semiconductor foundry services provider and a producer of memory ICs.
Company Financials
Since its inception, UMC has grown its revenue every year. This is highlighted by the recent 1991-to-1995 period, during which the company's sales
grew at a remarkable compound annual growth rate (CAGR) of 43 percent.
For 1996 UMC is projecting a strong, 32 percent year-on-year revenue
growth to U.S.$1.19 billion. Table 1 shows UMCs revenue, R&D, and capital expenditure from 1991 to 1996. As shown in the table, UMCs R&D
spendings have been maintained at a modest range of 6 percent to 10 percent of total revenue. This is in contrast to the industry average of 13 percent. On the other hand, UMCs capital expenditure, mostly for the
construction of new manufacturing facilities, has been on the rise and is
expected to stay at a high level (that is, more than 50 percent of revenue) for
the next couple of years. A significant notable in UMC's achievements is the
continual rise of company productivity. Revenue per employee has risen
consistently from 1991 to 1996 and has nearly tripled during the six-year
period.
Table 1
UMCs Revenue, R&D, Capital Spending, and Employee Productivity, 1991 to 1996
(Millions of U.S. Dollars)
1991
1992
1993
1994
1995
1996
212
257
567
17.4
21
376
46
51
900
59
1185
32
193
37
39.5
52
70
R&D (% of Revenue)
8.2
75
9.8
7.0
5.8
5.9
Capital Spending
50
24
56
22
53
14
255
45
570
63
600
0.12
0.15
020
0.25
030
035
Revenue
Revenue Year-to-Year Increase (%)
R&D
Capital Spending (% of Revenue)
Revenue/Employee ($)
'
51
Note: The 1996 column is UVIC's projection.
Source: Dataquest (June 1996)
SCMS-WW-DP-9602
©1996 Dataquest
Junes, 1996
Company Strategy—Focusing on Foundry
The year 1995 was a watershed for UMC. During the year UMC produced a
gigantic boost in profitability on top of an impressive 59 percent increase in
revenue. UMC surpassed TSMC in net margin and became the most profitable semiconductor manufacturer with net margin in excess of 50 percent.
However, prospects for UMC's profitability have dimmed as a result of the
precipitous drop in the prices of SRAM, a significant revenue source for
UMC that accounted for more than 35 percent of the company revenue in
1995. UMC's management, however, had anticipated the imminent changes
in the memory IC market and began to set forth a methodical move toward
a product migration strategy. As a result, UMC's future core business will
no longer rely on standard chip products and instead will focus on semiconductor foundry.
Table 2 shows the historical and planned product migration at UMC. Contribution of commercial, communications, and computer and peripheral
ICs to UMC's overall company revenue has steadily decreased over the past
few years. At the same time, a greater emphasis has been placed on memory IC and foundry services, IXiring 1996, a phaseout of UMC's communications and computer and peripheral IC production will be accomplished
through the spin-off of these divisions. Over the next three years, revenue
from memory IC is expected to be maintained at 30 percent of company's
sales as foundry services becomes UMC's principal focus.
Figure 1 shows UMC's planned product transition in terms of the company's manufacturing ouliput. As shown in the figure, amount of UMC's
capacity (Fabs 1,2, and 3A) allocated for foundry services will rise from less
than 40 percent in 1995 to a projected 70 percent in 1997 with the bulk of the
increase to be accomplished in 1996. This will be a remarkable feat in light
of the swiftness of the product transition and its apparent nonimpact on
UMC's projected revenue stream. While a major redirection in manufacturing is taking place, the company is well on track to achieve a 32 percent
growth in revenue in 1996. This attests to the thorough plarming and superb
execution that UMC is capable of in carrying out its product transition
strategy.
Table 2
UMC Revenue Composition, Product Tjrpe as a Percentage of Total Revenue
Hl/96
H2y96
1997
1998
9
7
6
4
5
0
25
20
16
14
6
3
12
5
5
0
0
26
34
40
17
27
30
30
28
28
30
48
52
65
65
1991
1992
1993
1994
Commercial IC
Communication IC
32
1
23
2
14
7
10
Computer and
Peripheral IC
Memory IC
23
23
33
Foundry Services
11
28
24
1995
0
Note: H1 and H2 represent the first and second halves of the year, respectively.
SCMS-WW-DP-96G2
©1996 Dataquest
June 3,1996
Figure 1
U M C Focuses on Foundry
Percentage of UMC Capacity for Foundry
io60-
40-
20-
"~l
HI/94
1
H2/94
1
HI/95
1
H2/95
1
HI/96
Year
1
H2/96
1
HI/97
1
H2/97
1996
963277
UMC's approach toward building a world-class foundry company is
through the formation of joint ventures with its strategic foundry partners.
UMC has established three fotindry joint ventures QVs) with major American and Canadian fabless companies. Joint ventures are UMC's chosen
business model for implementing a risk-sharing approach in establishing
its foundry alliances. The rationale is based on the assumption that if market conditions deteriorate and wafer demand slacks off, a no-deposit
arrangement will not bind the partner-custonrers to take delivery of the
wafers that they have been allocated. The philosophy behind the risksharing JV arrangement is for the partners, as part-owners, to share the JV's
success as well as its downside risks.
For UMC's fabless JV partners, the JV deals offer guaranteed access to
foundry services, a percentage of dividends, and, if the JV eventually goes
public, capital gains. UMC gains the obvious benefit of spreading the burden of large fab costs, as well as its own guaranteed access to foundry
capacity. As planned, UMC wUl receive 40 percent of the capacity at the
three new JV fabs, or 30,000 8-inch wafers per month.
Under the terms of the agreements, each partner will have an equity stake
in the joint venture that corresponds to the percentage of its investment in
the (initial) capital cost of the JV fab (U.S.$400 million for JV 1 and U.S.$600
million each for JV 2 and JV 3). Each JV partner will produce the investment
amounts in cash in three installments over two years. The installments will
coincide with the timing of expected building and equipment costs. UMC's
JV arrangements, however, are contingent upon a number of conditions
including receipt of commitments for additional financing and obtaining
requisite government approvals.
SCMS-WW-DP-9602
©1996 Dataquest
June 3,1996
For its part, UMC has been busy applying its outstanding bank credit to
arrange financing of the three foundry JVs. In January 1996,14 Taiwanese
banks granted a syndicated loan of U.S.$278 million ($7.68 billion in NT, the
Taiwanese currency) to finance United Semiconductor Corp., UMC's first
foundry JV. This was followed by a May 1996 announcement that UMC
would issue convertible bonds in Taiwan to raise U.S.$220 million (NT $6
billion) working capital. Also in the pipeline is the overseas convertible
bonds that UMC plans to issue sometime in the near future.
UMC's Foundry Joint Ventures and Partners
The following indicates UMC's three foundry joint ventures, the partners
involved, and the percentage of equity stake each partner has in the project:
• JV 1, United Semiconductor Corporation
3 UMC (Includes technology share)—43 percent
3 Alliance Semiconductor—20 percent
3 S3—25 percent
3 Others—12 percent
• JV 2, United IC Corporation
3 UMC (Includes technology share)—40 percent
3 ATI—5 percent
3 ESS Technology—5 percent
3 ISSI—5 percent
3 Lattice—10 percent
3 Trident—10 percent
3 Oak Technology—10 percent
3 OFTi—5 percent
• JV 3, United Silicon Inc.
• UMC (Includes technology share)—40 percent
3 Alliance—10 percent
3 Cirrus Logic—15 percent
3 Xilinx—25 percent
When the three JV foimdry fabs are successfully built and at full production
in 1999, UMC will have increased its 8-inch manufacturing capacity by
tenfold from its current level. As shown in Table 3, a total output of 100,000
8-inch wafers per montii is planned for UMC's 3A and the three JV fabs.
Discounting the portion that is allocated to UMC's JV partners, UMC will
have access to more than 55,000 8-inch wafers per month by 1999.
SCMS-WW-DP-9602
©1996 Dataquest
June 3,1996
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In view that more than 15 new fabs will be built and begin operation in Taiwan by 1998, there could be a problem with a shortage of skilled labor to
run them. Competition for labor at UMC's new fabs will not be so much of a
problem for UMC as for the other companies. UMC will be scaling back
operations at its 4-inch Fab 1 line and transferring the personnel from there
to help staff the new facilities. About 400 people, 300 of them direct fab
labor, will thus be available for the new LJMC fabs.
Product Simplification
As part of its product transition plan, UMC is pursuing a rapid production
simplification strategy. It is quickly shedding divisions through spin-offs
and discontinuation of product lines. In the fourth quarter of 1995, UMC
announced it was discontinuing the manufacturing of x486 CPU microprocessors. This also resolved the disputes UMC has had with Intel in x486
patent infringement. In the second quarter of 1996, UMC spun off the PC
chipset, I/O peripheral, and notebook chipset business to a newly created
Integrated Technology Express (ITE), an IC-design company in Santa Clara,
California. Meanwhile, UMC's LAN chipset, fax, and modem chip business
was off-loaded to Davicom, another IC design start-up. With the spin-off of
the communications and computer and peripheral IC business, only the
consumer IC and memory IC product division will be kept in-house.
Another important objective accomplished by the production simplification
strategy is to alleviate concerns UMC's foundry customers may have about
potential competition between it and UMC. On the other hand, UMC's new
fabless spin-offs, free of manufacturing concerns, will be able to focus R&D
resources on product design, development, and marketing to be overall
more competitive.
UMC Foundry Service Model
For itself and its new joint venture foundry companies, UMC has opted a
foundry service business model that is aimed at providing a turnkey fullservice program. As shown in Figure 2, UMC's foundry service portfolio
will offer reticle generation from pattern-generation tape (that is, GDS-II),
maskmaking, IC fabrication, electrical-sort, chip assembly, and final test.
While UMC and the JV foundries will focus on IC fabrication, they will provide the coordination and logistic management that make up the turnkey
full-service program. UMC has close relationships with Taiwan's largest
maskmaking shop, Taiwan Mask Company (TMC) and assembly/test vendor Siliconware. These relationships help forge together the turnkey fullservice program that will provide a one-stop shopping solution for UMC's
foundry customers.
Interestingly, UMC is one of the first companies in the industry that
adopted very early on a "vertical disintegration" approach toward the chip
manufacturing business. EKiring the 1980s, when niost large chipmakers
worldwide were vertically integrated (comprising IC design, layout, maskmaking, IC fabrication, chip packaging, and test), UMC departed from the
norm and instead chose to focus on only high-value-added expertise^—
namely IC fabrication and design—leaving other parts of the chipmaking
processes to closely allied vendors that specialized in their respective segments. Over the years, the "vertically disintegrated" chipmaking infrastructure campaigned by UMC has set root and become the mode of operandi in
Taiwan's fledging semiconductor industry.
SCMS-WW-DP-9602
©1996 Dataquest
June 3,1996
Figure 2
UMC Turnkey, Full-Service Program and Focus on IC Foundry Manufacturing
PG Tape
Reticle Layout
Maskmaking
Turnkey
Full-Service
IC Fabrication
1
UMC's
1 Foundry Focus
E-Sort
Assembly
Final Test
^r
9B327B
Manufacturing Technologies
Figure 3 shows UMC's manufacturing technology road map. UMC is at
0.5-micron linewidth production in all iowr of its principal processes:
SRAM, logic, mixed-mode, and DRAM. Within a year, 0.35-micron manufacturing process will begin to go into production, first with the SRAM process and to be followed by each of the other three processes in six-month
separations. CMP, a critical enabling technology for multilevel interconnect
fabrication, will also be introduced by the end of 1996. All in all, UMC's
manufacturing technologies are among the rank of the world-leading
foundry service providers.
UMC has also steadily improved its manufacturing efficiency over the past
few years. UMC's current manufacturing cycle time is at 2.1 days per mask
layer, down from 3.5 days per layer in 1993. By at least one measure (the
"Competitive Semiconductor Manufacturing Survey" from the University
of California at Berkeley), UMC's manufacturing cycle time is competitive
with the estimated industry average of 2.6 days per layer.
SCMS-WW-DP-9602
©1996 Dataquest
Junes, 1996
Crt
o
^
Figure 3
UMC Technology Road Map
5V/3V
a
"D
1
V
I
ID
OJ
O
r>j
!
t
•
SRAM
2.5V
3V
\
i
\
4
0.5nm
2p2m
^
^
W
1
:
i
\ :
0.35nm
3p2m
^
1 I
i
•
w
I
; \
\
1
1 \
\
\
\
\
\
O.Stim
1p3m
Lqntic
©
w
IP
0,35nm
1p4m
Ik
\
I
0.25jim
1p5m
P
1
\
CO
CO
CD
*
\
O
K.
PJ
X3
0,25|im
4p2m
MixedMode
CMP
:
0.5^m
2p3m
-T"*-*-^
,
>
\
n^
0,35fim
2p3m
k.:
— p
\
0,25nm
2p4m
k.
W
\
\
\
<
\
t
nnm
0.5nm
3p2m
1 fc 0.35fim
T^—W 3p2m
1
1
1994
:3
CO
CO
en
Source: UMC, Datsquest (June 1996)
1995
1996
I
•
^ h D,25
;• P
4p2
; \
1
i N
I
\
1997
t
1 \
1998
10
UMC's achievements in establishing quality manufacturing and R&D were
recently recognized by the Taiwan's government, which presented UMC
with the 1995 National Quality Award. The award is Taiwan's highest official recognition of a company's outstanding achievements in total quality
management. One of the key reasons behind the selection of UMC for Taiwan's top quality honor is UMC's continual effort to establish respect for
intellectual property rights through patent application and protection. Over
the past several years, UMC has vigorously promoted employee innovation, which has resulted in UMC building an impressive portfolio of patents. As shown in Table 4, UMC's patent awards—both in Taiwan'and
overseas (United States)—have increased dramatically, from less than 10 in
1992 to more than 400 in 1995 (see Table 4). As a result, UMC is among the
top firms with the highest number of patent awards for companies in its
capitalization class.
Table 4
UMC's Patent Portfolio
Patents Applied
1992
Taiwan
18
1993
287
Overseas
56
74
265
552
282
251
712
609
350
850
3
27
133
285
360
5
11
48
181
145
182
430
542
Total
Patents Approved
Taiwan
Overseas
Total
8
38
1994
1995
Estimate 1996
430
358
500
Source: UMC, Dataquest (June 1996)
Internet address
Via fax
Dataquest
(408) 468-8605
[email protected]
(408) 954-1780
Dataquest is a registered trademark of A.C Nielsen Company
Perspective
Semiconductor Contract Manuf actxiring Worldwide
Market Analysis
1995 Fabless Semiconductor Review
Abstract: The revenue of worldwide fabless semiconductor companies surged in 1995, reaching an estimated U.S.$6.3 billion, a gain of 46 percent over 1994. Strong worldwide demand
for personal computers and network equipment kept the fabless companies on the fast track
to continue to outperform the overall semiconductor market.
By Calvin Chang
The Fabless
More than 100 fabless companies wôrldwide are estimated to have revenue
greater than U.S.$1 million. Dataquest now tracks 55 fabless companies for
which semiconductor revenue segment information has been gathered and
analyzed. The vast majority of the fabless companies listed in Table 1 are
less than 10 years old, but the fabless collectively represent one of the most
exciting growth segments of the semiconductor industry.
Fabless Semiconductor Revenue Distribution
Products produced by the fabless companies span a wide range of semiconductor segments. Table 2 shows the segmentation of 1994 and 1995 revenue
for fabless comparues by semiconductor product group and the segments
within the groups. As shown in the table, fabless companies' revenue from
MOS memory has risen from 7 percent to 10 percent of overall fabless revenue. Within MOS memory, SRAM accounts for the bulk (two-thirds) of
fabless revenue in 1995. Alliance Semiconductor, Integrated Silicon Solution
Inc., Paradigm Technology, and other SRAM fabless companies latched
onto strong PC and telecommunications markets and jointly produced the
ElataQuest
Publication Date: IVIay 20, 1996
Filing: Perspectives
(For Cross-Technology, file in the Semiconductor Regional Markets and Manufacturing
binder.)
Semiconductor Contract IVIanufacturing Worldwide
Table 1
Worldwide Fabless Semiconductor Revenue, 1994-1995 (Millions of U.S. Dollars)
Company
ACC Microelectronics
Acer
Actel
Adaptec
Altera
Brooktree
C-Cube
1994
1995
49
70
40
79
76
125
90
199
109
45
108
124
50
89
12
Catalyst
Chips & Technologies
220
402
120
125
49
138
Cirrus Logic
781
16
1,002
Crosspoint Solutions
Cyrix
1
241
2
212
18
33
60
106
7
47
Chrontel
DSP Group
ESS Technology
6
ETEQ Microsystems
28
106
27
Etron
Eupec
Fagor
143
38
14
G-Link USA
Information Storage Devices
Integrated Circuit Systems
Integrated Infonnation Technology
1
38
81
35
60
12
158
17
134
47
187
International CMOS Technology
Lattice
Level One Commtmications
56
96
44
Logic Devices
14
78
17
Micro Linear
Novasensor
Oak Technology
41
54
13
62
15
84
OPTi
Pericom Semiconductor
130
12
167
Q Logic
Quality Semiconductor
45
22
60
46
Quality Technologies
QuickLogic
S3
49
8
60
16
130
25
315
(Continued)
SCIVIS-WW-DP-9601
©1996Dataquest
IVlay 20,1996
Table 1 (Continued)
Worldwide Fabless Semiconductor Revenue, 1994-1995 (Millions of U.S. Dollars)
Company
SEEQ Technology
Sierra Semiconductor
Silicon Integrated Systems
Silicon Storage Technology
Symphony Laboratories
Thomson-CSF (TCS)
TranSwitch
Trident Microsystems
Tseng Labs
WaferScale Integration
Weitek
Western Digital
Xilinx
Zycad
Other Fabless Companies
Total Fabless Companies
Year-to-Year Change (%)
1994
1995
22
27
120
141
101
127
4
39
12
15
78
100
12
17
87
139
83
105
24
37
28
37
184
239
321
520
1
2
145
210
4,311
6,302
36
46
Source: Dataquest (May 1996)
Table 2
Segmentation of Fabless Revenue by Semiconductor Product Type, 1994-1995 (Revenue
in Millions of U.S. Dollars)
Product Group
Product Segment
MOS Memory
Dynamic RAM
MOS
Microperipherals
1995
Revenue
7
58
0.9
30
0.7
170
3.9
415
6.6
EPROM
27
0.6
26
0.4
EEPROM
44
1.0
52
0.8
Flash Memory
14
0.3
46
0.7
Other MOS Memory
3
0.1
14
0.2
8-Bit and 16-Bit CISC
MPU
0
0
5
0.1
32-Bit and Above
CISC MPU
248
5.8
226
3.6
32-Bit and Above
RISC MPU
14
0.3
20
0.3
System Core Logic
Chipsets
494
11.5
561
8.9
Graphics and Imaging Controllers
941
21.8
1,422
22.6
69
1.6
99
1.6
Static RAM
MOS
Microprocessor
1995
1995
Segment
Group
Percentage Percentage
1994
1994
Group
1994
Segment
Revenue Percentage Percentage
Communications
Controllers
6
53
10
4
51
(Continued)
SCI\/IS-WW-DP-9601
©1996 Dataquest
IVIay 20,1996
Semiconductor Contract l\/lanufacturing Woridwide
Table 2 (Continued)
Segmentation of Fabless Revenue by Semiconductor Product Type, 1994-1995 (Revenue
in Millions of U.S. Dollars)
Product Group
MOS Logic
Product Segment
Optical
Semiconductors
1995
Revenue
1995
1995
Segment
Group
Percentage Percentage
378
8.8
450
7.1
Audio/Other
Controllers
411
9.5
669
10.6
7
0.2
§
0.1
752
17.4
1,252
19.9
44
1.0
56
0.9
MOS Custom ICs
12
0.3
MOS Standard Logic
27
0.6
Other MOS Logic
15
0.3
1
0
Data Converters/
Switches/Multiplexers
156
Telecom ICs
Traditional Digital
Gate Arrays
MOS Cell-Based ICs
Discrete Devices
1994
Group
Percentage
Mass Storage
Controllers
MOS PLDs
Monolithic
Analog Devices
1994
Segment
1994
Revenue Percentage
Voltage Regulators/
References
20
14
0.2
57
0.9
14
0.2
1
0
3.6
176
2.8
111
2.6
202
3.2
•
9
Disk Drive ICs
17
0.4
26
0.4
Special Function
Analog Devices
52
1.2
80
1.3
Linear Arrays/
ASICs
18
0.4
22
0.3
Mixed-Signal ASICs
47
1.1
43
0.7
Power Transistors
8
0.2
23
0.4
Insulated Gate Bipolar Transistors
8
0.2
23
0.4
Small-Signal Diodes
4
0.1
1
0
Power Diodes
52
1.2
69
1.1
Thyristors
62
1.4
66
1.0
0
0
6
0.1
Infrared LEDs
^
'
^
•
.
I
0
0
21
0.3
Couplers
26
0.6
31
0.5
Charge-Coupled
Devices
26
0.6
34
0.5
Other
Optoelectronics
8
0.2
2
0
Total Fabless Semiconductor Revenue
4,311
Other LEDs
100
6,302
22
9
3
1
100
SCMS-WW-DP-9601
©1996 Dataquest
May 20,1996
•
huge, 140 percent increase in sales during 1995. Prospects for the SRAM
fabless companies in 1996 seem less certain, however, as recent declines in
SRAM prices are slowing revenue growth. Other fabless companies in the
memory IC arenas include the DRAM producers Etron, NeoMagic, and Silicon Magic. In flash memory, the fabless are represented by Silicon Storage
Technology and a few others.
With NexGen acquired by Advanced Micro Devices, Cyrix is pretty much
the only fabless story in MOS microprocessors. And nothing is a better
illustration of how fabless companies' growth has been hampered by the
constraint in foundry capacity than the case of Cyrix. Limited by the small
number of foundry sources available for its 3-layer-metal and 4-layer-metal
process, Cyrix has seen its revenue decline in 1995. Cyrix's growth prospects in 1996 likewise hinge on its ability to get additional capacity from its
foundry suppliers (IBM and SGS-Thomson).
MOS microperipherals markets are where the fabless really shine. Without
a doubt, the personal computer graphics controller market is entirely
owned by the fabless, including Cirrus Logic, S3, Trident Microsystems,
ATI, Tseng Labs, Western Digital, Ark Logic, Sierra Semiconductor, and a
few others. The graphics fabless companies collectively shipped an estimated 74 million units of graphics chips in 1995 for the whole PC and
graphics accelerator card markets. As the table shows, graphics and imaging controllers generated more than U.S.$1.4 billion in 1995 for the fabless
and are the largest source of fabless revenue. In system core logic chipsets,
the fabless (Silicon Integrated Systems, OPTi, Acer Labs, ACC Microsystems, Pico Power, Symphony, and Chips & Technologies) accounted for
more than 40 percent of the PC core logic market. Fabless companies are
equally important in all other peripheral applications for the personal computer, such as mass storage controllers (IDE and SCSI controllers), audio
chips, and communications controllers. Their total revenue of more than
U.S.$3.2 billion from MOS microperipherals is a testament to the fabless'
dominance in the PC peripherals chip markets. Conversely, an apt description of the importance of the fabless to the personal computer industry is
that without the fabless, no PC could be built.
Programmable logic devices (PLDs) are another area where the fabless
dominate. Fabless PLD suppliers had a gangbuster year in 1995 that produced U.S.$1.25 billion in PLD revenue, a 66 percent increase from 1994.
Looking forward, Xilinx, Altera, Lattice, Actel, and other fabless PLD suppliers are expected to continue to dominate the fast-growing MOS PLD
market.
Other semiconductor markets from which the fabless derive significant revenue include monolithic analog devices (data converters/switches/multiplexers, telecom ICs), discrete semiconductor, and some optical devices.
Looking Forward: Projecting Fabless Growtli
A number of foreseeable developments in the semiconductor industry are
playing favor to the fabless. As shown in Table 3, Dataquest is projecting an
unusually slow growth of 8 percent for the worldwide semiconductor
industry in 1996, to be followed by two years of growth that falls in the traditional range of about 15 percent a year, consistent with the long-term
SCIVlS-WW-DP-9601
©1996 Dataquest
May 20,1996
industry historical average. The principal cause of the dramatic slowdown
in projected growth for 1996 compared with the average 30-plus percent
growth of 1993 through 1995 is the fall in DRAM prices that began in the
last quarter of 1995. The erosion in DRAM prices is expected to continue,
and it will put a damper on the growth of tike industry's revenue, which is
significantly (over 30 percent) weighted toward memory products. In contrast, memory products account for only 10 percent of the fabless companies' revenue, with DRAM contributing to less than 1 percent of total
fabless revenue (see Table 2). Thus the growth of the fabless companies is
unlikely to be significantly impacted by the continued decline in memory
average selling prices (or revenue). Dataquest expects that fabless growth
will be significantly and consistently higher than overall semiconductor
industry growth for the next five years (see Figure 1).
Moreover, constraint in available foundry capacity has been an important
limitation for fabless growth. This situation is likely to be remedied as significant amounts of new manufacturing capacity, being built by both existing and new foundry companies, begin to come into production in 1997. In
fact, Dataquest projects an oversupply of foundry capacity is likely to begin
during 1997. A plentiful supply of foundry capacity will certainly aid the
fabless in achieving greater revenue milestones.
The recent years have witnessed a continual emergence of start-up semiconductor companies that have enriched the fabless camp. Dataquest
expects this trend to continue, as nearly all new companies entering the
semiconductor industry are likely to be fabless. Those that are not fabless
are, interestingly, likely to be foundries. This has been the case for the past
few years and is projected to continue. The fabless-foundry model has
proven to be a viable approach toward defraying the escalating costs of
building modern IC manufacturing capacity. With capital resources, the
foundries focus on developing and providing cost-effective semiconductor
manufacturing. The fabless, on the other hand, find their relatively smaller
resources best used on new product design, development, and marketing.
With the fabless model providing an attractive vehicle for enterprising engineering talents to enter the IC industry, the rank of the fabless will surely
grow. As shown in Table 3, the fabless universe is projected to grow steadily,
reaching U.S.$20.8 billion in revenue, or 6.7 percent of the worldwide semiconductor market, by 2000. This will represent a more than 500 percent
increase from the 1993 revenue level and leave no doubt in anyone's mind
that the fabless are a major force to be reckoned with.
SCI\/IS-WW-DP-9601
©1996 Dataquest
IViay 20,1996
Table 3
Fabless Revenue Estimates and Projections Compared with the Worldwide
Semiconductor Market, 1993-2000 (Millions of U.S. Dollars)
1993
1994
110,580
1996
162,612
1998
85,518
1995
151,171
1997
Worldwide Semiconductor
Revenue
184,241
Worldwide Semiconductor
Growth (%)
31
29
37
8
Fabless Company Revenue
3,175
-
4,311
36
6,302
3.7
3.9
Fabless Companies' Year-toYear Growth (%)
Fabless Companies' Contribution to the Worldwide
Semiconductor Market (%)
213,833
1999
256,247
2000
309,836
13
16
20
21
7,578
9,544
12,071
15,708
20,852
46
20
26
26
30
33
4.2
4.7
5.2
5.6
6.1
6.7
Figure 1
Fabless Companies Outperform the Semiconductor Market
Year-to-Year Growth Rate (%)
ouWorldwide
Semiconductor
Growth
4540- / ^ ' \
/
3530-
•^Xx
25-
^^
—
Fabless Growth
VÎ^^^
2015*^
10-
501994
I
1995
1
1996
1
1
1
1997
1998
1999
2000
SodUVO
SCIVIS-WW-DP-9601
©1996 Dataquest
IVIayaO, 1996
^Vjia
Internet address
Via fax
Dataquest
(408) 468-8605
[email protected]
(408) 954-1780
Dataquest is a registered trademark of A.C Nielsen Company
I
I
DataQuest
DataQuest
Semiconductor Contract
ii/lanufacturing Wafer Pricing Trends
Market Trends
Product Code: SGMS-WW-MT-9602
Filing: Market Trends
\
IVIanufacturing Wafer Pricing Trends
Market Trends
Program: Semiconductor Contract IVIanufacturing Worldwide
Product Code: SCI\/IS-WW-MT-9602
Filing: IVIarket Trends
Semiconductor Contract Manufacturing Wafer Pricing Trends
Table of Contents
1. SCM Wafer Pricing Update
How Much Have SCM Wafer Prices Changed?
Looking Ahead: SCM Wafer Price Projection
2. Semiconductor Contract Manufacturing Market Forecast
SCM Supply Surge
SCM Capacity Supply and Demand Imbalance Forecast
SCM Contribution to the Semiconductor Market
SCMS-WW-MT-9602
©1996 Dataquest
Page
1
1
3
7
7
7
11
December 23,1996
List of Figures
^^-^^^^^^^^^^^^^^^^^^
|
Figure
Page
1-1 Buyers' and Suppliers' Reported 150mm Foundry Wafer Prices,
September 1996 versus October 1995
3
1-2 Buyers' and Suppliers' Reported 200mm Foundry Wafer Prices,
September 1996 versus October 1995
4
2-1 Worldwide SCM Capacity Imbalance Projection
10
2-2 SCM Market Forecast and Contribution to the Semiconductor
Market
12
i
i
SCi\/IS-WW-MT-9602
©1996 Dataquest
December 23,1996
Semiconductor Contract Manufacturing Wafer Pricing Trends
List of Tables
Table
1-1
1-2
1-3
2-1
2-2
2-3
2-4
2-5
SCMS-WW-MT-9602
Page
September 1996 Foundry Wafer Prices for 150mm and
200mm Wafers, by Technology
150mm SCM Wafer Price Projection, 1995-1997
200mm SCM Wafer Price Projection, 1995-1997
Dedicated Foundry Companies' New Fab Plans, 1996-1999
Dataquest Projection of the Semiconductor Contract
Manufacturing Supply and Demand Dynamics by Year,
1995-2000
Semiconductor Contract Manufacturing Market Forecast by
Region, 1993-2000
Semiconductor Contract Manufacturing Market Forecast by
Supply and Demand Sources, 1993-2000
Semiconductor Contract Manufacturing Market Revenue
Forecast by Regions, 1993-2000—November 1996 Update
©1996 Dataquest
2
4
5
8
9
10
11
11
December 23,1996
I
Chapter 1
'
SCM Wafer Pricing Update
In October, Dataquest conducted a worldwide semiconductor confract
manufacturing (SCM) foundry wafer pricing study. A large number of
SCM users and providers were surveyed and reported prices paid and
charged in September 1996 for 150mm and 200mm foundry-processed
CMOS wafers. Pricing reported also encompassed a variety of different
process technologies, by feature size (minimum geometry) and metal
interconnect layers. Table 1-1 presents the complete SCM pricing survey
reports. As Ulusfrated, foundry wafer buyers reported consistently lower
prices than foundry providers. The difference between average wafer
prices reported by buyers and suppliers ranges from 1 percent to nearly
25 percent, depending on the process technology. Dataquest believes buyers' reported prices are a more accurate reflection of the current wafer
pricing envirorunent. Moreover, the fact that buyers are reporting lower
prices than are suppliers in all categories of technologies sfrongly indicates that the current SCM market can aptly be described as a buyers'
market.
The difference in buyers' and suppliers' reported prices also tends to be
higher for the lower technologies (larger line width). This suggests it is
very much a phenomenon of the lagging technologies where supply is
plentiful and most prone to pricing pressure. In confrast, 0.35-micron, the
most advanced foundry process available, experiences little or no discrepancy in buyers' and suppliers' reported prices. Demand for leading-edge
SCM capacity should remain robust and help wafer pricing in advanced
processes—for example 0.35iam—to stay relatively firm in the coming
months.
>
How Much Have SCM Wafer Prices Changed?
Compared with one year ago (the previous worldwide survey was in
October 1995), foundry per-wafer prices in September 1996 averaged a
25 percent decline. Figures 1-1 and 1-2 compare the wafer prices for October 1995 and those reported by SCM suppliers and buyers in 1996 for
150mm and 200mm wafers, respectively. As Ulusfrated, the 1996 wafer
prices exhibit a decline ranging from negative 5 percent to negative 30 percent, depending on the process technologies. Notably, all processes (all
wafer sizes, line geometries, and metal layers) experienced price erosion
during the past year. One exception: There is no price comparison for 0.35micron process, which was not available in 1995, and so no prices were
reported.
SCMS-WW-MT-9602
©1996 Dataquest
CO
o
Table 1-1
September 1996 Foundry Wafer Prices for 150mm and 200mm Wafers, by Technology (U.S. Dol
1pm, 2ML*
1pm, 3ML 0.8pm, 2ML 0.8pm, 3ML 0.6pm ,2ML 0.6pm , 3 M
150mm Wafers
CO
o>
o
r>o
Suppliers' Responses on Wafer
Prices
High
710
860
1,10
600
600
628
680
753
72
82
600
625
685
800
900
1,00
348
400
550
600
570
60
466
502
613
673
738
79
24
20
2
650
480
600
600
580
High
Low
Low
Average
Ijuyers' Responds oaa Wfifelf l ^ c e s
@
Average
Difference between Buyers'
and Sellers' Averages (%)
2
CO
CO
OJ
o
0.8pm ,2ML 0.8pm, 3ML 0.6pm, 2ML 0.6pm, 3ML 0.5pm ,2ML 0.5pm , 3 M
Oi
200mm Wafers
Suppliers' R^ponses on Wafer
Prices
High
Low
Average
2,200
1,700
2,35
1,80
1,870
2,01
2,50
1,45
1,85
Buyers' Responses oriWadferl^ces
High
Low
Average
Difference between Buyers'
and Sellers' Averages (%)
[S3
CO
CO
CO
O)
1,200
1,150
1,500
1,200
1,650
1,800
1,200
1,300
1,900
1,500
1,175
1,350
1,410
1,543
1,650
13
Notes: Assumed baseline process of CMOS—13 to 16 masks for 0.5pm or tiigher, 14 to 18 masks for 0.35pm, no epitaxial, single-level poly, and m
per month.
Given by line geometry and number of metal layers; "1pm, 2ML' means a 1-micron, two-layer metal process.
Source: Dataquest (November 1996)
>
Figure 1-1
Buyers' and Suppliers' Reported ISOinm Foundry Wafer Prices, September 1996 versus
October 1995
Wafer Price (U.S. Dollars per Wafer)
1 400 —
1,200 -
Buyers' Average 9/96
^
^
^
^
nrtnhrr 10Ti
1,000-
"""
800-
600- ^ ^ ^ ^ ^
-^
400-
>
200-
n_
" i
1|im, 2ML
(
0.8^m, 2ML
1
I
0.6|.im, 2ML
0.6|im, 3ML
Process Type
1
0.5|im, 2ML
O.Sjirr , 3 M L
9684?7
Looking Ahead: SCM Wafer Price Projection
All survey respondents, foundry suppliers and wafer buyers alike, indicated expectation of further decline in foundry wafer prices during the
next six months from October 1996 to March 1997. Projection of declines
ranges from negative 5 percent to negative 40 percent, with an average of
negative 10 percent across process technologies and wafer sizes. Based on
the strong indication given by the survey, Dataquest projects that SCM
wafer prices wiU continue to experience downward pressure throughout
1997. Tables 1-2 and 1-3 present the projection of SCM wafer prices for
150mm and 200mm foundry wafers, respectively.
Dataquest's SCM foundry wafer pricing model for 1997 calls for a continuing decline in wafer prices in aU technologies and all wafer sizes. After
crashing through to the U.S.$1,000 price support in 1996,150mm wafers
will likely experience prices under U.S.$900 in 1997. For larger geometries,
such as 1.0-micron and 0.8-micron processes, 150mm foundry wafers are
expected to bring in less than U.S.$700 apiece during the next year.
r
SCI\/IS-WW-l\/IT-9602
©1996 Dataquest
December 23,1996
Figure 1-2
Buyers' and Suppliers' Reported 200mm Foundry Wafer Prices, September 1996 versus
October 1995
Wafer Price (U.S. Dollars per Wafer)
4,000Suppliers' Average 9/96
3,500-
Buyers' Average 9/96
October 1995
3,000-
2,500 -
2,000-
1.500-
1,000-
500-
0,8jim,
2ML
I
O.Bum,
3ML
I
0.6M.m,
2ML
I
I
O.Stim,
0.5|j.m,
3ML
2ML
Process Type
0.5iinn,
3ML
0.35^m,
3ML
0.35|j.m,
4ML
Table 1-2
150mm SCM Wafer Price Projection, 1995-1997 (U.S. Dollars per Processed Wafer)
Technology
October 1995
September 1996
March 1997
Projection
September 1997
Projection
l.Ovim, 2ML
636
466
440 to 510
420 to 510
l.Ovim, 3ML
684
502
470 to 550
450 to 550
0.8pm, 2ML
772
613
580 to 640
550 to 620
O.Svim, 3ML
844
673
630 to 700
590 to 680
0.6]im, 2ML
927
738
700 to 740
660 to 710
0.6pm, 3ML
1,031
799
730 to 790
670 to 750
0.5pm, 2ML
1,205
859
770 to 850
690 to 800
0.5pm, 3ML
1,307
912
820 to 900
730 to 850
Notes: Assumed baseline process of CMOS—13 to 16 masks for 0.5pm or higher, 14to 18 masks for 0.35pm., no epitaxial, single-level
poly, and minimum volume of 500 unprobed wafers per month.
October 1995 prices are average of surveyed responses; September 1996 prices are average of surveyed SCM buyers' responses.
SCIVIS-WW-MT-9602
©1996 Dataquest
December 23,1996
Table 1-3
200mm S C M Wafer Price Projection, 1995-1997 (U.S. Dollars per Processed Wafer)
March 1997
Projection
September 1997
Projection
980 to 1,110
910 to 1,030
1,020 to 1,190
Technology
October 1995
September 1996
0.8]im, 2ML
0.8>iin, 3ML
1,352
1,391
1,175
1,350
0.6pm, 2ML
0.6pm, 3ML
1,844
1,958
1,410
1,543
0.5pm, 2ML
0.5pm, 3ML
0.35pm, 3ML
0.35pm, 4ML
2,169
1,815
1,970
1,540 to 1,720
1,630 to 1,870
1,380 to 1,590
2,756
3,036
2,480 to 2,610
2,230 to 2,470
2,450 to 2,730
2,370
NA
NA
1,130 to 1,280
1,170 to 1330
1,280 to 1,460
2,730 to 2,880
1,050 to 1,230
1,150 to 1,350
1,460 to 1,730
NA = Not applicable
Note: Assumed baseline process of CMOS—13 to 16 masks for O.Spm or higher, 14 to 18 masks for 0.35|jm, no epitaxial, single-level
poly, and minimum volume of 500 unprobed wafers per month.
October 1995 prices are average of surveyed responses; September 1996 prices are average of surveyed SCM buyers' responses.
For 200mm SCM foundry wafers in 1997, profit margins for 0.5-micron
process wafers will see continuing pressure as prices are expected to fall
through the U.S.$1,800 mark. Further pressure on 0.5-micron pricing will
also come from the projected substitution of 0.5-micron technology by
0.35-micron as the leading-edge SCM volume production process.
Dataquest believes by the first half of 1998,0.35-micron will emerge as the
mainstream SCM process. By the end of 1997, when many new foundry
fabs will have entered into volume production in 0.35-micron, wafer pricing for 0.35-micron SCM process will then serve as the most important reference point for pricing of all SCM processes.
SCIVIS-WW-IVIT-9602
©1996 Dataquest
December 23,1996
Chapter 2
Semiconductor Contract Manufacturing
IVIarlcet Forecast
^ ^ ^ ^ ^ ^ ^ ^ ^ .
SCM Supply Surge
While demand for SCM capacity in the next several years (1996 to 1999) is
projected to continue to grow at a steady pace, there will be an even
greater increase in the supply of SCM capacity. Much of the SCM capacity
increase is contributed by an abundance of new fab construction slated
for the next few years. Of the 16 dedicated foundry companies in the
world, all have plans to buUd one or more new fabs during 1996 to 1999.
Table 2-1 lists the dedicated foundry companies and their fab plans.
Because some of the dedicated foundries are new companies that may not
have the financial and technological wherewithal required to build a mode m IC fab, Dataquest assigns a probability to indicate the likelihood of the
new fabs being actually built. As shown in the table, all new foundry fabs
but a few have high probabilities of being buUt and successfully going into
volume production. Not counting the lower-probability projects (50 percent or lower), the dedicated foundry companies will, over the next three
years, put into place new capacity that is more than four times the total
dedicated foundry output at the end of 1995.
Besides the dedicated foundries, there is also a rising number of integrated
device manufacturers (IDMs) offering foundry services. Most significant
are the Korean IDMs, including Samsung and LG Semicon, which are
offering ample leading-edge SCM capacity with very competitive wafer
pricing. In Taiwan, United Microelectronics Corporation has announced it
will spin off aU of its product divisions to become a dedicated foundry. By
the end of 1997, all of UMC's IC manufacturing will be devoted to foundry
production. Winbond will likely maintain at least 30 percent of its capacity
as foundry business. In the United States, IBM remains the most important
and largest supplier of leading-edge SCM production. Other important
foundry suppliers include well-known IDMs such as LSI Logic, Texas
Instruments, VLSI Technology and medium or small SCM vendors,
including IMP, IC Works, AMI, Orbit, and others.
SCM Capacity Supply and Demand imbalance Forecast
SCM capacity demand and supply in 1995 through 2000 have been estimated and compared. Dataquest has constructed a market projection that
portrays what will most likely be the users' perception of the capacity
availability in the SCM market in the years ahead. In forecasting the SCM
supply/demand outlook, Dataquest continues to use the guideline that a
balanced supply-to-demand SCM market would require about 5 percent
to 10 percent higher supply than demand to account for the inevitable
inefficiencies in matching customer requirements and supplier capability.
The assumption that the SCM market is price elastic is also maintained.
The SCM supply/demand imbalance analysis, including forecast assumptions, is shown in Table 2-2.
SCMS-WW-MT-9602
©1996 Dataquest
Table 2-1
Dedicated Foundry Companies' N e w Fab Plans, 1996-1999
Dedicated Foundry Company
Fab Plan
ASMC (China)
Anam Semiconductor Electronics
Fab 2 (6-inch)
Champlain
Fab 1 (8-inch)
Fab 3 (8-inch)
Fab 1 (8-inch)
Probability
(%)
80
100
SubO.Spm
Production
Start
X
1996
1997
X
1998
Q4/1997
5
100
Extel Semiconductor
Fab 1 (6-inch)
GMT Microelectrorucs
Fab 2 (6-inch)
MidWest Microelectronics
Fab 1 (8-inch)
Fab 1 (6-inch),
Fab 2 (8-inch)
100
Newport Waferfab Ltd.
80
K
SubMicron Technology
Fab 2 (6-inch),
Fab 3 (8-inch)
Fab 1 (8-inch)
100
X
Tower Semiconductor
Fab 2 (8-inch)
TSMC
Fab 4 (8-inch),
Fab 5 (8-inch)
40
100
X
X
United IC Corp. (UMC Joint Venture No. 2)
United Semiconductor Corp.
(UMC Joint Venture No. 1)
Fab 1 (8-inch)
100
n
Q3/1997
Fab 1 (8-inch)
100
X
1996
Fab 1 (8-inch)
Fab 1 (8-inch)
30
100
X
X
Q4/1997
United Silicon Corp.
(UMC Joint Venture No. 3)
WaferTech (TSMC Joint Venture)
Total Number of New Fotindry Fabs
1996
Q4/1997
50
80
X
1998
1997,1998
20
Q4/1996,
Q4/1997
Q3/1997
1999
1997,1998
1998
19 new fabs
(14 8-inch, 5 6-inch)
Note: Probability is Dataquest's estimation of the probability that the fab will actually be built and enter into production.
"Sub-0.5 |jm" denotes whether the fab will have sub-0.5-micron process capabilities.
Projection of the SCM supply and demand imbalance for 1995 to 2000 is
shown in Figure 2-1. The projection pronounces the end of the SCM capacity constraint of the previous years (1994 and 1995), to be followed by an
extended period of ample supply in 1996 through the year 2000. As shown
in the figure, oversupply in SCM capacity begins in 1996. The years 1997
and 1998 will witness the unveUing of much of the foundry suppliers'
ambitious capacity buildup as more than 10 new 200mm wafer fabs will
enter into and ramp u p production during the two-year period. This is
expected to add significantly to the foundry supply surplus, allowing the
supply/demand imbalance to reach over 25 percent by 1999. At the same
time, however, the oversupply will to lead to a continued downward
trend in foundry wafer prices—a situation that wiU likely spur demand.
Increased SCM demand, ranging from 10 percent to 20 percent, as a result
of price elasticity has been built into the Dataquest SCM market forecast
model. Price elasticity will, however, have only a modest ameliorating
effect on the projected supply surplus. Dataquest believes the three years
from 1997 through 1999, encompassing the 0.5-micron and 0.35-micron
technology generations, will be a period of excess SCM supply.
SCI\^S-WW-IVIT-9602
©1996 Dataquest
December 23,1996
C/J
o
$
S
Table 2-2
Dataquest Projection of the Semiconductor Contract Manufacturing Supply and Demand Dyn
Year
"Real" Oversupply or Undersupply
1 percent to 3 percent undersupply
Market Characteristics
Tight supply
Price firnmess
Sellers' market
Market For
Average of
1996
3 to 5 percent oversupply in overall SCM
capacity
Oversupply in mainstream capacity
3 to 6 percent undersupply at leading edge in
first half of year turning into oversupply by
Q4
Bifurcation of SCM market into mainstream
(> 0.5 micron) and leading edge (0.5 micron
and smaller)
Adequate/excess supply in mainstream
capacity, v^rith leading edge also transitioning to a buyers' market by 2H/1996
Wafer price decline sets in lH/1996 and
quickens in 2H/1996
Market fore
elasticity—
to absorb
demand d
1997
capacity
Oversupply in all SCM process technologies
with the exception of 0.35 micron
5 percent to 10 percent undersupply in
0.35 micron capacity beginning to ease by
Q4
capacity
Ample supply for all process technologies
Mainstream is now 0.5 micron and greater
Leading edge is 0,35 micron with three to
four layers of metal,
Continued wafer price dedine for most
process teclinologies
Buyers' market in mainstream; sellers' market
in leading-edge technology (0.35 micron)
Six or seven
venture fo
tion durin
duction a
Market fore
absorb 15
1995
CO
a>
C3
tS3
©
CO
CO
CT)
a
Pi
1998
1999
2000
CD
3
CT
tS3
00
CO
CO
05
capacity
Ample supply for all process technologies
except 0,25 micron
12 percent oversupply in overall SCM
capacity
Comfortable supply for all process
technologies except 0.25 micron
Source: Dataquest (November 1996
Convert to buyers' market for all process tech- Three new
fabs enter
nologies
Price softness
Continued
Increased demand spurred by attractive
Increased d
excess sup
foundry wafer prices for all process
technologies
Increased d
Buyers' market
excess sup
More aggressive pricing
Increased demand
0.25 micron
Demand for 0.25 micron prpqe^lijEig^m tflf t ^
Increased d
Buyers' market
excess sup
Price declines lessening
Rising capa
New investment begins again
10
Figure 2-1
Worldwide S C M Capacity Imbalance Projection
Based on the projected SCM supply/demand outlook, Tables 2-3 and 2-4
present the SCM market forecast by regions and supply and demand
sources, respectively, in terms of processed silicon wafer area (millions of
square inches of silicon, or MSI).
An oversupply in 1998 and 1999 is expected to keep SCM suppliers
focused on technology migration and transition to a higher-margin product mix. This should help attract higher SCM usage and permit higher
foundry wâfer prices in leading-edge processes, although prices in
mainstream and laggard technology areas will see continued decline.
Dataquest believes that the net result is a modest but steady increase in the
average selling prices (ASPs) of SCM services through the year 2000. This
also means a higher overall SCM niarket, in dollar revenue terms.
Table 2-5 presents the SCM market forecast by region.
Table 2-3
Semiconductor Contract Manufacturing Market Forecast b y Region, 1993-2000
(Millions of Square Inches of Silicon)
Americas
Japan
Europe
Asia/Pacific
Worldwide SCM Market
CAGR (%)
1995-2000
1993
1994
1995
1996
1997
1998
1999
2000
54.8
94.4
68.6
117.4
95.1
129.5
121.8
124.9
156.5
133.8
192.7
244.1
26.4
150.2
15.2
23.8
2.4
3.5
30.3
5.7
32.2
7.0
37.5
8.4
44.9
10.7
173.1
55.7
306.7
191.4
14.2
66.0
18.5
16.9
26.5
166.7
213.3
260.6
285.9
336.2
398.4
487.1
582.6
17.5
8.1
SCMS-WW-MT-9602
©1996 Dataquest
December 23,1996
Semiconductor Contract Manufacturing l\/larl<et Forecast
11
Table 2-4
Semiconductor Contract Manufacturing Market Forecast by Supply and Demand
Sources, 1993-2000 (Millions of Square Inches of Silicon)
1993
1994
1995
1996
1997
1998
1999
2D00
CAGR (%)
1995-2000
Fabless
IDM
41.4
123.7
47.4
163.1
61.5
194.4
76.5
202.6
97.3
230.3
121.8
265.4
159.5
313.2
207.0
356.7
27.5
12.9
System OEMs
1.6
166.7
3.9
214.4
5.4
261.3
7.0
286.2
9.1
336.7
11.7
15.1
19.4
399.0
487.8
583.1
29.2
17.4
24.0
36.7
46.9
70.4
111.2
171.8
226.0
266.2
41.5
142.7
166.7
177.7
214.4
214.4
215.7
286.2
225.5
336.7
227.2
261.8
487.8
316.9
583.1
8.1
17.4
Demand Sources
Total SCM Market
Supply Sources
Dedicated
IDM
Total SCM Market
261.3
399.0
Table 2-5
Semiconductor Contract Manufacturing Market Revenue Forecast by Regions, 19932000—November 1996 Update (Millions of U.S. Dollars)
CAGR (%)
1995-2000
1993
1994
1995
1996
1997
1998
1999
2000
Americas
1,537
2,200
3,167
4,061
6,655
8,750
Japan
1,367
2,215
598
2,138
3,236
645
759
2,780
922
11,428
3,672
248
1,789
471
5,279
2,407
1,155
1,386
10.6
18.3
69
3,222
105
4,565
172
6,152
204
7,049
254
336
10,693
470
13,612
643
17,129
30.2
22.7
Europe
Asia/Pacific
8,700
29.3
SCM Contribution to tlie Semiconductor iVIarlcet
Figure 2-2 shows the forecast for the SCM market and its contribution to
the semiconductor market. Dataquest estimates that SCM products are
sold on the merchant semiconductor market at a multiple of the wafer
price paid by SCM customers. This multiple ranges from 1.6 to as high as
4, depending on the specific markets (for example, graphics chips,
chipsets, mass flow controllers, programmable logic devices, or mixedsignal devices) and the SCM customers' marketing power (distribution,
brand recognition, or design-wins). In the present analysis, an average of
2.5 in 1995, rising to 2.8 for 2000, is used to account for the migration of
SCM products to a higher-margin mix enabled by SCM suppliers' continue adoption of advanced semiconductor process technologies. As
shown in the figure, the contiibution of SCM products to the overall
merchant semiconductor market is expected to rise from about 10 percent
in 1995 to 16 percent by year 2000. In other words, by the year 2000,16 percent of the semiconductor products sold worldwide will be manufactured
by semiconductor contract manufacturers.
SCI\/IS-WW-l\/IT-9602
©1996 Dataquest
December 23,1996
12
Figure 2-2
SCM Market Forecast and Contribution to the Semiconductor Market
SCM Contribution to Worldwide
Merchant Semiconductor Market (%)
Worldwide SCM
Market (U.S.$B)
la-
18
te
^
14
_
SCM Contribution to Worldwide Merchant
Semiconductor Market
12
10
8
6
4
2
0
SCIVIS-WW-MT-9602
©1996 Dataquest
December 23,1996
i
Internet address
Via fax
Dataquest
A Gartner Group Cornpany
(408) 468-8605
[email protected]
(408) 954-1780
The content of this report represents our interpretation and anal5'sis of information generally available to the public
or released by resporîble individuals in the subject companies, but is not guaranteed as to accuracy or completeness.
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Phone:+44 1784 431 611
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Research Affiliates and Sales Offices:
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Dataquest Germany
Kronstadter Strasse 9
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Phone: +49 89 93 09 09 0
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Phone: 81-3-3481-3670
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Beijing, China
Dataquest
©1996 Dataquest
i
DataQuest
Semiconductor Five-Year Forecast
Trends—Spring 1996
>
Market Trends
Program: Semiconductors Contract l\/lanufacturing Services Worldwide
Product Code: SCMS-WW-MT-9601
Publication Date: May 13,1996
Semiconductor Five-Year Forecast
Trends—Spring 1996
Market Trends
Program: Semiconductors Contract IVIanufacturing Services Worldwide
Product Code: SCMS-WW-MT-9601
Publication Date: May 13,1996
Semiconductor Five-Year Forecast Trends—Spring 1996
Table of Contents
1. Introduction and Assumptions
Forecast Summary
Forecast Highlights
Exchange Rates
2. Worldwide Forecast by Product Family
Worldwide Forecast Data
3. Worldwide Semiconductor Forecast by Region
4. Americas Forecast by Product Family
5. Japan Forecast by Product Family
6. Europe Forecast by Product Family
7. Asia/Pacific Forecast by Product Family
8. Forecast by Product
Microcomponent ICs
Memory ICs
LogicICs
Analogies
Total Monolithic ICs
Discrete Devices
Optical Semiconductors
9. Forecast by Technology
Digital MOS and Bipolar IC Forecast
Appendbc A—^Japanese Revenue History and Forecast in Yen
Appendix B—European Revenue History and Forecast in ECU
Appendix C—Definitions
Appendix D—Historical Exchange Rates
SCIVIS-WW-IVIT-9601
©1996 Dataquest
Page
1
1
2
3
5
5
9
11
15
19
23
27
27
28
29
29
29
30
31
33
33
35
39
43
47
May 13,1996
Semiconductors Contract Manufacturing Services Worldwide
List of Figures
Figure
2-1 Market Share by Product, 1995 and 2000
3-1 Semiconductor History and Forecast by Region
3-2 Regional Consumption as a Percentage of Total
4-1 Product Comparison, Americas Market, 1995 and 2000
5-1 Product Comparison, Japanese Market, 1995 and 2000
6-1 Product Comparison, European Market, 1995 and 2000
7-1 Product Comparison, Asia/Pacific Market, 1995 and 2000
8-1 Worldwide Semiconductor Forecast by Product
9-1 MOS versus Bipolar Forecast
A-1 Comparison of Revenue Shipment Growth in the Japan
Region—^Dollars versus Yen
B-1 Comparison of Revenue Shipment Growth in European
Region—^Dollars versus ECU
Page
8
9
10
14
18
22
26
27
33
4
35
39
i
SCI\/1S-WW-MT-9601
©1996 Dataquest;
May 13,1996
Semiconductor Five-Year Forecast Trends—Spring 1996
List of Tables
Table
1-1
2-1
2-2
2-3
2-4
2-5
3-1
3-2
4-1
4-2
4-3
4-4
5-1
5-2
5-3
5-4
6-1
6-2
6-3
6-4
7-1
7-2
7-3
7-4
SCMS-WW-MT-9601
Page
Changes in 1996 Forecast
2
Worldwide Semiconductor Growth by Product Type
5
Worldwide Semiconductor Market, Six-Year Revenue History,
1990-1995
6
Worldwide Semiconductor Market, Five-Year Revenue Forecast,
1995-2000
6
Worldwide Semiconductor Market, Historic Revenue Growth,
1990-1995
7
Worldwide Semiconductor Market, Forecast Five-Year Revenue
Growth
7
Total Semiconductor Consumption by Region, Five-Year Revenue
Forecast, 1995-2000
10
Total Semiconductor Growth Forecast by Region
10
Americas Semiconductor Market, Six-Year Revenue History,
1990-1995
12
Americas Semiconductor Market, Five-Year Revenue Forecast
1995-2000
12
Americas Semiconductor Market, Historic Revenue Growth,
1990-1995
13
Americas Semiconductor Market, Forecast Five-Year Revenue
Growth
13
Japanese Semiconductor Market, Six-Year Revenue History,
1990-1995
.16
Japanese Semiconductor Market, Five-Year Revenue Forecast,
1995-2000
16
Japanese Semiconductor Market, Historic Revenue Growth,
1990-1995
17
Japanese Semiconductor Market, Forecast Five-Year Revenue
Growth
17
European Semiconductor Market, Six-Year Revenue History,
1990-1995
20
European Semiconductor Market, Five-Year Revenue Forecast,
1995-2000
20
European Semiconductor Market, Historic Revenue Growth,
1990-1995
21
European Semiconductor Market, Forecast Five-Year Revenue
Growth
21
Asia/Pacific Semiconductor Market, Six-Year Revenue History,
1990-1995
24
Asia/Pacific Semiconductor Market, Five-Year Revenue Forecast,
1995-2000
24
Asia/Pacific Semiconductor Market, Historic Revenue Growth,
1990-1995
25
Asia/Pacific Semiconductor Market, Forecast Five-Year Revenue
Growth
25
©1996 Dataquest
May 13,1996
iv
List of Tables (Continued),
Table
Page
8-1 Microcomponent IC Market, Five-Year Revenue Forecast,
1995-2000
28
8-2 Memory IC Market by Region, Five-Year Revenue Forecast,
1995-2000
28
8-3 Logic IC Market by Region, Five-Year Revenue Forecast,
1995-2000
29
8-4 Analog IC Market by Region, Five-Year Revenue Forecast,
1995-2000
30
8-5 Total Monolithic IC Market by Region, Five-Year Revenue
Forecast, 1995-2000
30
8-6 Discrete Device Market by Region, Five-Year Revenue Forecast,
1995-2000
30
8-7 Optical Semiconductor Market by Region, Five-Year Revenue
Forecast, 1995-2000
31
9-1 Semiconductor Market by Process Technology, Six-Year Revenue
History, 1990-1995
34
9-2 Semiconductor Market by Process Technology, Five-Year
Revenue Forecast, 1995-2000
34
A-1 Japanese Semiconductor Market, Six-Year Yen Revenue History,
1990-1995
36
A-2 Japanese Semiconductor Market, Five-Year Yen Revenue
Forecast, 1995-2000
36
A-3 Japanese Semiconductor Market, Yen Revenue Growth,
1990-1995
37
A-4 Japanese Semiconductor Market, Forecast Five-Year Yen
Revenue Growth, 1995-2000
37
B-1 European Semiconductor Market, Six-Year ECU Revenue
History, 1990-1995
40
B-2 European Semiconductor Market, Five-Year ECU Revenue
Forecast, 1995-2000
40
B-3 European Semiconductor Market, Historic Revenue Growth,
1990-1995
41
B-4 European Semiconductor Market, Forecast Five-Year ECU
Revenue Growth, 1995-2000
41
D-1 Exchange Rates
47
SCI\/1S-WW-IVIT-9601
©1996 Dataquest
iVIay 13,1996
Chapter 1
Introduction and Assumptions,
Dataquest Semiconductor Group analysts provide a semiconductor device
revenue forecast twice a year, in April and October. These revenue forecasts, which cover a five-year horizon, comprise forecasts for the major
product families and the four main geographic semiconductor-consuming
regions. This document, completed in April 1996, is the latest of these forecasts. Although revenue is subject to the vagaries of exchange rate variations, it is the most useful means to consolidate the forecasts of widely
differing products and the most meaningful measure of markets and companies. Unit forecasts, which underlie the microcomponent and memory
IC forecasts, are doUarized to arrive at the revenue forecast presented here.
Average annual exchange rates are used for revenue history, and the most
recent "average" exchange rate is extended into the five-year forecast horizon. Dataquest does not forecast exchange rates.
The forecast is presented in two local currencies in Appendixes A and B, in
yen for the Japanese market forecast in Appendix A and in ECU for the
European market forecast in Appendix B. The Americas market and the
Asia/Pacific-ROW market are forecast only in U.S. doUars.
In 1996, the "North America" market has been expanded to include the
total North and South America region and will be known as the "Americas" region from this point forward. This matches the divisions found in
Dataquest's 1995 market share data.
Forecast Summary
The PC market, now the dominant market for semiconductors, grew
nearly 26 percent in 1995. Semiconductors grew by 37 percent as demand
continued to outstrip supply and DRAM average selling prices (ASPs)
continued strong, at $25 per megabyte. DRAM revenue growth, which
was 66 percent in 1993 and 60 percent in 1994, reached 81 percent in 1995.
The brakes on this growth were applied early in 1996 as ASPs tumbled.
The declining DRAM ASPs lead a number of factors that have aligned to
take our 1996 forecast down to a surprising 7.6 percent growth. Beside
DRAM, some other factors causing our 1996 forecast to drop under 8 percent are excess inventories, slowing markets, and a stronger yen. Inventory problems occurred as the fourth quarter PC market was well below
expectations, leaving the first half of 1996 struggling with an inventory
correction. Triggered by this correction, DRAM prices tumbled with prices
per megabyte going from $25 in 1995 to under $15 early in 1996. Although
we had anticipated DRAM price erosion in 1996, this price erosion
occurred far sooner and faster than we had forecast last fall.
It is important to recognize that these corrections do not signal an evaporating market. Although the semiconductor end markets have slowed,
they are still healthy. Dataquest's PC unit forecast for 1996 is still at 19 percent worldwide. If these problems were not severely impacting revenue,
we would still be forecasting growth between 15 percent to 22 percent.
Table 1-1 shows the impact of the major downside factors on our 1996
forecast.
SCMS-WW-MT-9601
©1996 Dataquest
Table 1-1
Changes in 1996 Forecast (Percent)
DRAM Revenue Growth (%)
Non-DRAM Product Growth (%)
Yen/Dollar Exchange Rate
Total Growth in 1996 (%)
October 1995
Forecast
33
18
93.90
22.1
This Forecast
1»
14*
107.05
7.6
Change
to Dollar
Growth (%)
-32
-4
-12
-14.5
Change to 1996
Worldwide
Forecast (%)
-8
-3
-3
-14.5
'Excludes change in yen/dollar exchange rate
Both DRAM and Japan represent about one-fourth of the total semiconductor market, so their impact on the worldwide 1996 forecast shows up
proportionately in the right column. If the 1996 yen-dollar exchange rate
does not differ from 1995, the 3 percent change to the worldwide forecast
would bring it back to double digits. If DRAM prices rebound more than
expected, the growth could move the forecast up into the "normal" 15 percent range. This forecast is highly leveraged off of the fortunes of these
two items.
Forecast Highlights
The following are the highlights of this forecast:
• Growth in 1996 drops under 8 percent after 37 percent growth in 1995.
• The PC market slows in 1996 to 19 percent unit growth versus 26 percent in 1995.
• The MPU market slows along with PC market. Price reductions bring
96 growth down to 17 percent.
• The DRAM price per bit will decline nearly 50 percent in 1996. Even
with a high rate of bit growth, revenue growth will be nonexistent.
• Non-DRAM products will grow by 14 percent in 1996, growth consistent with historical rates.
• The Asia/Pacific regional market will exceed Japan in 1998 and will
grow to 25 percent of the world market in 2000.
• The Americas forecast has decreased. Even with a 17 percent 1995
through 2000 compound aimual growth rate (CAGR), the Americas will
lose 1 percent of the world market (to 33.7 percent) by 1999 as Americas
growth slows.
• Like the Americas, the European market's growth has been revised
downward to a 17 percent CAGR from 1995 through 2000. Nonetheless,
the European market share will remain at 18 percent over the forecast
period.
We expect the semiconductor market to pass the $300 billion mark in 2000,
as the adjustments seen in 1996 will not greatly impact the long-term
growth of the market.
SCi\/lS-WW-MT-9601
©1996 Dataquest
l\yiay 13,1996
Introduction and Assumptions
Exchange Rates
The following exchange rates are used for the 1994 through 1999 forecast:
• ¥107.05 per dollar
• ECU 0.774 per dollar
The following chapters will discuss the forecast by product and region in
more detail.
SCMS-WW-I\/IT-9601
©1996Dataquest
May 13.1996
Chapter 2
Worldwide Forecast by Product Family
The growth by product in 1995 as well as the past five-year CAGR and
forecast 1995-through-2000 CAGR is shown in Table 2-1.
Memory ICs will show much slower growth as the five-year compounded
growth rate of 16 percent brings memory IC growth back in line. Microcomponent growiii, as well, will slow as the Americas market grows more
slowly and prices stabilize. Logic ICs and analog ICs are settling into
14 percent growth rates, growtii more consistent with the growSi of electronic equipment markets. Discrete devices have gained greater growth
potential with the lead of power and radio frequency (RF) transistors.
Despite the growth potential of logic ICs, analog ICs, discrete devices, and
optical semiconductors and the slowdown of memory IC growth, microcomponent and memory ICs will continue to increase their share of the
semiconductor market at the expense of these other categories.
The tables on the following pages provide the complete five-year forecast
by product type for the worldwide semiconductor market.
Worldwide Forecast Data
Tables 2-2 through 2-5 provide the five-year forecast by product type for
the worldwide semiconductor market.
Table 2-1
Worldwide Semiconductor Growth by Product Type (Revenue in Millions of Dollars)
1995 Revenue
Microcomponents
Memory Total
55,421
Logic/ASIC Total
Analog ICs
22,961
17,607
Monolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
34,513
1994-1995
Growth (%)
30.7
CAGR (%)
1990-1995
Actual
29.2
CAGR (%)
1995-2000
Forecast
64.4
22.0
34.6
13.5
15.4
14.8
24.8
16.5
13.8
14.7
130,502
1,935
132,437
14,023
4,811
151,271
SCMS-WW-MT-9601
©1996 Dataquest
17.6
38.5
16.2
38.2
8.5
24.4
16.1
1.4
15.9
30.3
23.7
12.8
14.8
11.6
12.1
36.9
22.6
15.4
Table 2-2
Worldwide Semiconductor Market, Six-Year Revenue History, 1990-1995 (Revenue in
Millions of Dollars)
Microcomponents
1990
9,584
1991
11,774
13,197
356
1992
14,359
1993
19,947
1994
1995
23,550
244
26,408
33,704
199
34,513
55,421
160
15,626
318
12,841
12,972
15,308
12,918
2,875
10,043
23,306
15,956
33,505
18,821
2,835
13,121
2,713
16,108
55,261
22,961
2337
20,624
10,180
12,513
71,966
15,263
94,196
17,607
130,502
CAGR (%)
1990-1995
29.2
Memory Total
Bipolar Memory
12,559
431
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
12,128
12,182
3,742
8,440
Analog ICs
Monolithic IC Total
8,845
43,170
47,460
1,289
44,459
1,395
53,083
1,335
48,855
54,418
1,463
73,429
1,665
95,861
1,935
132,437
14.8
24.8
8.5
24.4
7,674
2,412
8,035
2,804
8,155
2,688
9,083
3,006
10,763
3,889
14,023
4,811
12.8
14.8
54,545
59,694
65,261
85,518
110,513
151,271
22.6
Hybrid ICs
Total ICs
Discrete Devices
Optical
Semiconductors
Total Semiconductor
3,272
9,700
9,517
34.6
-18.0
35.4
13.5
-9.0
19.6
Table 2-3
Worldwide Semiconductor Market, Five-Year Revenue Forecast, 1995-2000 (Revenue in
CAGR (%)
1995-2000
1995
1996
1997
1998
1999
2000
34,513
55,421
39,945
46,524
64,213
65,532
93,666
77,645
118,680
17.6
55,749
54,885
75,098
160
55,261
119
55,630
79
93,587
71
118,609
-15.0
16.5
Logic/ASIC Total
Bipolar Logic
22,961
2337
24,910
2,012
MOS Logic
Analog ICs
Monolithic IC Total
Hybrid ICs
20,624
17,607
22,898
19,562
130302
140,166
1,947
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Total ICs
Discrete Devices
Optical
Semiconductors
Total Semiconductor
108
93
64,105
27,692
1,644
75,005
31,906
1,415
37,212
43,748
1,219
1,066
26,048
21,698
160,127
30,491
25,147
35,993
29,531
225,941
42,682
34,911
274,984
2,055
2,075
16.1
1.4
277,059
24,251
8,526
15.9
11.6
12.1
309,836
15.4
2,009
187,036
2,030
14,023
4,811
142,113
15,300
5,199
162,136
16,517
189,066
18,481
5,588
6,286
227,996
21,044
7,207
151,271
162,612
184,241
213,833
256,247
1,935
132,437
16.5
13.8
-14.5
15.7
14.7
SCMS-WW-MT-9601
©1996 Dataquest
May 13,1996
Worldwide Forecast by Product Family
Table 2-4
Worldwide Semiconductor Market, Historic Revenue Growth, 1990-1995 (Percentage
Revenue Growth over Preceding Year)
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analog ICs
Moriolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
1990
22.7
-20.8
-6.3
-21.3
3.4
-2.9
6.5
13.5
-0.2
-5.8
-0.3
4.8
0.2
0.4
1991
22.9
5.1
-17.4
5.9
6.5
-12.6
14.9
7.6
9.9
8.2
9.9
4.7
16.3
9.4
1992
22.0
18.4
-10.7
19.2
-0.4
-12.1
3.5
7.0
11.8
-4.3
11.4
1.5
-4.1
9.3
1993
1994
38.9
50.7
-23.3
52.2
32.4
23.5
-1.4
30.6
22.9
35.6
9.6
34.9
11.4
11.8
31.0
43.1
-18.4
43.8
18.0
-4.3
22.8
22.0
30.9
13.8
30.5
18.5
29.4
29.2
1995
30.7
64.4
-19.6
64.9
22.0
-13.9
28.0
15.4
38.5
16.2
38.2
CAGR (%)
1990-1995
29.2
34.6
-18.0
35.4
• 13.5
-9.0
19.6
14.8
24.8
8.5
24.4
30.3
23.7
12.8
14.8
22.6
36.9
Table 2-5
Worldwide Semiconductor Market, Forecast Five-Year Revenue Growth (Percentage
2000
CAGR (%)
1995-2000
18.0
17.0
1999
19.4
24.7
18.5
26.7
17.6
16.5
1
1997
1998
1995
30.7
64.4
1996
16.1
0.6
16.5
15.2
-19.6
64.9
-25.6
0.7
-9.2
15.2
-13.9
17.0
-15.1
24.8
-10.1
26.7
-15.0
16.5
22.0
-13.9
8.5
-13.9
11.2
15.2
-13.9
17.6
-12.6
13.8
-18.3
16.6
-13.9
-14.5
28.0
15.4
11.0
11.1
17.1
15.9
18.0
17.4
18.6
18.2
15.7
14.7
Monolithic IC Total
Hybrid ICs
38.5
16.2
7.5
0.6
13.8
10.9
14.2
16.8
1.0
20.8
1.2
21.7
1.0
16.1
1.4
Total ICs
Discrete Devices
38.2
7.4
9.1
14.1
16.6
11.9
20.6
13.9
21.5
15.2
15.9
11.6
8.1
7.5
13.3
12.5
147
16.1
19.8
18.3
20.9
12.1
15.4
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analog ICs
Total Semiconductor
30.3
23.7
36.9
7.6
3.2
8.0
SCI\/IS-WW-MT-9601
©1996 Dataquest
May 13,1996
Semiconductors Contract Manufacturing Services Woridwide
The impact of these varying rates of growth by product is shown in
Figure 2-1. In 1995, the PC-driven combination of microcomponent and
memory ICs gained market share rapidly, going from 54 percent of the
worldwide market in 1994 to almost 60 percent of the market in 1995. In
1992, memory and microcomponent ICs combined to share only 46 percent of the semiconductor market. This gain in market share driven by PC
growth will slow. As the figure shows, memories and microcomponents
will only gain a 3 percent share in the coming five-year period, after gaining 12 percent in tiie past five years. All other semiconductor categories,
logic ICs, analog ICs, discrete devices and optical semiconductors, will
lose market share, but at a slower pace than in the past.
€
Figure 2-1
Market Share by Product, 1995 and 2000
1996
Optical Semiconductc rs (3.2%)
20D0
Optical Semiconductors (2,8%)
Hybrid IC ( n . 7 % ^ _ |
^^^
Hybrid IC ( 1 . 3 % ) ^ ^ - - ^
L^îscreta
/^7.8%} \
v/^DJscrete v
/<X(9.3%) \
/ Analog/^^
\
/ Mixed
^ ^ \
[ (11.6%)
X^
\
\
Logic/ASIC
(15.2%)
Microcomponent \
(22.8%)
Y
1 Logic/ASIC
\
(14.1%)
X
/
/
/Analog/^^
\
Microcomponent
/ Mixed ^ ^ \
(25.1%)
/(11.3%)
X \
Memory
(36.6%)
M
#
\
\
i
/
Memory
(38.2%)
m
M
Total = $310 Billion
Total s $ 151 Billion
962904
i
SCi\/IS-WW-!VIT-9601
©1996 Dataquest
IViay13,1996
Chapter 3
Worldwide Semiconductor Forecast by Region
The worldwide revenue forecast is broken into the four constituent
regional revenue shipment forecasts in Figure 3-1. A significant feature of
this figure is the passing of Japan by Asia/Pacific in revenue by 1998.
The 1993-through-1995 period showed remarkable consistency in the
growth of all regions; the three-year compounded growth rates for the
Americas, Japan, Europe, and Asia/Pacific regions were 33 percent,
27 percent, 32 percent, and 39 percent, respectively. In the coming five
years, these growth rates will drop by half, and regional differences wiU
become more pronounced. Although we have forecast differing growth
rates by region, the forecast still does not suggest a major downturn in the
coming five years, only a period of adjustment. The negative growth
shown for Japan in 1996 is because of an expected dollar devaluation; the
growth would be nearly 12 percent in yen.
The regional revenue data for the five-year semiconductor forecast is listed
in Table 3-1 and the annual growth by region in Table 3-2.
The effect of this forecast on the share of the total market by region is provided in Figure 3-2, where the lower anticipated growth for the Japanese
market results in a continuing decline of the Japanese market share of the
total market. The decline in the Japanese market is neatiy mirrored by the
rise in the Asia/Pacific market; these changes are tightly related with the
shift of Japanese manufacturing to Asia/Pacific sites erUiandng the
growth of Asian markets.
Figure 3-1
Semiconductor History and Forecast by Region
Billions of Dollars
100-
,
Japan
80-
<:::^^
6040-
^ ^ ^ ^ ^
_ ^ ^ _ ^ ^ - ^ ;::jr=-F^'^^*'^
20-5
^~\
1993
\
1994
1
1995
1996
1
1997
1
1998
1
1999
2000
962905
SCMS-WW-MT-9601
©1996 Dataquest
10
Table 3-1
Total Semiconductor Consumption by Region, Five-Year Revenue Forecast, 1995-2000
(Revenue in Millions of Dollars)
Americas
Japan
Europe
Asia/Pacific
Semiconductor Total
1995
1996
48,349
42,164
28,341
52,478
32,417
151,271
41,244
31,479
37,411
162,612
1997
60,217
1998
70,352
45,286
35,734
51,144
85,481
60,212
41,079
51,258
213,833
48,433
62,121
256,247
43,004
184,241
1999
2000
104,579
CAGR (%)
1995-2000
16.7
71,693
56,828
11.2
14.9
18.8
15.4
76,736
309,836
Source: Dataquest (May 1996}
Table 3-2
Total Semiconductor Growth Forecast by Region (Percentage Revenue Growth over
Preceding Year)
Americas
1995
35.2
Japan
Europe
36.0
35.6
Asia/Pacific
42.0
36.9
Semiconductor Total
1996
1997
14.7
1998
15.4
9.8
13.5
15.0
12.9
15.0
19.2
7.6
13.3
16.1
8.8
-2.2
11.1
16.8
1999
21.5
17.7
17.9
21.2
19.8
2000
22.3
CAGR (%)
1995-2000
16.7
11.2
14.9
19.1
17.3
23.5
20.9
18.8
15.4
Figure 3-2
Regional Consumption as a Percentage of Total
Percentage of World Dollar Shipments
45-
Americas
Japan
Europe
•
Asia/Pacific
5—I
1
1
1
1
1
1
1
1
1
1—
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
SCMS-WW-MT-9601
©1996 Dataquest
I\/Iay13,1996
Chapter 4
Americas Forecast by Product Family.
The five-year forecast for the Americas market (the more inclusive successor to the North America region) is based on the following assumptions:
• The Americas PC market is slowing. Windows 95 didn't materialize as
the strong driver of growth. Many businesses are waiting for \^^ndows
NT before the next big hardware/software upgrade cycle. This slowing
of PC demand in the business community coupled with a saturation of
the home PC market has left the forecast unit growth in 1996 at 13 percent. The lowered growth expectation has impacted all PC-related business (more than 50 percent of the Americas semiconductor market).
• Pentium processors pushed u p microprocessor (MPU) revenue strongly
in 1995. With Intel's Pentium price reductions, a slowing Americas market, and no looming Pentium Pro changeover in 1996, MPU market
growth is expected to drop to about half of 1995's 24 percent growth.
• High-ASP semiconductors, such as x86 processors and single in-line
memory modules (SIMMs), will continue to be strongly consumed in
the Americas and added to PCs or motherboards manufactured in the
Asia/Pacific region.
• Price reductions in Pentium processors and free-faUing DRAM prices
will accelerate the consumption of higher-performance MPUs and
larger DRAM configurations. The same money will buy twice the PC in
1996; a prospect that may develop new customers but that also runs the
risk of alienating home PC consumers w h o may tire of the treadmill
nature of PC bujdng and six-month obsolescence.
• Because of the strong computer market, microcomponent and memory
ICs grew from 61 percent of semiconductor revenue in the Americas
market in 1994 to 68 percent in 1995, a somewhat unnatural spurt of
growth that will not be repeated in 1996. We expect this share to drop to
67 percent in 1996, because memory IC revenue growth will lag all other
major device families. By the year 2000, microcomponent and memory
ICs will account for 70 percent of semiconductor revenue in the Americas, a slow ramp from 1995's 68 percent.
• DRAM price-per-bit declines of 40 percent to 50 percent will be offset by
increased bit demand, but this will barely keep DRAM revenue growth
positive in 1996.
• Discrete device growth (22 percent in 1994 and 30 percent in 1995)
increasingly comes from the use of power MOS field-effect transistors
(MOSFETs) and insulated gate bipolar transistors (IGBTs) in switching
power supplies and peripheral drivers and the increasing use of RF
devices. MOSFETs and IGBTs showed 37 percent and 59 percent growth
in 1995, respectively. These devices will continue to post double-digit
growth in 1996.
Tables 4-1 through 4-4 provide details of the Americas semiconductor
market.
SCMS-WW-MT-9601
©1996 Dataquest
11
12
Semiconductors Contract l\/lanutacturing Services Worldwide
Table 4-1
Americas Semiconductor Market, Six-Year Revenue History, 1990-1995 (Revenue in
1990
1991
MiCTocomponents
3,381
Memory Total
Bipolar Memory
4,485
160
3,916
4,641
1992
5,282
5,837
MOS Memory
Logic/ASIC Total
4,325
4,101
1,417
2,684
131
4,510
4,070
130
5,707
4,287
1,200
2,870
2,397
15,024
1,102
Bipolar Logic
MOS Logic
Analog ICs
Monolithic IC Total
Hybrid ICs
2,404
14,371
245
Total ICs
14,616
Discrete Devices
1,611
313
16,540
Total Semiconductor
1993
7,620
8,868
83
8,785
5,549
1,090
4,459
3,304
1994
9,839
1995
12,421
CAGR (%)
1990-1995
29.7
12,535
66
12,469
6,323
20,530
55
35.6
-19.2
901
5,422
20,475
7,528
741
6,787
36.5
12.9
-12.2
20.4
3,820
32,517
3,995
44,474
10.7
25.3
347
32,864
378
44,852
9.1
2,870
627
25.1
12.2
14.9
48,349
23.9
245
15,269
3,185
2,689
18,095
309
18,404
1,389
332
1,603
423
1,811
486
2,212
697
16,990
20,430
27,926
35,773
25341
288
25,629
Table 4-2
Americas Semiconductor Market, Five-Year Revenue Forecast 1995-2000 (Revenue in
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
1995
12,421
20,530
55
20,475
Logic/ASIC Total
Bipolar Logic
7,528
741
MOS Logic
Analog ICs
6,787
Monolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
1996
1997
1998
1999
2000
CAGR (%)
1995-2000
14,073
21,145
16,182
24,297
18,779
28,647
21,950
36,710
25,575
47,307
15.5
18.2
40
33
24,264
17
20
36,690
12,887
17
-20.9
18.2
21,105
8,400
675
7,725
4,575
9,581
576
9,005
5,315
422
47,290
15,320
360
10,570
6,232
12,465
7329
14,960
8,652
17.1
16.7
64,732
78376
96,854
163
385
400
79,261
97,254
1.1
16.7
14.7
28,620
11,074
504
3,995
44,474
48,193
378
345
55,375
352
44,852
48,538
55,727
370
65,102
2,870
627
3,225
3,650
4,190
4395
5,700
715
52,478
840
60,217
1,060
70352
1,325
85,481
104,579
48,349
1,625
153
-13.4
21.0
16.7
SCMS-WW-MT-9601
©1996 Dataquest
May 13,1996
Americas Forecast by Product Family
13
Table 4-3
Americas Semiconductor Market, Historic Revenue Growth, 1990-1995 (Percentage
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analog ICs
Monolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
1990
20.9
-24.6
-11.1
1991
15.8
1992
34.9
3.5
-18.1
25.8
-0.8
-25.1
5.8^
-2.6
10.9
4.3
-0.8
-15.3
6.9
26.5
5.3
-8.2
8.0
-3.2
-0.3
4.5
0
12.2
20.4
-3.5
-3.2
-1.7
-4.9
-3.1
4.5
-13.8
6.1
2.7
11.0
26.1
20.5
15.4
27.4
20.2
1993
44.3
51.9
-36.2
1994
29.1
41.4
53.9
29.4
-20.5
41.9
13.9
-1.1
40.0
-17.3
21.6
22.9
15.6
28.3
20.5
28.2
40.0
-6.8
39.3
13.0
14.9
36.7
22.1
43.4
28.1
1995
26.2
CAGR (%)
1990-1995
29.7
63.8
-16.7
64.2
35.6
-19.2
36.5
12.9
-12.2
20.4
19.1
-17.8
25.2
10.7
4.6
36.8
8.9
36.5
29.7
-10.0
35.2
25.3
9.1
25.1
12.2
14.9
23.9
Table 4-4
Americas Semiconductor Market, Forecast Five-Year Revenue Growth (Percentage
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Logic/ASIC Total
Bipolar Logic
CAGR (%)
1995-2000
1996
1997
1998
63.8
14.2
3.0
15.0
14.9
16.0
17.9
16.9
28.1
16.5
28.9
15.5
18.2
-16.7
64.2
-27.3
3.1
-18.2
-20.9
18.2
11.6
-8.9
15.6
-12.5
-25.9
28.2
16.4
-15.0
28.9
19.1
-17.8
25.2
-17.5
15.0
14.1
-14.7
18.9
-14.7
15.3
-13.4
16.6
16.2
17.4
17.3
17.9
17.6
17.1
16.7
16.9
5.1
21.9
4.1
20.0
18.1
22.8
3.9
16.8
14.8
26.2
21.7
22.7
16.4
16.7
14.7
22.6
21.0
16.7
1995
26.2
4.6
13.8
14.5
Monolithic IC Total
Hybrid ICs
36.8
8.9
8.6
-8.7
14.9
Total ICs
Discrete Devices
Total Semiconductor
36.5
29.7
8.5
12.4
14.8
13.2
-10.0
35.2
14.0
17.5
14.7
MOS Logic
Analog ICs
2000
1999
8.8
2.0
18.0
16.8
-16.3
16.8
25.0
21.5
22.3
16.8
1.1
SCIVIS-WW-MT-9601
©1996 Dataquest
IVIay13,1996
14
The effect of the Americas forecast on the relative consumption by product
is shown in Figure 4-1. With 68 percent of the revenue in the Americas
stemming from microcomponents and memories, the Americas market is
highly dependent on the health of data processing, \^^th lowered growth
expectations in these two product types, we expect that market shares will
hold more constant than in the past, with microcomponents actually losing 1 percent over the next five years. Logic ICs will lose a 1 percent share
as bipolar logic declines.
i
Figure 4-1
Product Comparison^ Americas Market^ 1995 and 2000
2000
1995
Discrete (5.9%)
Hybrid iC (0,8%)
Analog/Mixed
(8.3%)
Discrete (5.5%)
Hybrid IC (0.4%)
Analog/Mixed
(8.3%) •
«
Total = $48.2 Billion
96290?
i
SCMS-WW-IVIT-9601
©1996 Dataquest
I\/Iay13,1996
Chapter 5
Japan Forecast by Product Family.
The five-year semiconductor forecast for the Japanese market is based on
the following assumptions:
• Growth had been accelerating in Japan after the disastrous revenue
decline in 1992, but this three-year growth period is slowing. A 36 percent dollar growth in 1995 will be followed by a 2 percent decline in
1996. Although the past three years have had dollar revenue enhancements because of the yen-to-dollar depreciation, the 1996 forecast
includes a dollar appreciation of 14 percent, turning a 12 percent yenbased growth in 1996 to a 2 percent decline in dollars.
• The Japanese market is fundamentally sound. PC growth in Japan will
drop from the 58 percent seen in 1995 to above 30 percent. The continued migration of electronic equipment manufacturing to Asia/Pacific
sites is a factor that will reduce revenue growth over tiie forecast period,
but this migration has been somewhat stunted by constraints in growing Asian infrastructures. The result of this migration is that the Japanese market will drop from 28 percent of worldwide shipments in 1994
to slightly over 23 percent in the year 2000, a lower loss of share than
our past forecasts, because depreciation is expected to slow the rate of
migration.
• Microcomponents will show Japan's strongest product growth in 1996
as the MPtj category is dominated by the dollar-based x86 devices from
Intel. The other product categories, more strongly supplied by domestic
suppliers in yen-based revenue, are impacted by the devalued dollar
exchange rate. The weak 1996/1995 growth of MCU, analog, optical
semiconductor, and discrete is due to sluggish consumer equipment
production.
• Microcomponents show the strongest five-year compounded growth in
Japan. The 21 percent compounded growth forecast for PC shipments in
Japan provides comparable growth for the MPU category.
• MCU, analog IC, and optical semiconductor growth in Japan will be
reduced by the offshore production shift of consumer electronics, the
biggest application for these devices in Japan.
• MOS memory revenue will decline by 16 percent in dollars (negative
4 percent in yen). Even with strong PC growth, the bit growth will be
insufficient to bring revenue into positive growth as ASPs drop by half.
DRAM consumption in Japan has been pumped u p by robust growth in
SIMM production, which will be impacted by any possible slowdown
in worldwide PC shipments. Prices are weakening for other memory
products like SRAM, flash, and MROMs.
• Optical semiconductors showed a 32 percent growth in 1995, a considerable increase over the 21 percent seen in 1994. An explosive increase
in the consumption of optically oriented computer peripherals such as
CD-ROM players, scanners, and laser/LED printers has helped to fuel
this growth over the past two years. This growth wiU be blunted in 1996
and beyond as this multimedia frenzy slows. It is not expected that new
growth opportunities in DVD will be seen in the optical semiconductor
category until the end of the forecast period (the year 2000).
SCMS-WW-MT-9601
©1996 Dataquest
15
16
Tables 5-1 through 5-4 provide details on the Japanese semiconductor
market.
Table 5-1
Japanese Semiconductor Market, Six-Year Revenue History, 1990-1995 (Revenue in
1990
2,974
Microcoinponents
Memory Total
Bipolar Memory
4,390
194
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
1991
1992
5,697
127
7,829
12,337
82
5,570
5,712
7,246
7,111
12,255
8,772
1,001
4,711
1,118
5,993
988
7,784
3,278
18,674
4,048
24,106
4,744
33,682
750
15,946
3,077
820
19,494
889
24,995
1,034
34,716
17.5
5.9
17.1
3,423
1,556
1,728
3,916
2,097
4,681
2,767
13.1
20,579
24,645
31,008
42,164
15.8
3,579
3,269
4,196
4,931
1,441
3,490
4,175
138
4,037
Monolithic IC Total
2,723
15,018
3,094
16,417
Hybrid ICs
Total ICs
776
15,794
860
17,277
2,969
1,494
3,432
1,787
20,257
22,496
Analog ICs
Discrete Devices
Total Semiconductor
4,849
1,016
3,833
2,903
15,196
1995
CAGR (%)
1990-1995
21.4
1994
5,603
7344
98
4,393
165
4,228
5,351
1,277
4,074
1993
3,987
23.0
-15.8
23.9
12.2
-7.3
17.4
11.7
9.5
Table 5-2
Japanese Semiconductor Market, Five-Year Revenue Forecast, 1995-2000 (Revenue in
1995
1996
1997
1998
1999
2000
CAGR(%)
1995-2000
7,829
12,337
8,558
10,409
10,130
11,853
12,001
13,481
14,286
17,163
16,934
22,162
16.7
12.4
82
60
11,793
55
13,426
49
17,114
45
22,117
-11.3
12,255
63
10,346
Logic/ASIC Total
Bipolar Logic
8,772
988
8,934
824
9,663
637
10,919
546
12,501
486
14,180
437
10.1
-15.1
MOS Logic
Analog ICs
7,784
8,110
4,744
4,801
32,702
9,026
4,846
36,492
10,373
5,331
41,732
12,015
5,922
13,743
6,612
12.0
6.9
49,872
1,075
37,567
1,075
42,807
1,075
50,947
59,888
1,075
12.2
0.8
34,716
1,045
33,747
4,681
2,767
42,164
4,708
2,789
41,244
4,845
2,874
45,286
5,232
5,813
60,963
6,641
11.9
7.2
3,105
51,144
3,452
60,212
4,089
71,693
8.1
11.2
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Monolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
33,682
1,034
12.5
SCI\/IS-WW-IV1T-9601
©1996 Dataquest
IVIay13.1996
Japan Forecast by Product Family
17
Table 5-3
Japanese Semiconductor Market, Historic Revenue Growth, 1990-1995 (Percentage
1991
20.3
1992
-8.7
1993
1994
Microcomponents
1990
11.7
22.0
Memory Total
Bipolar Memory
-246
1.6
0.1
-14.9
-5.0
-16.4
36.5
-8.0
40.5
28.9
-22.8
MOS Memory
-25.5
1.7
0.8
8.5
-11.4
16.7
-4.5
-9.4
-20.4
38.0
17.8
Logic/ASIC Total
Bipolar Logic
MOS Logic
Artalog ICs
Monolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
-1.1
4.3
-0.4
-6.2
-7.7
-5.9
-6.2
-7.4
-6.3
13.6
9.3
10.8
9.4
-12.8
-7.7
-3.6
-3.7
-5.7
15.6
19.6
11.1
-10.3
-12.9
-8.5
-1.5
22.9
12.9
22.9
9.3
22.3
11.2
11.1
19.8
30.1
24.5
11.7
27.2
23.5
29.1
8.4
28.2
14.4
21.4
25.8
1995
39.7
CAGR (%)
1990-1995
21.4
68.0
-16.3
69.1
23.4
23.0
-15.8
-11.6
29.9
17.2
39.7
-7.3
17.4
23.9
12.2
16.3
38.9
11.7
17.5
5.9
17.1
19.5
32.0
36.0
9.5
13.1
15.8
Table 5-4
Japanese Semiconductor Market, Forecast Five-Year Revenue Growth (Percentage
Microcomponents
1995
39.7
Memory Total
68.0
Bipolar Memory
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analog ICs
Monolithic IC Total
Hybrid ICs
-16.3
69.1
23.4
-11.6
29.9
17.2
39.7
16.3
Total ICs
Discrete Devices
38.9
19.5
Total Semiconductor
32.0
36.0
1996
9.3
-15.6
-23.2
-15.6
1.8
-16.6
4.2
1.2
-2.9
1.1
-2.8
0.6
0.8
-2.2
1997
18.4
13.9
-4.8
14.0
8.2
-22.7
11.3
0.9
11.6
2.9
11.3
2.9
3.0
9.8
CAGR (%)
1995-2000
16.7
1998
1999
2000
18.5
13.7
19.0
27.3
18.5
29.1
-8.3
13.8
-10.9
-8.2
29.2
-11.3
12.5
13.0
-14.3
14.5
-11.0
13.4
10.1
-10.1
-15.1
15.8
11.1
14.4
11.7
19.5
0
20.1
12.0
6.9
12.2
0
19.7
14.2
11.9
7.2
18.5
19.1
8.1
11.2
14.9
10.0
14.4
0
13.9
8.0
8.0
12.9
27.5
19.0
11.1
11.2
17.7
12.4
0.8
SCMS-WW-MT-9601
©1996 Dataquest
May 13,1996
18
Figure 5-1 illustrates the effect of the Japanese market forecast on the relative consumption by product. The figure highlights three main trends.
First, microcomponents are expected to track PC growth in Japan. Second,
memory IC price erosion will hold memory growth down over the forecast period. Third, the non-DRAM, non-MPU devices will decline in market share as these devices increasingly move toward offehore equipment
production. With a memory and microcomponent market share that is 20
percent less than that of the Americas, the Japanese market has had less
dependence on the PC. Personal computers will make strong gains in the
Japanese market in the coming years.
Figure 5-1
Product Comparison, Japanese Market, 1995 and 2000
1995
Optical Semiconductors (6.6%)
Hybrid IC (2.5%)
2000
Hybrid IC (1.5%)
i
Total s $42.2 Billion
gezaOB
i
SCMS-WW-I\/IT-9601
©1996 Dataquest
May 13,1996
Chapter 6
Europe Forecast by Product Family,
The five-year semiconductor forecast for the European market, shown on
the following pages, is based on these assumptions:
• With two consecutive years of growth exceeding 35 percent, the European market has shown considerably more strength than we had
expected. This growth, based on the PC and personal communications
booms, is expected to moderate in 1996.
• The European PC market, which grew by 25 percent in 1995, is still
expected to do more than 20 percent in 1996. Declining prices for
DRAM will limit the semiconductor ride on this boom, however.
• DRAM revenue will be flat in 1996. Double-digit growth will return in
1997, although at a compounded rate below 20 percent. The more stable
prices seen in 1997 will result in DRAM revenue growth consistent with
PC unit growth (17 percent).
• MCU growth continued strongly into 1995, with revenue growth
exceeding 40 percent. ASP erosion and a slowing of demand will limit
revenue growth in 1996, and beyond, to less than 20 percent.
• Shortages in discrete products enhanced the market in 1994 and 1995 as
ASPs were kept high. In 1995, a 45 percent annual growth more than
doubled the 19 percent seen in 1994. Discrete growth will drop into
lower growth in 1996 (10 percent) and beyond (11 percent CAGR, 1995
through 2000).
Tables 6-1 through 6-4 provide details on the European semiconductor
n\arket.
Figure 6-1 illustrates the consumption by product changes for the European market over the forecast period. Unlike past years of memory and
microcomponent market incursion, the product mix remains fairly consistent over the forecast period. By the year 2000, microcomponents and
memory ICs are expected to account for 62 percent of semiconductor shipment revenue, up slightly from the 60 percent of 1995. The growth in
microcomponents derives from all segments of the microcomponent category, the MPUs and microperipherals (MPRs) in computers and the microcontroller (MCU) and digital signal processor (DSP) ICs used in
communications and consumer products.
SCMS-WW-MT-9601
©1996Dataquest
19
20
Table 6-1
European Semiconductor Market, Six-Year Revenue History, 1990-1995 (Revenue in
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analog ICs
Monolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
1990
1,802
2,105
55
2,050
1,882
510
1,372
2,169
7,958
157
8,115
1,895
405
10,415
1991
2,082
2,172
43
2,129
2,085
443
1,642
2,184
8,523
178
8,701
1,828
485
11,014
1992
2,723
2,698
38
2,660
2,137
388
1,749
2,249
9,807
151
9,958
1,826
434
12,218
1993
4,037
4,067
27
4,040
2,299
363
1,936
2,736
13,139
179
13,318
1,769
374
15,461
1994
5,408
6,602
28
6,574
2,659
329
2,330
3,370
18,039
178
18,217
2,108
575
20,900
1995
7,009
9,990
19
9,971
3,243
291
2,952
4,127
24,369
239
24,608
3,053
680
28,341
CAGR (%)
1990-1995
31.2
36.5
-19.2
37.2
11.5
-10.6
16.6
13.7
25.1
8.8
24.8
10.0
10.9
22.2
Table 6-2
European Semiconductor Market, Five-Year Revenue Forecast, 1995-2000 (Revenue in
1995
1996
1997
1998
Microcomponents
7,009
Memory Total
Bipolar Memory
9,990
19
9,971
8,503
10,321
9,775
11,962
11,365
13,917
13
16,719
19,911
4,540
174
5,250
6,175
134
6,041
-14.4
15.4
8,580
50,111
15.8
15.5
263
50,374
1.9
15.4
11.1
13.4
14.9
203
3,771
Analog ICs
Monolithic IC Total
4,127
24,369
4,630
27,075
5,306
31,017
6,049
35,871
239
24,608
249
27,324
245
31,262
248
3,053
680
28,341
3,367
3,603
869
35,734
31,479
14.8
13.7
11,949
3,974
251
3,370
Total Semiconductor
14.8
-15.9
10
291
2,952
788
19,919
8
13,907
3,243
Discrete Devices
CAGR (%)
1995-2000
17.1
13
Logic/ASIC Total
Bipolar Logic
MOS Logic
Hybrid ICs
Total ICs
2000
15,437
16,728
9
10,308
3,621
MOS Memory
1999
13,454
4,366
151
5,099
7,149
42,581
36,119
3,985
258
42,839
4,491
975
1,103
5,178
1,276
41,079
48,433
56,828
SCMS-WW-MT-9601
©1996 Dataquest
May 13,1996
Europe Forecast by Product Family
21
Table 6-3
European Semiconductor Market, Historic Revenue Growth, 1990-1995 (Percentage
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
Artalog ICs
Mor\olithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
1990
25.0
-15.4
-22.5
-15.2
-3.4
-8.3
-1.4
39.4
7.0
15.4
7.2
20.4
14.4
9.7
1991
15.5
3.2
-21.8
3.9
10.8
-13.1
19.7
0.7
7.1
1992
30.8
24.2
-11.6
24.9
2.5
-12.4
6.5
3.0
1993
48.3
50.7
-28.9
51.9
7.6
-6.4
10.7
21.7
1994
34.0
1995
29.6
CAGR (%)
1990-1995
31.2
62.3
3.7
62.7
15.7
51.3
-32.1
51.7
36.5
-19.2
37.2
-9.4
20.4
22.0
-11.6
26.7
23.2
37.3
22.5
35.1
11.5
-10.6
16.6
13.7
25.1
-0.6
36.8
34.3
35.1
8.8
24.8
10.0
10.9
22.2
13.4
7.2
15.1
-15.2
14.4
34.0
18.5
33.7
-3.5
19.8
-0.1
-10.5
-3.1
-13.8
19.2
53.7
44.8
18.3
5.8
10.9
26.5
35.2
35.6
Table 6-4
European Semiconductor Market, Forecast Five-Year Revenue Growth (Percentage
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
1995
1996
1997
1998
29.6
51.3
21.3
3.3
15.0
15.9
16.3
16.3
1999
18.4
20.2
2000
14.7
19.1
-11.1
19.1
CAGR (%)
1995-2000
17.1
14.8
-23.1
16.4
-10.0
20.2
11.7
0
15.9
9.7
14.2
17.6
-11.6
26.7
22.5
-13.7
-19.1
-14.3
15.6
-13.2
-15.9
14.8
13.7
-11.3
-14.4
14.2
12.2
11.9
14.6
15.8
14.0
16.8
18.2
18.5
20.0
15.4
Monolithic IC Total
Hybrid ICs
35.1
34.3
11.1
4.2
14.6
15.6
1.2
18.7
17.7
4.0
1.9
Total ICs
Discrete Devices
35.1
44.8
11.0
10.3
7.0
15.5
10.6
18.6
12.7
Total Semiconductor
18.3
15.9
11.1
10.3
12.2
13.4
13.5
15.0
13.1
17.9
17.6
15.3
15.7
17.3
14.9
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analog ICs
-32.1
51.7
-31.6
3.4
22.0
35.6
-1.6
14.4
15.8
15.5
1.9
15.4
11.1
SCMS-WW-MT-9601
©1996 Dataquest
May 13,1996
22
Semiconductors Contract IVIanufacturing Services Worldwide
Figiu-e 6-1
Product Comparison, Eiuopean Market, 1995 and 2000
1995
2000
Hybrid IC (0.5%)
Hybrid iC (0.8%)
es29oa
i
SCMS-WW-MT-9601
©1996 Dataquest
I\/Iay13,1996
Chapter 7
Asia/Pacific Forecast by Product Famil^L
The five-year forecast for the Asia/Pacific region shown on the following
pages is based on the following assumptions:
• The PC business was slower than expected in 1995 and will slow again
in 1996. DRAM, SRAM, and MPU growth have been reduced in 1996.
The combined MOS memory growth will decline to 10 percent after
74 percent in 1995. Microcomponent growth will drop from 30 percent
in 1995 to 21 percent in 1996.
• Decreasing ASPs, d o w n 40 percent over those of 1995, will offset much
of the bit growth in Asia/Pacific, reducing DRAM revenue growth
below 10 percent in 1996.
• SRAM ASPs are declining, but not falling. SRAM revenue growth will
drop to less than half of tifie 60 percent growth seen in 1995.
• Asia/Pacific's microprocessor market is almost totally dominated by
x86 architectures. With ever-shortening PC life cycles, most PC products
are shipped without the MPU on-board—92 percent of motherboards,
83 percent of desktop PCs, and 80 percent of notebook computers from
Taiwan are shipped this way. This frend will continue over the forecast
period.
• China and the southern Asia/Pacific regions have shown sfrong growth
in telecom and consumer equipment. High-end telecommunications
equipment is being built in China, and the shipment of pagers and cellular phones continues to expand.
• A sfrengthening yen continues to drive elecfronic equipment production out of Japan and into the Asia/Pacific region. This production shift
enhances the Asia/Pacific growth that comes with the growth of its
own consuming markets. As a semiconductor consuming region, Asia/
Pacific will pass Japan in 1998.
Tables 7-1 through 7-4 provide details on the Asia/Pacific semiconductor
market.
Figure 7-1 shows the impact of the five-year product forecast on the relative shares of the total Asia/Pacific market. "Die combined memory-microcomponent IC share increased from 56 percent of the market in 1994 to
61 percent in 1995. Like the three other geographical regions, Asia/Pacific
will see littie gain in the memory-microcomponent market (to 64 percent
in 2000) as prices correct and the PC market slows. Arialog and logic ICs,
less affected by price erosion, will maintain market position.
SCMS-WW-MT-9601
©1996 Dataquest:
23
24
Semiconductors Contract IVIanufacturing Services Worldwide
Table 7-1
Asia/Pacific Semiconductor Market, Six-Year Revenue History, 1990-1995 (Revenue in
1991
2,197
1992
1993
1994
Microcomponents
1990
1,427
3,085
Memory Total
Bipolar Memory
1,579
22
1,991
17
2,916
12
4,303
4,918
7
5,558
7,223
7
MOS Memory
1,557
1,974
2,904
4,911
Logic/ASIC Total
Bipolar Logic
MOS Logic
1,268
374
894
1,466
352
1,114
1,645
369
1,276
2,396
381
2,015
7,216
2,728
Analog ICs
Monolithic IC Total
Hybrid ICs
1,549
5,823
111
5,934
1,842
2,339
9,985
125
10,110
1,649
3,195
14,812
Total ICs
Discrete Devices
Total Semiconductor
1,199
200
7,333
7,496
112
7,608
1,386
200
9,194
275
12,034
176
14,988
2,080
418
17,486
365
2,363
4,025
19,534
251
19,785
2,527
520
22,832
1995
7,254
12,564
4
12,560
3,418
317
3,101
4,741
27,977
284
28,261
3,419
737
32,417
CAGR (%)
1990-1995
38.4
51.4
-28.9
51.8
21.9
-3.3
28.2
25.1
36.9
20.7
36.6
23.3
29.8
34.6
Table 7-2
Asia/Pacific Semiconductor Market, Five-Year Revenue Forecast, 1995-2000 (Revenue in
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analog ICs
Monolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
1995
7,254
12,564
4
1996
8,811
13,874
1997
10,437
16,101
2
12,560
3
13,871
3,418
317
3,955
262
3,101
4,741
27,977
284
3,693
5,556
4,246
6,231
32,196
308
32,504
28,261
3,419
737
32,417
4,000
907
37,411
16,099
4,474
1998
12,740
19,053
1
19,052
5,373
191
1999
15,842
23,065
1
23,064
6,574
5,182
160
6,414
37,243
337
7,535
44,701
337
9,131
54,612
337
37,580
4,419
45,038
5,074
54,949
1,005
43,004
1,146
51,258
228
5,845
1,327
62,121
2000
CAGR(%)
1995-2000
19,699
29,292
22.1
18.4
1
29,291
-24.2
8,073
135
7,938
11,067
68,131
337
68,468
6,732
1,536
76,736
18.5
18.8
-15.7
20.7
18.5
19.5
3.5
19.4
14.5
15.8
18.8
SCMS-WW-MT-9601
©1996 Dataquest
May 13,1996
Asia/Pacific Forecast by Product Family
25
Table 7-3
Asia/Pacific Semiconductor Market, Historic Revenue Growth, 1990-1995 (Percentage
-L6
22.2
54.0
26.1
-22.7
46.5
-29.4
1993
39.5
68.7
-41.7
Logic/ASIC Total
-1.9
9.7
26.8
15.6
47.1
12.2
69.1
45.7
Bipolar Logic
MOS Logic
-3.1
16.1
-5.9
24.6
4.8
14.5
3.3
57.9
21.5
17.8
18.9
28.7
27.0
33.2
36.6
48.3
-19.0
16.8
16.7
0.9
28.2
11.6
32.9
40.8
48.2
15.6
0
25.4
19.0
37.5
30.9
26.1
52.0
45.3
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Analog ICs
Monolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
199Q
57.2
16.3
16.8
1991
1992
40.4
1994
29.2
1995
30.5
46.9
0
46.9
13.9
-4.2
17.3
73.9
-42.9
74.1
26.0
31.9
42.6
32.0
21.5
24.4
17.8
43.2
30.6
42.0
25.3
-13.2
31.2
13.1
42.8
35.3
41.7
CAGR (%)
1990-1995
38.4
51.4
-28.9
51.8
21.9
-3.3
28.2
25.1
36.9
20.7
36.6
23.3
29.8
34.6
Table 7-4
Asia/Pacific Semiconductor Market, Forecast Five-Year Revenue Growth (Percentage
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
18.3
24.3
21.1
24.3
27.0
-33.3
16.1
-50.0
0
18.3
13.1
-13.0
20.1
-16.2
21.1
22.4
-16.2
0
27.0
15.0
12.1
15.7
9.4
22.0
20.9
15.6
10.5
10.8
15.0
1997
30.5
73.9
21.5
10.4
18.5
16.1
-42.9
-25.0
74.1
10.4
15.7
-17.4
25.3
-13.2
MOS Logic
31.2
Total ICs
Discrete Devices
Total Semiconductor
2000
1996
Logic/ASIC Total
Bipolar Logic
Analog ICs
Monolithic IC Total
Hybrid ICs
1999
1995
17.8
43.2
19.1
17.2
15.1
13.1
8.5
42.8
35.3
41.7
15.0
17.0
23.1
15.4
42.0
1998
22.1
22.8
-15.6
CAGR (%)
1995-2000
22.1
18.4
-24.2
18.5
18.8
-15.7
23.8
21.2
20.7
0
24.8
0
19.5
3.5
19.8
14.8
22.0
15.2
24.6
15.2
19.4
14.5
14.0
19.2
15.8
21.2
15.7
15.8
23.5
18.8
20.0
0
23.8
21.2
22.2
18.5
SCMS-WW-MT-9601
©1996 Dataquest
May 13,1996
26
Figure 7-1
Product Comparison, Asia/Pacific Market, 1995 and 2000
1995
optical Semiconductc)rs (2.3%)
Hybrid IC ( 0 . 9 % ) ^ , „ ^ J - |
2000
Hybrid IC ( 0 . 4 % 1 „ — i - |
^..^
y)^Discrete i
l . ^ / ^ Discrete
/
Microcomponent \
(22.4%)
\
/ Analog/Mixed
(14.6%)
X
\Logic/ASIC /
\ (10.5%) /
Memory
(38.8%)
M
#
^8.8%) 1
/Analog/Mixed \
/
(14.4%)
\ Logic/ASIC y ^
\
(10.5%)/
Total: $32.4 Billion
I
\
Microcomponent \
(25.7%)
\
l
Memory
(38.2%)
M
M
esasio
I
SCMS-WW-MT-9601
©1996 Dataquest
May 13,1996
I
Chapter 8
Forecast by Product
Chapter 2 provided a brief discussion of the semiconductor product families. This chapter focuses on the individual products and summarizes the
regional splits for each product category.
Figure 8-1 graphs the worldwide forecast by category for the forecast
period. A major change to the forecast is the flat memory growth seen in
1996—a departure from last year's forecast, where we expected decelerating growth, but growth nevertheless. After this three-year correction
period, memory revenue will again outpace microcomponent revenue
growth, widening the gap toward the end of the forecast period.
Each of these major product categories is discussed in the following sections, and a regional forecast table is provided.
Microcomponent ICs
After six consecutive years of growth exceeding 20 percent, microcomponent growth is slowing. Growth will drop below 20 percent in 1996 and
remain in the high teens for the duration of the forecast. The PC market is
slowing somewhat and will post growth under 20 percent worldwide over
the coming five years. Microprocessor ASPs wiU not rise as rapidly as in
the recent past, and the slowing growth of PCs and multimedia peripherals will limit microperipheral growth. Communications and digital entertainment will keep DSP growth above 20 percent compounded.
Microcontrollers continue to find new homes in every conceivable electronic product and will help hold the microcomponent CAGR near 18 percent. Table 8-1 shows the microcomponent growth by region for the
coming five years, with some product detail presented below.
I
Figure 8-1
Worldwide Semiconductor Forecast by Product
Billions of Dollars
liiU-
*
*
**
*
1
Discrete
100*
80-
*
**
Hybrid IC
*
y
Jfc
^
Bipolar Digital
^
MOS Memory
60*•
40-
*
^
*
+
I
^—
1993
1
^
^
"
^
MOS
Microcomponent
20 •<C^^-""""^
"i
Optoelectronic
"
_
" i U T Z — — —'
•
• ' 1
1994
1995
___ .
MOS Logic
Analog
—T-
1996
T—
1997
T
1998
1
1999
2000
SCMS-WW-MT-9601
©1996 Dataquest
27
28
Table 8-1
Microcomponent IC Market, Five-Year Revenue Forecast, 1995-2000 (Revenue i n
1995
Americas
Japan
Europe
Asia/Pacific
Microcomponent IC Total
12,421
7,829
7,009
7,254
34,513
1996
14,073
1997
16,182
1998
18,779
1999
21,950
8,558
8,503
8,811
39,945
10,130
9,775
10,437
46,524
12,001
11,365
12,740
54,885
14,286
13,454
15,842
65,532
2000
CAGR (%)
1995-2000
25,575
16,934
15,437
15.5
16.7
17.1
22.1
17.6
19,699
77,645
Memory ICs
By accounting for 28 percent of total semiconductor revenue, DRAM has
had an enormous effect on total semiconductor growth. With an 82 percent
DRAM revenue growth in 1995, the semiconductor market grew by
37 percent; excluding DRAM revenue growth, all other semiconductor
products showed a combined growth of 25 percent. In 1996, Dataquest
anticipates no DRAM growth, a problem that will limit total semiconductor growth to 8 percent even as non-DRAM devices will grow by 14 percent on average.
Memory IC demand will continue unabated in 1996. The only difference is
that we are in oversupply and prices have declined precipitously. The year
1996 marks the end of the DRAM shortage and the return to the "normal"
declining price-per-bit scenario. Bit growth is expected to be substantial
but not sufficient to counter the large price-per-bit declines that have
dropped price-per-megabyte below $14. A compounded revenue growth
rate of 17 percent for DRAM over the 1995-through-2000 period, although
a drop from the past five years, will allow DRAM to grow faster than the
semiconductor market and account for more than 30 percent of the semiconductor revenue in the year 2000. The five-year compounded growth for
memory ICs has dropped to 16.5 percent. Despite a drop in revenue in
Japan in 1996, all four regions will show double-digit CAGRs over the
forecast period. Table 8-2 shows the memory IC forecast by region.
Table 8-2
Memory IC Market by Region, Five-Year Revenue Forecast, 1995-2000 (Revenue in
21,145
1998
28,647
36,710
10,409
10,321
11,853
11,962
13,481
13,917
17,163
16,728
13,874
55,749
16,101
64,213
19,053
75,098
23,065
93,666
1996
Americas
20,530
Japan
Europe
12,337
9,990
12,564
55,421
Asia/Pacific
Memory IC Total
1999
1997
24,297
1995
2000
47,307
CAGR (%)
1995-2000
18.2
22,162
12.4
19,919
29,292
118,680
14.8
18.4
16.5
SCI\/IS-WW-MT-9601
©1996 Dataquest
May 13,1996
Forecast by Product
29
Logic ICs
Logic ICs include a broad and dissimilar set of products. These products
can be cut by standard or ASIC, bipolar or MOS. A traditional cut used in
this forecast is that of process technology—bipolar logic and MOS logic,
which more or less track an "old versus new" division. After a two-year
respite from rapidly declining revenue in 1993 and 1995, bipolar logic
returned to a 14 percent decline in 1995, a "normal" rate that we expect to
continue into 1996 and beyond.
>
MOS logic showed a 28 percent growth in revenue in 1995 after 27 percent
in 1994. We expect growth to drop to eleven percent in 1996 and then settle
into a long-term 16 percent growth rate driven by the still strong MOS programmable logic device (PLD), MOS gate array, and MOS cell-based products. MOS ASIC is the major driver of the MOS logic category. The total
logic data combines both bipolar and MOS logic, giving an aggregate
growth of 22 percent for 1995 and a five-year CAGR of 14 percent over the
forecast period. Table 8-3 gives the combined logic forecast.
Analog ICs
Consumer entertainment products, being largely audio and video, are
intrinsically analog in nature and have typically consumed about 40 percent of all analog ICs. The big declines seen in 1992 in the consumer market, especially in Japan and Europe, severely impacted the growth of
analog ICs, resulting in a growth of only 6 percent. Since 1992, analog ICs
have shown a consistent 23 percent annual growth. In 1995, we saw a drop
from this trend, with a 15 percent growth.
>
Analog ICs show a very equal distribution among the four regions, with
the Americas having the smallest share at 23 percent and Japan the largest
at 27 percent. This distribution is changing as consumer equipment manufacturing increasingly migrates to Asia/Pacific sites. The increasing presence of analog ICs in computer and communications applications is
stabilizing growth in the Americas and Europe. Table 8-4 shows the analog
IC growth rate by region over the forecast period.
Total Monolithic ICs
The combination of microcomponent, memory, logic, and analog ICs gives
the total monolithic IC market. The five-year forecast for this summary
category is shown in Table 8-5.
Table 8-3
Logic IC Market by Region, Five-Year Revenue Forecast, 1995-2000 (Revenue in
Americas
Japan
>
Europe
Asia/Pacific
Logic IC Total
1995
1996
1997
7,528
8,772
8,400
8,934
3,621
3,243
3,418
•
22,961
3,955
24,910
1998
1999
2000
9,581
11,074
12,887
9,663
3,974
4,474
27,692
10,919
12,501
15,320
14,180
4,540
5,373
5,250
6,574
6,175
8,073
31,906
37,212
43,748
CAGR (%)
1995-2000
15.3
10.1
13.7
18.8
13.8
SCMS-WW-MT-9601
©1996 Dataquest
May 13,1996
30
Table 8-4
Analog IC Market by Region, Five-Year Revenue Forecast, 1995-2000 (Revenue in
Americas
Japan
Europe
Asia/Pacific
Analog IC Total
1995
3,995
4,744
4,127
1996
4,801
4,630
4,741
17,607
5,556
19,562
4,575
1997
5,315
1998
6,232
4,846
5,306
6,231
5331
6,049
1999
7,329
5,922
7,149
7,535
25,147
9,131
29,531
21,698
2000
8,652
6,612
8,580
11,067
34,911
CAGR(%)
1995-2000
16.7
6.9
15.8
18.5
14.7
Table 8-5
Total Monolithic IC Market by Region, Five-Year Revenue Forecast, 1995-2000 (Revenue
in Millions of Dollars)
Americas
Japan
Europe
Asia/Pacific
Monolithic IC Total
1995
44,474
33,682
24369
27,977
130,502
1996
1997
48,193
32,702
27,075
55,375
36,492
31,017
41,732
35,871
32,196
140,166
37,243
160,127
44,701
187,036
1998
64,732
1999
78,876
49,872
42381
54,612
225,941
59,888
50,111
CAGR (%)
1995-2000
16.8
12.2
15.5
68,131
274,984
19.5
16.1
2000
96,854
Discrete Devices
Discrete devices showed a 30 percent revenue growth in 1995. Although
the discrete device category has been losing market share because of the
relentless integration of components, this category remains viable because
power and RF devices are not readily integrated. Power transistors represent about one-third of discrete revenue and are expected to lead the discrete growth with a 14 percent CAGR. Table 8-6 gives the discrete forecast
by region. The growing use of power discrete devices in power control
and communications applications in the Americas has brought the compounded Americas growth rate back into double digits.
Table 8-6
Discrete Device Market by Region, Five-Year Revenue Forecast, 1995-2000 (Revenue in
1995
1996
1997
1998
1999
2000
Americas
2,870
3,225
3,650
4,190
4,895
5,700
CAGR (%)
1995-2000
14.7
Japan
Europe
Asia/Pacific
4,681
4,708
3,367
4,845
3,603
5,232
5,813
6,641
7.2
4,491
4,419
16,517
5,178
6,732
11.1
4,000
15,300
3,985
5,074
Discrete Devices Total
3,053
3,419
14,023
18,481
5,845
21,044
24,251
14.5
11.6
SCI\/IS-WW-I\/IT-9601
©1996 Dataquest
May 13,1996
Forecast by Product
31
P
Even more than analog ICs or discrete devices, optical semiconductors
find their primary market in corisumer entertainment products. With scanners and copiers using charge-coupled devices (CCDs), CD-ROMs using
laser diodes, and optical-fiber data links using semiconductor receivers
and transmitters, the data processing market is showing an increasing
impact on the optical semiconductor market. This impact was seen as a
24 percent revenue growth in 1995. Growth in 1996 is anticipated to be
8 percent as the computer peripherals and consumer markets slow. Laser
diodes have continued to lead the growth in this category; 1996 shows a
36 percent revenue growth for this product type. The optical semiconductor forecast by region is given in Table 8-7.
Table 8-7
Optical Semiconductor Market by Region, Five-Year Revenue Forecast, 1995-2000
1997
1998
1999
2000
840
2,874
1,060
3,105
1,325
3,452
Americas
Japan
2,767
715
2,789
680
737
788
907
869
1,005
975
1,146
1,103
1,327
1,625
4,089
1,276
1,536
4,811
5,199
5,588
6,286
7,207
.8,526
Europe
Asia/Pacific
Total
>
1996
1995
627
CAGR(%)
1995-2000
21.0
8.1
13.4
15.8
12.1
•
SCMS-WW-MT-9601
©1996 Dataquest
May 13,1996
I
Chapter 9
Forecast by Technology
Digital MOS and Bipolar IC Forecast
The five-year IC forecast includes the process categories of MOS digital
and bipolar digital ICs. This process split is still important for the logic IC
category but is of decreasing importance for the memory IC category. For
microcomponent ICs, the bipolar subsegment has become fairly irrelevant
and is no longer reported or forecast separately.
The forecast data for digital ICs, by process, is plotted in Figure 9-1. The
graph shows that the bipolar portion of the digital IC market is declining
at a 12 percent CAGR over the forecast period. By the year 2000, bipolar
digital ICs will have declined to less than 0.5 percent of the total digital IC
market.
Tables 9-1 and 9-2 show the five-year history and forecast, respectively, for
the bipolar and MOS portions of the three main digital IC categories. It can
be seen that, as a memory IC process technology, bipolar has been in a
rapid slide that is slowing as revenue becomes insignificant. Bipolar logic
ICs accounted for 14 percent of logic IC revenue in 1994. By 2000, it is
expected that bipolar logic will represent less than 3 percent of the logic IC
revenue.
I
Figure 9-1
MOS versus Bipolar Forecast
Billions of Dollars
•— 100-
"
•
^
"
^
— - ^ ^
10Bipolar
119 90
1
1991
1
1992
1
1993
t
1994
. 1
1995
1
1996
.,.,
1 ..... — 1
1997
1998
1
1999
\
20 )0
962912
I
SCMS-WW-MT-9601
©1996 Dataquest
33
34
Table 9-1
Semiconductor Market by Process Technology, Six-Year Revenue History, 1990- 1995
Bipolar Total
Bipolar Memory
Bipolar Logic
MOS Total
MOS Micro
MOS Memory
MOS Logic
Total Digital IC
1990
4,173
1991
1992
1993
3,628
3,193
431
3,742
356
3,272
318
2,875
30,152
9,584
34,315
11,774
39,710
14,359
3,079
244
2,835
56,374
19,947
26,408
12,128
8,440
12,841
9,700
15,308
10,043
23,306
13,121
33,505
16,108
34,513
55,261
20,624
34,325
37,943
42,903
59,453
78,933
112,895
CAGR (%)
1990-1995
1994
2,912
1995
2,497
199
2,713
76,021
160
2,337
-18.0
-9.0
110,298
29.6
29.2
-9.8
35.4
19.6
26.9
Table 9-2
Semiconductor Market by Process Technology, Five-Year Revenue Forecast, 1995-2000
Bipolar Total
Bipolar Memory
Bipolar Logic
MOS Total
MOS Micro
MOS Memory
MOS Logic
Total Digital IC
CAGR(%)
1995-2000
1995
1996
1997
1998
1999
2000
2,497
2,131
1,752
119
2,012
1,137
71
110,298
118,473
108
1,644
136,677
1,298
79
-14.6
160
2,337
1,508
93
1,415
160,381
1,066
238,936
-14.5
16.7
34,513
55,261
20,624
39,945
55,630
46,524
64,105
54,885
75,005
1,219
195,112
65,532
93,587
22,898
120,604
26,048
138,429
30,491
161,889
35,993
196,410
77,645
118,609
42,682
17.6
16.5
15.7
240,073
16.3
112,895
-15.0
SCMS-WW-MT-9601
©1996 Dataquest
May 13,1996
Appendix A
^
Japanese Revenue History and Forecast in Yen,
Revenue growth in shipments to the Japan region differs according to
whether tihe dollar or yen is used as tiie currency basis. As the dollar has
tjrpically weakened against the yen, Japanese growth has often been
inflated by this exchange rate change. Figure A-1 shows the annual
growth in each of these two currencies over both the historical 1988through-1995 period and the forecast 1996-through-2000 period. Because
Dataquest does not forecast exchange rates, the forecast growth rates are
the same.
The following tables show the yen-based revenue shipment data for the
Japan region. Tables A-1 and A-2 provide the Japanese revenue history
and forecast, respectively, in yen. The historical exchange rates are shown
at the bottom of these tables. Tables A-3 and A-4 show the annual growth
associated with the year-to-year revenue growth. The rate of dollar appreciation against the yen for the period from 1990 through 1995 is shown at
the bottom of Table A-3. Over tt\e past five years, the dollar has declined in
value, inflating the revenue growtti of the Japanese market in dollars.
Figure A-1
Comparison of Revenue Shipment Growth in the Japan Region—Dollars versus Yen
Annual Growth (%)
50-
^
1988
1989
0
Growth in Dollars
-•-
Growth in Yen
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
962913
>
SCMS-WW-MT-9601
©1996 Dataquest
35
36
Semiconductors Contract iVIanufacturing Services Worldwide
Table A-1
Japanese Semiconductor Market, Six-Year Yen Revenue History, 1990-1995 (Revenue in
Billions of Yen)
1991
487
597
22
1992
413
528
17
1993
443
634
14
710
208
503
392
575
728
174
554
510
613
128
485
619
635
111
524
421
2,233
117
367
1,922
365
2,077
Hybrid ICs
2,163
112
91
Total ICs
2,274
2,350
95
2,016
428
467
215
2,917
243
3,059
136.00
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
Arialog ICs
Monolithic IC Total
Discrete Devices
Total Semiconductor
Yen/U.S.$ Exchange Rate
1990
428
632
28
604
144.00
2,168
381
192
CAGR (%)
1990-1995
11.4
1994
570
1995
735
748
10
738
724
114
1,158
8
1,151
824
12.9
-22.7
93
731
-14.9
7.8
445
3,163
97
2.6
7.9
610
412
2,454
91
2,545
389
197
2,602
2,741
399
213
3,157
126.45
111.20
101.81
3,260
440
260
3,959
93.90
13.8
3.0
-2.8
7.5
0.6
3.8
6.3
Table A-2
Japanese Semiconductor Market, Five-Year Yen Revenue Forecast, 1995-2000 (Revenue
in Billions of Yen)
Microcomponents
1996
1997
1998
1999
2000
735
916
1,114
1,084
1,285
1,813
1,269
6
1,443
1,529
1,837
2,372
19.8
15.4
Memory Total
Bipolar Memory
1,158
8
MOS Memory
1,151
824
1,108
956
1,262
1,034
93
731
88
68
868
514
966
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analog ICs
Monolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
Yen/U.S.$ Exchange Rate
CAGR(%)
1995-2000
1995
445
7
3,163
97
3,501
3,260
440
3,613
504
260
3,959
93.90
4,415
107.05
112
299
519
3,906
6
1,437
5
5
-9.0
1,832
1,338
2,368
1,518
15.5
1,169
58
1,110
571
52
47
-12.8
1,286
634
1,471
15.0
9.7
13.0
4,467
5,339
708
6,411
115
4,022
115
4,582
560
332
115
6,526
711
3.5
14.9
519
308
4,848
107.05
115
5,454
622
370
438
6,446
107.05
7,675
107.05
11.0
14.2
5,475
107.05
15.2
10.1
SCIVIS-WW-MT-9601
©1996 Dataquest
May 13,1996
Japanese Revenue History and Forecast in Yen
37
Table A-3
Japanese Semiconductor Market, Yen Revenue Growth, 1990-1995 (Percentage Revenue
Growth in Yen)
1990
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analogies
Monolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
U.S.$ Appreciation versus Yen
16.6
-21.3
6.0
-22.2
7.2
3.2
8.9
3.9
-2.2
-3.7
-2.2
1995
7.3
1994
28.7
28.9
CAGR (%)
1990-1995
11.4
-11.6
-22.2
20.0
-19.1
18.0
-29.4
54.9
-22.8
12.9
-22.7
-4.8
2.5
-16.3
10.2
-11.2
-15.7
19.1
14.0
2.3
16.5
56.0
7.3
3.2
-12.8
-13.9
-18.9
-14.2
21.3
3.6
-13.4
8.1
-0.7
8.1
7.3
28.1
10.2
21.7
13.8
3.0
-14.9
7.8
2.6
7.9
-2.8
7.5
0.6
3.8
25.4
7.77
6.3
-8.20
1991
13.7
1992
1993
-15.1
-5.5
-19.7
0.6
4.7
3.3
9.2
0.5
13.0
-1.6
4.35
4.9
-5.56
-26.0
-12.5
-16.6
-19.0
-3.9
7.5
-2.2
-2.3
-14.9
-7.02
5.3
-12.06
13.1
18.2
-0.7
17.4
4.7
11.1
15.2
-8.44
13.8
-18.5
19.8
8.1
28.9
Table A-4
Japanese Semiconductor Market, Forecast Five-Year Yen Revenue Growth, 1995-2000
(Percentage Revenue Growth in Yen)
Microcomponents
1995
28.9
1996
24.6
1997
18.4
1999
19.0
2000
18.5
-8.3
27.3
-10.9
29.1
-8.2
1998
18.5
13.7
CAGR (%)
1995-2000
19.8
15.4
Memory Total
Bipolar Memory
54.9
-22.8
-3.8
-12.4
13.9
-4.8
MOS Memory
56.0
13.8
-3.8
16.1
-4.9
14.0
8.2
13.8
13.0
27.5
14.5
29.2
13.4
15.5
13.0
-22.7
-14.3
14.9
-11.0
15.8
-10.1
14.4
10.0
14.4
11.1
11.7
19.5
20.1
-12.8
15.0
9.7
15.2
0
0
19.7
3.5
14.9
10.1
11.0
14.2
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analog ICs
Monolithic IC Total
-18.5
19.8
8.1
28.9
18.8
15.4
10.7
11.3
0.9
11.6
15.2
2.9
Total ICs
7.3
28.1
10.8
Discrete Devices
10.2
21.7
14.7
Total Semiconductor
U.S.$ Appreciation versus Yen
25.4
-7.77
Hybrid ICs
11.3
0
13.9
19.0
8.0
8.0
11.1
11.2
14.2
14.9
2.9
3.0
11.5
14.00
9.8
0
12.9
0
17.7
19.1
0
0
18.5
-9.0
2.66
SCI\^S-WW-iVIT-9601
©1996 Dataquest
May 13,1996
I
Appendix B
European Revenue History and Forecast in ECU
Revenue growth in shipments to the European region differs whether the
dollar or ECU is used as the currency basis. The dollar has not had any
consistent long-term change with the ECU; the exchange rate in 1995 was
essentially the same as in 1990, although there were annual fluctuations.
Figure B-1 shows the annual growth in each of these two currencies over
both the historical 1988-through-1995 period and the forecast 1996through-2000 period. Because Dataquest does not forecast exchange rates,
the forecast growth rates are the same.
Tables B-1 and B-2 provide the European revenue history and forecast in
ECU. The historical exchange rates are shown at the bottom of these
tables. Tables B-3 and B-4 show the annual growth associated with the
year-to-year revenue growth. The rate of dollar appreciation against the
ECU for the period from 1990 through 1995 is shown at the bottom of
Table B-3. Over the past seven years, the exchange rate has shown little
fluctuation, on average.
Figure B-1
Comparison of Revenue Shipment Growth in European Region—Dollars versus ECU
I
Annual Growth (%)
50Growth in Dollars
Growth in ECU
-10
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
962914
I
SCMS-WW-MT-9601
©1996 Dataquest
39
40
Table B-1
European Semiconductor Market, Six-Year ECU Revenue History, 1990-1995 (Revenue in
MUlions of ECU)
1990
Microcomponents
Memory Total
Bipolar Memory
1,420
MOS Memory
1,615
1,483
402
1,081
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analog ICs
Monolithic IC Total
Hybrid ICs
1,659
43
1,709
6,271
1991
1,689
1992
2,097
1993
3,464
1,761
35
1,727
2,077
3,489
23
1,691
359
1,332
1,771
29
2,048
1,645
299
1,347
1,732
3,466
1,973
311
1,661
2,347
124
6,912
144
Total ICs
6395
7,057
7,668
11,273
154
11,427
Discrete Devices
1,493
319
1,406
334
1,518
321
8,207
1,483
393
8,932
0.788
0.811
9,408
0.77
13,266
0.858
Total Semiconductor
ECU/U.S.$ Exchange Rate
7,551
116
1994
4,543
5,546
24
5,522
2,234
276
1,957
2,831
15,153
150
15,302
1,771
483
17,556
0.84
1995
5,425
7,732
15
7,718
2,510
225
2,285
3,194
18,862
185
19,047
2,363
526
21,936
0.774
CAGR (%)
1990-1995
30.7
36.1
-19.4
36.7
11.1
-10.9
16.1
13.3
24.6
8.4
24.4
9.6
10.5
21.7
Table B-2
European Semiconductor Market, Five-Year ECU Revenue Forecast, 1995-2000 (Revenue
in MilUons of ECU)
1995
Microcomponents
Memory Total
Bipolar Memory
5,425
7,732
MOS Memory
7,718
2,510
Logic/ASIC Total
Bipolar Logic
15
CAGR(%)
1995-2000
18.2
1996
6,887
1997
1998
1999
7,918
9,206
10,898
2000
12,504
8,360
11
9,689
11
11,273
8
13,550
7
16,134
6
8,349
9,679
3,219
11,265
3,677
13,542
16,128
5,002
164
141
122
109
3,055
3,536
4,130
4,893
4,900
5,791
6,950
29,056
40,590
16.8
16.6
213
40,803
2.9
16.5
2,933
4,253
15.8
-15.1
15.9
14.8
-13.6
16.5
225
2,285
203
2,730
3,194
3,750
18,862
21,931
4,298
25,124
185
19,047
202
22,132
198
25,322
201
29,256
34,491
209
34,700
Discrete Devices
2363
2,727
638
3,228
790
3,638
893
4,194
1,034
12.2
526
2,918
704
Total Semiconductor
ECU/U.S.$ Exchange Rate
21,936
0.774
25,498
0.81
28,945
0.81
33,274
0.81
39,231
0.81
46,031
0.81
16.0
MOS Logic
Analog ICs
Monolithic IC Total
Hybrid ICs
Total ICs
14.5
SCMS-WW-MT-9601
©1996 Dataquest
May 13,1996
European Revenue History and Forecast in ECU
41
Table B-3
European Semiconductor Market, Historic Revenue Growth, 1990-1995 (Revenue
Growth in ECU)
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analog ICs
Monolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
U.S.$ Appreciation versus ECU
1990
8.5
-26.6
-32.8
-26.4
1991
18.9
6.2
-19.5
6.9
-16.2
14.0
-20.4
-10.6
23.2
-14.5
21.0
-7.1
-7.0
4.5
-0.7
3.6
10.2
16.7
10.4
-0.7
23.2
-4.8
-13.22
8.8
2.92
0.2
1992
24.2
1993
65.2
1994
31.2
1995
19.4
CAGR (%)
1990-1995
30.7
17.9
-16.1
68.0
-20.8
69.2
58.9
1.5
59.3
13.2
39.4
-37.5
36.1
-19.4
39.8
12.4
36.7
11.1
-11.3
17.8
-18.5
16.7
-10.9
16.1
20.6
34.4
12.8
24.5
23.7
13.3
24.6
8.4
24.4
18.6
-2.7
-16.8
1.1
-2.2
9.2
-19.5
8.7
-5.2
-15.0
5.3
-5.06
19.9
4.2
23.3
35.6
49.3
32.1
49.0
8.0
-4.0
41.0
11.43
-2.6
33.9
16.7
50.5
32.3
-2.10
24.5
33.4
9.0
24.9
-7.86
- 9.6
10.5
21.7
-0.36
Table B-4
European Semiconductor Market, Forecast Five-Year ECU Revenue Growth, 1995-2000
(Percentage Revenue Growth in ECU)
Microcomponents
Memory Total
Bipolar Memory
MOS Memory
Logic/ASIC Total
Bipolar Logic
MOS Logic
Analog ICs
Monolithic IC Total
Hybrid ICs
Total ICs
Discrete Devices
Total Semiconductor
U.S.$ Appreciation versus ECU
1995
19.4
1996
1997
1998
27.0
15.0
16.3
39.4
8.1
-28.4
15.9
0
16.3
-23.1
8.2
15.9
9.7
16.4
14.2
-19.1
11.9
-14.3
16.3
14.6
14.6
9.0
16.2
-1.6
14.4
14.0
15.6
1.2
15.5
15.4
7.0
-37.5
39.8
12.4
-18.5
16.7
12.8
24.5
23.7
24.5
33.4
9.0
24.9
-7.86
16.8
-9.7
19.5
17.4
21.3
16.2
4.65
10.3
13.5
0
CAGR (%)
1995-2000
1999
18.4
2000
14.7
20.2
-10.0
19.1
-11.1
15.8
-15.1
20.2
19.1
15.6
-13.2
17.6
15.9
14.8
-11.3
-13.6
18.2
16.8
18.2
18.7
18.5
16.5
20.0
17.7
16.8
16.6
4.0
18.6
1.9
17.6
10.6
12.2
12.7
13.1
15.3
15.7
2.9
16.5
12.2
15.0
0
17.9
0
17.3
0
15.8
14.5
16.0
0.91
SCIVIS-WW-MT-9601
©1996 Dataquest
May 13,1996
I
Appendix C
Definitions,
Analog ICs
Analog ICs are a group of semiconductors that deal with electrical signals
and electrical power. Analog components carry information as voltage,
current, frequency, phase, duty cycle, or other electronic parameters.
Because they are not based on number values, analog information is not
limited to a finite range of values and has no inherent quantization noise
or quantization error. The downside is that analog signal information
exists in the time domain and can be corrupted as the information-carrying parameter is influenced by noise, drift, bandwidth, and component
instability—all the vagaries of time.
Bipolar
These are semiconductor devices that use bipolar transistors rather than
MOS transistors. Bipolar transistors are found in both ICs and discrete
products. Bipolar transistors are so named because they carry electricity
with two different types of "carriers"—holes and electrons.
Digital ICs
Digital ICs handle numbers in the binary format of ones and zeros. Digital
ICs comprise logic, microcomponent, and memory ICs. The number-handling nature of digital electronics makes the data more immune to physical changes in the electronic components.
I
Discrete Devices
A discrete semiconductor is defined as a single semiconductor component
such as a transistor, diode, or thyristor. Although multiple devices may be
present in a package, they are still considered discretes if they have no
internal functional intercormection and are applied in the same manner as
other discrete devices. Some discrete devices may actually be similar to
ICs in having integrated protection and sensing circuitry. Even if a device
is an integrated circuit, it will be considered a discrete if it is used like one.
Hybrid IC
A hybrid is an IC that mixes semiconductor technology with other electronic technologies in a single package. It is this mixing of technologies
within the IC package that gives these products the "hybrid" IC name.
Other technologies include thin and thick film resistors and chip capacitors. A multiple-chip IC is not a true hybrid IC and is counted in the
monolithic IC category. The mixing of technologies is most often done for
analog hybrid ICs. Because of this, hybrid ICs are often added to monolithic analog IC revenue to provide the total analog IC market.
SCMS-WW-MT-9601
©1996Dataquest
43
44
IC
An integrated circuit is a chip in which multiple transistors and diodes are
intercormected to perform an electronic function. The function-specific
r\ature of an IC differentiates it from the nonspecific array of discrete
transistors.
Logic
This is an electronic function where bits (one and zeros) are processed.
This bit processing is defined by hardwiring, mask programming, or field
programming. Microcomponents and memory ICs are logic ICs, but they
are logic ICs that are either dedicated to a function (such as microperipherals and memory ICs) or are software programmable (such as microprocessors and microcontrollers). Logic ICs also include customer-specific logic
ICs.
Microcomponent
A microcomponent is a digital IC that can be programmable such as a
microprocessor (MPU), microcontroller (MCU), digital signal processor
(DSP), or an application-specific logic device that provides a supporting
function to an MPU, MCU, or DSR
Monolithic IC
A monolithic IC is an IC formed on a single chip of semiconducting material. This designation has been applied more broadly to mean any device,
even a multiple-chip packaged device, that does not contain other, nonsemiconductor, components. This differentiates monolithic ICs from
hybrid ICs that may also be multiple-chip, but represent a "hybrid" in the
sense of mixing other technologies within the IC package, such as film
resistors or chip capacitors.
MOS
MOS is an acronym for metal oxide semiconductor, a t5ê of transistor
used in ICs and discrete devices. Although the actual device may use different materials than metal or oxide, this acronym is used to define the
whole family of similar processes that provide an insulated gate fieldeffect transistor (FET). MOSFETs, like all field-effect transistors, differ from
bipolar devices in having an insulated gate and only a single carrier of
electrical current (either electrons or holes). MOSFETs are found in both
N and P channel varieties. A special IC process combines both the N and P
charmel device in a complementary configuration, an arrangement known
as CMOS.
Memory IC
Memory ICs are ICs that can store and retrieve logic bits. Two major
memory types are read-only memories (ROM), preloaded with data, or
random-access memories (RAM), where data can be both stored and
accessed. RAM subcategories include DRAM and SRAM. Memory ICs
that do not lose their data when power is removed are called nonvolatile
SC!\^S-WW-l\/iT-9601
©1996Dataquest
May 13,1996
Definitions
45
memories. DRAM and SRAM do not retain data when power is removed
from the device. ROM, EPROM, EEPROM, and flash memory ICs are nonvolatile memory devices.
I
These devices are the semiconductor subset of optoelectronic products.
This family includes light-sensing products such as photosensors and
CCDs as well as light-emitting devices such as LEDs and lasers.
Optocouplers and interrupters use both functions.
Semiconductors
These electronic components are manufactured by introducing impurities
into a semiconductor material to create special current conducting devices
such as diodes, bipolar transistors, and MOS transistors. Semiconducting
material is so named because its conducting capability falls between the
range of insulators and metallic conductors.
I
SCMS-WW-I\/IT-9601
©1996 Dataquest
May 13,1996
Appendix D
>
Historical Exchange Rates
Table D-1 shows 10 years of exchange rates of the yen and ECU versus the
U.S. dollar. The appreciation of the dollar against these local currencies is
given in the last two columns.
Table D-1
Exchange Rates
Year
1980
>
Yen per U.S.$
227
ECUperU.S.$
-
1981
1982
221
-
248
1983
1984
235
237
-.
-
1985
1986
1987
238
167
144
1988
130
1989
1990
138
144
136
1991
1992
1993
1994
1995
126.5
111.2
101.8
93.90
0.846
0.908
0.788
0.811
0.770
0.858
0.840
0.774
U.S.$ Growth
versus Yen (%)
3.6
-2.7
12.2
-5.2
0.9
0.4
-29.8
-13.8
-9.7
6.2
4.3
-5.6
-7.0
-12.1
-8.4
-7.8
U.S.$ Growth
versus ECU (%)
.-2.5
7.3
-13.2
2.9
-5.0
11.4
-2.1
-7.9
)
SCMS-WW-MT-9601
©1996 Dataquest
47
I
i
Gary Grandbois, Vice President/Chief Analyst
(408) 468-8251
Internet address
[email protected]
Via fax
(408) 954-1780
Dataquest
The content of this report represents our interpretation and analysis of infbrination generally available to the puUic
It does iK>t contain material provided to us in confidence by our dients. Re[>roduction or disdosure in whole or in
part to other parlies shall be made upon the written and express consent of Dataquest.
i
NORTH AMERICA
Woridwide Headquarters
EUROPE
ASIA/PACIFIC
Asia/Paclfie Headquarters
United States
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Dataquest
©1996 Dataquest
DataQuest
DataQuest
I
I>ataQuest
i
DataQuest
Focus Report
>
\
Product Code: SCMS-WW-FR-9601
Publication Date: April 1,1996
Filing: Reports
Semiconductor Contract [Manufacturing
Focus Report
»
Program: Semiconductor Contract i\/lanufacturing Worldwide
Product Code: SCMS-WW-FR-9601
Publication Date: April 1,1996
Filing: Reports
Table of Contents
Page
1. Structure of the Semiconductor Contract Manufacturing Industry
Definition of Semiconductor Contract Manufacturing
Characteristics of Foundry, OEM ASIC, and End-Customer
ASIC Businesses
Differences between OEM ASIC and End-Customer ASIC
SCM Service Market Share: Manufacturing Power Database
Comparing Semiconductor Market Power versus
Manufacturing Power
2. Semiconductor Contract Manufacturing in Previous Years
Summary of 1993 and 1994
A Comparison of the Japanese and North American Demand
Markets
Fundamental Differences in the Approach to SCM in Japan
Implications of the Internal Japanese Market on Pricing
3. SCM Capacity Supply/Demand Analysis
SCM Capacity Supply/Demand Research Methodology
Comparing Supply and Demand
SCM Market Forecast
SCM Technology Analysis and Key Findings
4. SCM Supply/Demand Update, February 1996
Recent Capacity Events and Their Impact
SCM Market Forecast Update, February 1996
SCM Contribution to the Semiconductor Market
5. Economics of Semiconductor Contract Manufacturing
Fab Cost Drives SCM Growth
Method of Financing Fab Capacity: Fab Affordability
Greenfield Fabs
Shared Investments
Contractual Capacity
Arm's-Length Foundry Capacity: Wafer Purchases
Are Fabless Companies in Joint Ventures Still Fabless?
Comparison in Capacity-Financing Methods
SCM User Strategies
Fabless SCM User Strategies
IDM Company Strategies for Using SCM Services
6. Foundry Wafer Pricing
Summary of September 1995 Survey
February 1996 Update
Overview by Technology and Region of Supply
Pricing of Process Options
Volume Pricing Discounts and Premiums
Foundry Wafer Revenue Productivity—Another Measure
of Pricing
SCMS-WW-FR-9601
©1996 Dataquest
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43
44
44
April 1,1996
Table of Contents (Continued)
7. Future Trends in SCM
How Will SCM Change over Tmie?
Expansion of the Traditional Foundry Model
Manufacturing Integration
Design Integration
SCM Technology Will Continue to Lag Leading-Edge
IC Manufacturers
Dedicated Foundry Positioned to Dominate SCM Market
New Entrants in SCM
Value-Added Manufacturing Services Are the Key to Success
Appendix A—Glossary
Appendix B—Worldwide Semiconductor Contract Manufacturers
Appendix C—Fabless Companies in 1995
SCI\/!S-WW-FR-9601
©1996Dataquest
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April 1,1996
iiT
List of Figures . ^ ^ ^ ^ ^ ^ . ^ ^ _ ^ ^ ^ ^ ^ ^ ^ ^ ^ _
Figure
Page
1-1 Characteristics of the Foundry, OEM ASIC, and End-Customer
ASIC Business Models
2
1-2 Semiconductor Companies' Manufacturing Power and Market
Power
6
2-1 Regional SCM Supply Pricing by Technology and Market/Cost
Drivers
12
3-1 Worldwide "Realistic" SCM Supply and Demand Imbalance
Projection
19
4-1 "Realistic" Worldwide SCM Capacity Imbalance Projection,
February 1996
31
4-2 SCM Market Forecast and Contribution to the Semiconductor
Market
32
5-1 The Rising Cost of New Fabs
33
5-2 Annual Revenue as a $1 Billion Fab-Affordability Index, 1995
and 2000
34
5-3 Revenue versus Fab Cost Map: Companies Primed for Increased
Use of SCM Services
40
7-1 Contract Manufacturing Services Strategies
47
7-2 Leading-Edge Line Widths of SCM and the Semiconductor
Industry
50
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
]v
List of Tables _ ^ . . ^ . . . ^ ^ . . ^ ^ ^ . . ^ ^ . ^ ^ . . ^ ^ .
Table
Page
1-1 ASIC Supplier-Customer Relationship
4
1-2 Description of Transactions in Market Power Databases
7
1-3 Description of Transactions in Manufacturing Power Databases
8
2-1 SCM Market Demand by Region and by Type of Provider and
Customer, 1993 and 1994
10
3-1 SCM Supply and Demand, Regional Summary, 1993-2000
14
3-2 SCM Supply and Demand Sources, 1993-2000
16
3-3 SCM Market Forecast by Region, 1993-2000
17
3-4 SCM Market Forecast by Region, 1993-2000
17
3-5 Dataquest Interpretation of the SCM Supply and Demand
Analysis by Year, 1995-2000
18
3-6 SCM Supply-Side Capacity by Technology, Worldwide
21
3-7 SCM Supply-Side Capacity by Technology, North America
22
3-8 SCM Supply-Side Capacity by Technology, Japan
23
3-9 SCM Supply-Side Capacity by Technology, Asia/Pacific-ROW
24
3-10 SCM Supply-Side Capacity by Technology, Europe
25
4-1 SCM Supply and Demand, Regional Summary 1993-2000
28
4-2 SCM Supply and Demand Sources, 1993-2000
28
4-3 Dataquest Interpretation of the SCM Supply and Demand
Analysis by Year, 1995-2000
29
4-4 SCM Market Forecast by Regions, 1993-2000, February 1996
Update (Millions of Square Inches of Silicon)
31
4-5 SCM Market Forecast by Regions, 1993-2000, February 1996
Update (Millions of U.S. Dollars)
31
5-1 Trade-Offs in Methods of Financing Fab Capacity
38
5-2 Rising Cost of New Fabs Means Fewer Companies Can Afford
to Go Solo
6-1
6-2
6-3
6-4
SCMS-WW-FR-9601
38
1995 Foundry Wafer Prices, CMOS Unprobed Wafers, 13 to
15 Mask Levels
Estimated 1996 Foundry Wafer Process Option Pricing
150mm Foundry Wafer Revenue Productivity
Semiconductor Industry End-Chip Merchant Revenue
©1996 Dataquest
41
43
45
45
April 1,1996
Chapter 1
Structure of the Semiconductor Contract
Manufacturing Industry
Definition of Semiconductor Contract IVIanufacturing
When Dataquest embarked on the study of the semiconductor foundry
industry several years ago, a key issue that quickly emerged was the considerable variation that existed in the defirution and descriptions of the
term "semiconductor foundry." Ideas of what constitutes foundry vary
frorri company to company and from region to region. In order for a definition of a market segmentation to be meaningful in the characterization
of the market's changing dynamics, it should describe how companies
compete, be it through manufacturing, design, or marketing. A new
framework has been developed to address how companies are competing
in the growing market that we define as semiconductor contract manufacturing (SCM) services.
Dataquest realizes that semiconductor contract manufacturing is not new
as a concept. In fact, packaging, assembly, and test (also referred to as
back-end manufacturing) have been contracted to dedicated compaiues
for many years. Our broad definition of SCM does include these back-end
functions.
This report, however, will focus on front-end manufacturing, primarily.
Throughout this report, the term "SCM" will refer to the front end of semiconductor manufacturing.
Characteristics of Foundry, OENI ASIC, and End-Customer ASIC
Businesses
Figure 1-1 identifies the key characteristics of the foundry, OEM ASIC,
and end-customer ASIC business models. Dataquest has chosen to define
a business operation as foundry, OEM ASIC, or end-customer ASIC by its
capabilities, the way in which it interfaces with its customers, and whether
the products it manufactures are resold.
SCM is defined as including foundry and OEM ASIC businesses. The
ASIC business comprises two segments: OEM ASIC and end-customer
ASIC. By classifying companies' offerings in these categories, Dataquest
expects to be able to track the evolution of the contract manufacturing and
ASIC industries and classify companies in terms of their business strategy.
It should be pointed out that the "product resold" criterion can be somewhat fuzzy. For example, a system OEM that works with a manufacturer
at the GDS-II level interacts with its supplier essentially in a foundry relationship, even though the system OEM is not reselling the product. (GDSII is an electronic format that transmits exact specifications for mask construction and represents a complete design of the chip, including silicon
layout.)
SCMS-WW-FR-9601
©1996 Dataquest
Figure 1-1
Characteristics of the Foundry, OEM ASIC, and End-Customer ASIC Business Models
Wafer Fab
Has a fab
Has a fab
May (or may not)
have a wafer fab
Customer Interface
Mask or pattern
generator tape
(GDS-II, GIF
or equivalent)
Netllst or higher level
Netllst or higher level
EDA Tools
No
Yes
Yes
Design Libraries
No
Yes
Yes
Product Resold?
Yes, supplier
manufactures
product for company
who will resell it to end
customer or distributor
Yes, supplier
manufactures
product for company
who will resell it to end
customer or distributor
No, supplier sells
product directly to
end customer
Product Branding
Generally supplied
with customer's logo
Generally supplied
with customer's logo
Generally supplied
with supplier's logo
Source: Dataquest (February 1996)
The fabrication of another company's product is, by definition, the central
premise of semiconductor contract manufacturing. In Dataquest's framework, we identify foundry and a new category—OEM ASIC—as a subcategory of SCM. As shown in Figure 1-1, the OEM ASIC segment spans both
the contract manufacturing and the traditional ASIC business model.
The key similarity between contract manufacturing and the ASIC business
is that companies fabricate other companies' products. The first point of
differentiation, however, is at the customer interface. The foundry designation should be at a GDS-II, mask-level, or similar interface. In contrast,
the ASIC business, be it OEM ASIC or end-customer ASIC, is at netlist or
higher level design interfaces. (Such interfaces have chip design specifications but not silicon layout information.) As such, OEM or end-customer
ASIC suppliers have electronic design automation (EDA) tools and physical or circuit libraries that a pure foundry wouldn't have.
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
structure of the Semiconductor Contract Manufacturing Industry
The next element of differentiation is whether the chip product manufactured is resold by the customer. In an SCM business model, the answer to
that question is yes. Typically, the product is even branded with the customer's logo as if it had been fabricated in its own facilities. The endcustomer ASIC supplier is, by definition, making a product for the end
customer. In this case, the product may carry the supplier's logo or even,
in some cases, the customer's logo.
Chartered Semiconductor is a good example of a company that historically
has worked only at the GDS-II/mask interface with its customers. However, we understand that the company may be expanding its strategy to
encompass more OEM ASIC-type business. Taiwan Semiconductor Manufacturing Co. (TSMC) provides both the traditional foundry interface and
OEM ASIC services at a netlist interface through its agreement with
Compass. Many of the Japanese integrated device manufacturers (IDMs)
span both foundry and OEM ASIC segments and, indeed, offer full endcustomer ASIC products as well. (Note that Dataquest uses "IDM" to
describe semiconductor companies that have their own front-end fabs and
are merchant or captive suppliers of semiconductors. It can refer to either
a foundry user or a foundry provider.)
It is worth noting that the purpose of providing OEM ASIC services often
varies from supplier to supplier. TSMC made its decision to offer OEM
ASIC capability in order to assist small start-up companies that did not
have the resources to establish rn-house EDA tools and libraries (customer-owned tooling, or COT). As these start-up companies grow in size,
they would develop that capability internally and migrate to the traditional foundry relationship with a supplier at the GDS-II/mask interface.
In contrast, Japanese IDMs often offer OEM ASIC services as a means to
establish a solid customer relationship with the potential to grow into a
traditional end-customer ASIC relatioriship.
Differences between OEM ASIC and End-Customer ASIC
An important difference between OEM and end-customer ASIC suppliers
has been the extent of EDA capabilities and the degree of optimization by
which the physical library is tied to the silicon process. A well-established
ASIC supplier, with its full range of EDA capabilities, can take responsibility for optimizing the chip's performance at the system level. An OEM
ASIC vendor traditionally has been capable only of receiving design handoff at the netlist level. Moreover, at the netlist level, an end-customer ASIC
vendor typically develops its own cell libraries optimized to its own inhouse silicon process. In contrast, an OEM ASIC vendor usually acquires
third-party-developed physical libraries that are, at best, loosely tuned to
the vendor's silicon process. The OEM ASIC services offered by most SCM
suppliers are justifiably not as competitive, in terms of device performance
and density, as that of end-customer ASIC vendors such as LSI Logic,
NEC, or Toshiba which have been in the ASIC business much longer than
SCM suppliers.
Another distinction between OEM ASIC and end-customer ASIC businesses stems from who the supplier (and the customer) is. When the ASIC
service is provided to an ASIC vendor, such as LSI Logic, NEC, or Toshiba,
the relation is of an end-customer ASIC type. This means that the ASIC
revenue, in terms of semiconductor market share, is claimed by the ASIC
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
vendor supplier. A complication enters, however, when the customer is
another semiconductor company. Because the manufactured ASIC part
may be resold by the customer to its end customer (a system house, say),
revenue from the ASIC part, as it is resold, is also claimed by the semiconductor customer. This results in two semiconductor companies, an ASIC
house and one other chip company, claiming revenue for the same ASIC
part. While this is all right for an individual company's reporting of its
sales revenue, it results in double-counting in the tabulation of semiconductor market share.
Dataquest adopts a convention that prevents double-counting by
attributing the ASIC revenue only to the ASIC vendor. This would, however, require that the ASIC customer deduct the cost of the part from its
revenue for the purpose of reporting semiconductor market share. The
various supplier-customer ASIC relations are shown in Table 1-1. As
shown, the establishment of the convention permits a simple distinction
between end-customer ASIC and OEM ASIC. When the ASIC part is manufactured by an ASIC vendor, the relation is an end-customer ASIC business. Conversely, ASIC service provided by a foundry supplier is an OEM
ASIC relationship.
This table does not show a perfect solution. The imperfection stems from
the possibility of an ASIC company also providing significant foundry service. In such a case, should the company be designated as a foundry or an
ASIC supplier? The answer is not clear. At present, TSMC is considered a
foundry with a minor portion of its revenue from ASIC service. Consequently, TSMC is considered a supplier of SCM services as SCM encompasses both (OEM) ASIC and foundry. But suppose one of the established
ASIC suppliers (say VLSI Technology or LSI Logic) began to offer foundry
service, and its foundry business became an increasingly large source of
Table 1-1
ASIC Supplier-Customer Relationship
Supplier
Supplier-Customer
Hand-Off
Customer
Type of ASIC Business
ASIC Vendor (Example:
LSI Logic)
NetUst or higher
Nonsemiconductor
Companies (Example:
Sun Microsystems)
End-customer ASIC
ASIC Vendor (Example:
LSI Logic)
Netlist or higher
Semiconductor companies (Example: Sony
Microelectronics)
End-customer ASIC
(provided the customer
attributes the revenue
to the supplier)
SCM Provider (Example: NetUst or higher
TSMC)
Nonsemiconductor com- OEM ASIC
panies (Example: Sun
Microsystems)
SCM Provider (Example: Netlist or higher
TSMC)
Semiconductor companies (Example: Sony
Microelectronics)
OEM ASIC
SCi\/IS-WW-FR-9601
©1996 Dataquest
April 1,1996
the company's overall revenue. At v^hat stage should it be reclassified and
moved from the ASIC camp into the SCM universe? Fortunately such a
possibility appears remote at present, and Dataquest expects the definitions delineated in the table to hold for the foreseeable future.
SCM Service Marlcet Share: Manufacturing Power Database
As defined, the SCM services framework encompasses all aspects of confract manufacturing in semiconductors. Recognizing that manufacturing
is the essence of an SCM's business and to characterize the competitive
arena of the growing SCM market, Dataquest has developed a new database concept, to be implemented during 1996, that provides the means of
measuring the "manufacturing power" of the SCM players.
The semiconductor manufacturing power database is designed to capture
the manufacturing power of all front-end wafer fabrication. This includes
the revenue of all semiconductor manufacturers: IDMs, foundries (dedicated or joint-venture), and ASIC service providers (OEM or end-customer). As a comparison of the manufacturing output of semiconductor
producers, this database will allow SCM suppliers a meaningful metric for
determining their sfrength and competitiveness relative to other semiconductor manufacturers.
Comparing Semiconductor Market Power versus Manufacturing
Power
The fraditional semiconductor merchant market share database is a "market power" database that measures companies' presence in the market in
terms of sales of products bearing the companies' labels, irrespective of
which company actually manufactured the product. This database contains revenue of companies selling semiconductor products to the merchant market that may either be end customers or disfributors. Companies
covered in the market power database include semiconductor manufacturers that sell under their own brand, fabless semiconductor companies
that sell under their own brand, and semiconductor manufacturers or
fabless semiconductor companies that sell custom or ASIC designs to an
end customer with the customer's markings on the chip.
Because SCM suppliers manufacture products that are necessarily resold
by another company on the merchant market, they have no presence in the
merchant market and are not recognized in the fraditional "market power"
market share database. On the other hand, the "manufacturing power"
database measures market share in terms of the companies that manufacture the semiconductor products, regardless of the brand marked on the
package. What is not captured in the traditional "market power" database
is covered in the "manufacturing power" database. Hence, with the "manufacturing power" market share database, SCM suppliers now have a
means of measuring their sfrength and competitiveness relative to each
other and to other semiconductor producers.
Moreover, because the semiconductor manufacturers, including the SCM
vendors, have been taking charge of the industry's fab capacity expansion
and manufacturing technology development, a manufacturing power
database, by covering all the semiconductor manufacturers, could provide
a means of identifying the companies that will have a significant impact
on the building of the industry's infrastructure.
SCI\/IS-WW-FR-9601
©1996 Dataquest
April 1,1996
Figure 1-2 illustrates how an individual company's revenue would be
measured in terms of market power and manufacturing power. For example, Advanced Micro Devices (AMD) manufactures, markets, and sells
microprocessors and other products, which are reflected in its overall market share in a market power database. However, when it comes to manufacturing power, TSMC, instead of AMD, would receive credit for the 486
microprocessors it manufactures for AMD, as well as the other products
that TSMC makes for other companies. In a market power database, the
contribution of TSMC and other semiconductor contract manufacturers to
the manufacturing output of the industry is not recognized. In a manufacturing power database, however, the SCM suppliers are fully recognized,
as their contribution is reflected in their respective SCM revenue in the
manufacturing power market share. Moreover, a manufacturing power
database would reflect all semiconductor manufacturing, not just that
associated with contract manufacturing services.
Tables 1-2 and 1-3 describe the types of business transactions that belong
to the market power and manufacturing power databases, respectively.
Also included in the tables are examples of customer/supplier relationships that fall into each category.
Through the definitional guidelines provided in these tables, the market
power and the manufacturing power databases should jointly provide a
useful approach for tracking revenue and competitiveness for all players
in the semiconductor industry, including SCMs (foundry and OEM ASIC)
and IDMs (including end-customer ASIC).
Figure 1-2
Semiconductor Companies' Mantif acturing Power and Market Power
Market Power
Foundry
OEM
ASIC
Internal Production
Buy
1
'
1
Manufacturing Power
IDM Revenue
Fabless Revenue
Manufacturer Revenue
9613S1
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
Table 1-2
Description of Transactions in Market Power Databases
Type of Business Transactions
Examples
Sale of a standard or custom product to Motorola selling Motorola-branded
an end customer by an IDM, whether
products to system manufacturers or
manufactured by the IDM or another
distributors, regardless of whether
company
products were manufactured by
Motorola or by one of its fotmdries
Company Tracked
Motorola
Sale of a custom or standard product to Products sold by Oak Technology vmder Oak Technology
an end customer by a fabless company, its brand and manufactured by
whether manufactured through a
another company
foxmdry or ASIC relationship with its
wafer supplier
Sale of a custom product to an end customer by a foundry services supplier
Products manufactured by NEC to
SanDisk for use in SanDisk's solid
state PC card memory products
Sale of a standard or custom product to Hitachi selling to end customers its
: an end customer by an IDM manufac- branded DRAMs manufactured by
LG Semicon
tured under an exclusive manufacturing agreement or joint venture
TI selling its branded DRAM products
manufactured by TI-Acer
Production of ASIC products sold to
a fabless semiconductor company,
which are then resold to the fabless
company's end customers under its
brand
Hypothetical example: TSMC produces
ASICs from a netlist hand-off from a
customer, "XYZ" company TSMC
delivers either finished wafers or
packaged parts bearing XYZ's
company logo (turnkey).
NEC
Hitachi
TI
"XYZ" (But not TSMC)
SCIVIS-WW-FR-9601
©1996 Dataquest
April1,1996
Table 1-3
Description of Transactions in Manufacturing Power Databases
Type of Business Transactions
Examples
Production of products from an IDM's Intel's production of microprocessors
from its own fabs
own fab facilities, xmder the IDM's
brand, and sold to an end customer or
AMD's production of microprocessors
distributor
from its fabs
Company Tracked
Intel
AMD
Production of products sold to an IDM, TSMC's production of 486 microproces- TSMC
which are then resold under the IDM's sors for AMD
brand to an end customer
Sharp's production of flash memory for Sharp
Intel
LG Semicon's production of DRAMs for LG Semicon
Hitachi
Production of products sold to a fabless Chartered's production of ASSPs for
any of its fabless semiconductor
company, which are then resold under
customers
the fabless company's brand to an end
customer
Production of ASIC products sold to a
fabless semiconductor company,
which are then resold to the fabless
company's end customers under its
brand
Chartered
Semiconductor
Hypothetical example: TSMC's produc- TSMC (But not "XYZ")
tion of ASICs from a netUst hand-off
from a customer, "XYZ" company.
TSMC delivers either finished wafers
or packaged parts bearing XYZ's company logo (turnkey service).
SCIVIS-WW-FR-9601
©1996 Dataquest
April1,1996
Chapter 2
in Previous Years ^ ^ ^ ^ ^ ^ ^ ^ . ^ ^
Summary of 1993 and 1994
Dataquest began developing market statistics for the semiconductor contract manufacturing industry in 1993 in terms of both revenue and silicon
area produced. Table 2-1 summarizes SCM market demand in terms of
revenue by region and by type of provider and customer for 1993 and
1994. Japan and Asia/Pacific are ttie two dominant suppliers of SCM services, accounting for 55 percent and 33 percent, respectively, of the market
in 1994. Japanese SCM providers are all IDMs, but the Asia/Pacific region
is heavily dominated by dedicated foundries. In 1994, Asian dedicated
foundry revenue came primarily from TSMC, followed by Chartered
Semiconductor of Singapore, and, to a smaller extent, from ASMC of
Shanghai.
On the demand side. North America is the largest regional market, representing almost 50 percent of total world demand for SCM services in 1994.
The major source of that demand is the fabless companies, which represented about 60 percent of North American demand in 1994. Japan is a
close second, representing almost 40 percent of total world demand.
A Comparison of the Japanese and North American Demand iVIarlcets
The North American market demand for SCM services is the largest in
terms of revenue, but the Japanese market is the leading area from the perspective of demand for SCM capacity measured in wafer area. The reason
for this lies in the product mix of the demand for each region and in the
way that the Japanese SCM industry has evolved historically.
The average North American demand produces SCM revenue of about
$32 per square inch (translating to about $90 to $100 per square inch of
end-chip revenue) and is driven primarily by the mainstream-to-leadingedge logic chip market of the fabless companies. In comparison, the mainstream-to-leading-edge end-chip revenue per square indi for the total
semiconductor industry (excluding microprocessors) ranges from $70 to
$130.
The Japanese SCM market has a much longer history than the emerging
SCM market outside of Japan. The Japanese SCM market was first developed during the semiconductor recession of 1985 when the industry was
laden with overcapacity. The sustaining force that kept SCM capacity in
Japan growing during the 1980s and early 1990s was the practice of
migrating DRAM capacity to foundry production with each transition to a
new DRAM generation (256K/lMb or lMb/4Mb, for example).
About 70 percent of the SCM supplied by Japan is consumed within Japan.
This "internal" market is fundamentally different from the SCM market
outside of Japan. Internally in Japan, the use of older chip manufacturing
capacity has been "optimized within itself—that is, the production of
SCMS-WW-FR-9601
©1996 Dataquest
9
10
Table 2-1
SCM Market Demand by Region and by Type of Provider and Customer, 1993 and 1994
(Millions of Dollars)
1993
Supply
1994
Supply Change(%)
1993
Demand
1994
Demand Change(%)
By Region
North America
86
27
1,537
1,367
154
248
69
3,222
4,565
90
52
42
Fabless Companies
1,039
1,425
37
IDM Foundry Users
System OEMs
2,070
112
2,908
233
3,222
4,565
40
108
42
32.2
31.2
64.2
63.7
3.5
5.1
Japan
Europe
Asia/Pacific-ROW
Worldwide
By Provider Type
Dedicated Foundries
IDM Foundries
225
1,951
67
979
3,222
419
2,478
170
1,499
4,565
639
2,583
3,222
4,565
Dedicated Foundries as
Percentage of Total
19.8
23.4
IDM Foundries as Percentage of Total
80.2
76.6
Total
1,068
3,497
53
42
2,200
1,789
471
105
43
31
67
35
42
By Customer Type
Total
Fabless Companies as
Percentage of Total
IDM Foimdry Users as
Percentage of Total
System OEMs as
Percentage of Total
Note: Columns may not add to totals shown because of rounding.
older generation products (such as lagging-edge DRAM and analog) using
older, fully depreciated equipment has been made into an efficient and
well-established practice. This has led to the creation of an environment in
which trailing-edge products are manufactured at the lowest cost. As a
result, the average Japanese demand for SCM services produces SCM revenue of about $15 per square inch (translating to about $45 per square inch
of end-chip revenue) and is driven primarily by the lagging-edge products. This is consistent with the market for analog and lagging-edge
DRAM, which tjîcally has end-chip revenue per square inch of between
$30 and $50.
Fundamental Differences in the Approacli to SCIVI in Japan
Japanese SCM suppliers also tend to view pure foundry—manufacturing
a chip from a GDS-II tape or mask set—as a lower-value or low-margin
SCI\/IS-WW-FR-9601
©1996 Dataquest
April 1,1996
Semiconductor Contract Manufacturing in Previous Years
11
business. Japanese companies enter into SCM supply relationships for two
important reasons. First, providing SCM services helps foster goodwill
that can be translated into an exchange of favors for obtaining capacity
within the Japanese market. When a company needs capacity for a particular product, a reciprocal arrangement could be set u p with a customer—
in this case, another semiconductor company. Second, and perhaps more
important, a foundry agreement can develop into a closer relationship
when the business migrates to the higher-margin (and higher-prestige)
ASIC business and could involve future technology transfer.
Most SCM service businesses within Japanese companies are decentralized operations, where separate product divisions have the authority to
make supply agreements. But without a centralized, corporate-level focus
on the SCM business, the Japanese SCM suppliers have not been as competitive in markets outside of Japan. The only exceptions are those who
have sought major North American customers in order to stay technologically competitive in SCM or indeed have determined that operating a
foundry can be a profitable business in itself (such as Seiko Epson).
Implications of the Internal Japanese Market on Pricing
The pricing strategy of the Japanese SCM suppliers can be characterized
as more cost-driven than market-driven. This suggests that the Japanese
suppliers are more concerned with the overall cost of maintaining the
operation of older fabs. Although upgrading older fabs may allow for production of higher-margin products, the high upgrade costs and the uncertainties surrounding the economics of extending the life of an older fab
have generally led to "making do" with the existing technologies. The
overall objective is to minimize the costs of operating older facilities while
fully using their production output. This could be accomplished by running the company's own products or by providing SCM services.
Overall, wafer prices from Japanese SCM suppliers are lower than that of
SCM suppliers outside of Japan. Japa nese suppliers who provide SCM services to North American fabless or system/OEM customers generally
could charge higher prices than those serving the internal Japanese SCM
market. Companies such as Seiko/Epson, Fujitsu, Toshiba, Yamaha, and
Rohm have had a long tradition of providing SCM services to nonJapanese companies.
Figure 2-1 presents a conceptual view of the varying characteristics in the
SCM product mix and the cost-base pricing of the regional supply bases.
The large Japanese SCM supply is divided into two camps: a larger supply
with wide-ranging technologies and cost-based pricing serving the internal Japanese market and a smaller supply with advanced technology
addressing mostly non-Japanese SCM customers. The U.S. SCM supply
(represented by suppliers such as IBM and Texas Instruments) provides
leading-edge technologies but with limited capacity available. The Asia/
Pacific supply, represented largely by the dedicated foundries, has a more
focused SCM business approach: providing sufficient SCM capacity to the
world at prices reflective of SCM market dynamics. The European SCM
supply is relatively less developed but may see a spurt in growth when the
major European SCM suppliers such as Newport WaferFabs and Tower
Semiconductor complete tiieir capacity expansion.
SCIVlS-WW-FR-9601
©1996 Dataquest
April 1,1996
12
Semiconductor Contract IVianufacturing Worldwide
Figure 2-1
Regional SCM Supply Pricing by Technology and Market/Cost Drivers
Leading-Edge Product Mix
Japanese Suppjy
Base
Cost-Driven
Pricing
Market-Driven
Pricing
/
Lagging-Edge Product Mix
961363
SCI\^S-WW-FR-9601
©1996 Dataquest
April 1,1996
Chapter 3
SCM Capacity Supply/Demand Analysis
SCM Capacity Supply/Demand Research Methodology
From July to September 1995, Dataquest conducted a large-scale survey of
supply capacity and demand requirements for foundry providers and
foundry users for each year from 1993 through 2000. Projections of suppliers' capacity in terms of processed wafer area, segmented by line width,
metal levels, wafer size, and process technology, were collected from SCM
providers. SCM users provided Dataquest with their projected foundry
demand with the same segmentation.
The goal of the study was to achieve a minimum 85 percent of market coverage of users' projected demand and suppliers' planned capacity. The survey of individual SCM users and suppliers was performed on a bycompany basis to allow for a bottom-up methodology. This methodology,
with a high degree (85 percent or higher) of market coverage, provided the
foundation for a meaningful analysis of the supply and demand dynamics
in SCM.
On the supply side, over 95 percent market coverage was achieved from
direct survey responses (based on 1995 capacity), with an additional 3 percent to 4 percent derived from Dataquest estimates, using secondary
sources, previous analysis of the market, informal industry source interviews, and company visits.
The Dataquest study surveyed dedicated foundry providers including
TSMC, Chartered Semiconductor, Tower Semiconductor, Asia Semiconductor Manufacturing Corporation (ASMC) in Shanghai, and Newport
Wafer Fab. IDM SCM providers participating in the study included Gould
AMI, Fujitsu, Hitachi. IBM Microelectronics, LG Semicon, Matsushita,
Mitsubishi, NEC, Nippon Steel Semiconductor, Oki, Ricoh, Rohm, Samsung, Seiko/Epson, SGS-Thomson, Sharp, Sony, Thesys, Toshiba, United
Microelectronics Corporation (UMC), Winbond, and Yamaha. Dataquest
was also able to obtain direct responses from two companies that have no
production capability at present, but plan to enter the market within the
next three years (SubMicron Technology and ASMC-Taiwan).
In analyzing the supply capacity available in SCM, no distinction can be
made between the foundry and the OEM-ASIC segments. A stepper that is
installed in a fab does not distinguish between the wafers that come in
through a GDS-II or a netlist origin at the user-provider hand-off. It is not
meaningful to derive a forecast specifically for "foundry" or specifically for
"OEM-ASIC" since the capacities are interchangeable. Consequently,
Dataquest will refer to the total semiconductor contract manufacturing
services market, including both foundry and OEM ASIC, in the following
supply and demand discussions.
SCMS-WW-FR-9601
©1996 Dataquest
13
14
Comparing Supply and Demand
The summary of SCM supply and demand in terms of millions of square
inches (MSI) of silicon is shown in Table 3-1. As mentioned, this table is
derived from a bottom-up summation of the supply and demand inputs
from direct surveys and Dataquest analysis. The SCM supply/demand
findings also include the capacity allocated in exclusive contract manufacturing relationships. An exclusive contract manufacturing relationship
refers to a situation in which the SCM supplier is either a sole supplier for
a specific product or shares proprietary technology with its SCM customer
over a period of three years or longer.
The supply and demand analysis shown in the previous table also took
into account the following:
• The three joint venture fabs recently announced by UMC before October
1995 have been included in this analysis.
• The fabless semiconductor industry in Taiwan is just forming and
evolving and is expected to lead to significantly higher demand later in
the decade. This higher demand has not been factored into the present
analysis.
• Dataquest believes that, over the next year, there will be several projects
to buUd semiconductor foundries armounced after October 1995 that
will increase supply in 1998 and beyond, many of these from new
entrants into the market. These new entrants have not been factored
into the analysis in Table 2-1.
Table 3-1
SCM Supply and Demand, Regional Summary, 1993-2000
(Millions of Square Inches of SDicon)
Total Demand
North America
Japan
Europe
Asia/Pacific
Total Supply
North America
Japan
Etirope
Asia/Pacific
1993
1994
1995
1996
1997
1998
1999
2000
166.7
213.3
68.6
261.2
372.8
161.4
434.0
505.2
605.6
198.4
240.5
305.3
164.5
37.4
181.2
199.4
42.5
50.0
219.6
60.9
15.3
558.8
38.4
117.4
126.9
316.5
128.0
147.4
15.2
23.8
29.6
33.9
2.4
166.7
3.5
5.6
9.4
12.0
266.6
14.7
179.2
372.3
8.5
121.8
213.3
10.9
147.6
7.3
310.4
20.1
191.6
26.0
209.0
2.0
34.4
5.5
49.3
9.3
63.4
13.0
85.7
14.2
123.0
461.1
31.6
230.5
19.2
54.8
94.4
99.1
179.9
19.8
638.5
251.6
47.0
273.4
23.5
245.3
28.7
289.4
CAGR(%)
1994-2000
19.0
28.3
11.0
16.9
33.6
20.0
27.7
10.8
31.6
34.3
Note: Includes exclusive contract manufacturing relationships (a company is either the sole supplier for a specific product or shares proprietary technology over a three-year period or longer)
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
15
• There exists the possibility of additional SCM capacity emerging during
1996 and 1997 as a result of the migration of the DRAM market from
4Mb to 16Mb. It is likely that some older 4Mb DRAM fabs will be converted to provide contract manufacturing services. This potential converted SCM capacity has not been factored into the present analysis.
(Chapter 4 does discuss the impact of the recent memory price weakness on the SCM market, however.)
• Dataquest defines "oversupply" and "undersupply" in SCM to be a minimum of a 7 percent imbalance between the supply and demand.
• The characteristics of the SCM market are expected to vary with wafer
prices, which are in turn subject to the changing dynamics of SCM supply and demand. Moreover the SCM market is assumed to be price
elastic. Thus, SCM demand will fluctuate with changing wafer prices.
Table 3-2 presents the sources of the supply and demand in SCM services.
For 1996 through 2000, new SCM capacity at dedicated foundries is
expected to grow much more rapidly than IDM SCM capacity. The percentage of total SCM supply residing in dedicated foundries will rise from
18 percent in 1995 to a projected 37 percent by 2000. Also, in terms of longterm availability, dedicated foundry capacity is generally more consistent
than IDM SCM capacity because there is an inherent element of opportunism in the approach of IDMs to the SCM business.
Capacity constraint and the heightened semiconductor demand of recent
years have resulted in an increasing use of SCM by IDMs. In fact, given
the huge appetite of IDMs, which still account for nearly 95 percent of
merchant semiconductor revenue, changes in IDM decisions "to make or
to buy" will have probably the strongest impact on SCM supply and
demand. Althou^ the bulk of IDM consumption of SCM output now
stems from Japanese IDMs, most of tlie nearly 100 percent increase in SCM
consumption (by IDMs) in the next five years will come from IDMs outside Japan.
Outside Japan, fabless companies (and most of them are in North America) have been the principal consumers of SCM services. As a group, the
fabless companies' demand for wafers will rise from 25 percent of total
SCM output in 1995 to 35 percent by 2000. Unlike IDM users, which may
fall back on their own internal capacity, the very nature of fabless companies results in a user-provider relationship that is necessarily mutually
beneficial. As fabless companies' businesses grow, so will their wafer
demand and so will the SCM market. System OEM companies will continue to grow their consumption of SCM services. But their share of total
SCM demand is expected to remain small (about 3 percent). System OEM
customers are likely to continue to rely on end-customer ASIC services for
most of their chip needs.
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
1|
Semiconductor Contract Manufacturing Wortdwicfe
Table 3-2
SCM Supply and Demand Sources, 1993-2000 (Millions of Square Inches of Silicon)
Total Demand
Fabless Companies
IDMs
System OEMs
Total Supply
Dedicated Fabs
IDM
1994
1995
1996
1997
1998
261.2
66.1
316.5
83.7
189.8
5.3
213.3
24.0
36.5
266.6
47.8
225.9
6.9
310.4
67.7
372.8
105.5
258.5
8.8
434.0
132.9
1.6
166.7
213.3
47.1
162.3
3.9
372.3
94.3
461.1
139.1
142.7
176.8
218.8
242.6
277.9
322.0
1993
166.7
41.4
123.7
290.0
11.1
1999
505.2
162.9
328.2
14.1
558.8
189.1
369.7
2000
605.6
210.7
376.0
18.9
638.5
235.5
403.1
CAGR(%)
1994-2000
19.0
28.3
15.0
30.3
20.0
36.4
14.7
SCM Market Forecast
The data presented in the first table of this chapter is based on a straightforward summation of survey input with a some of Dataquest estimates
for a selected group of additional companies. The results from this
approach are called the "calculated" SCM supply/demand results. However, the actual SCM market supply/demand dynamics must take several
factors into account that a bottom-up analysis cannot provide. In determining the SCM market forecast, the following considerations are taken
into account:
• For 1995,1996, and 1997, all known SCM capacity increases have been
included. It may be possible to grow capacity slightly faster than our
analysis would dictate. But the possibility seems witiun noise levels,
given the current restrictions in semiconductor production equipment
availability. On the other hand, demand for SCM services during these
years is likely to be limited to our surveyed scope, given the historic
upward pressure in foundry wafer prices.
• For 1995 through 1997, the SCM market forecast is based on the average
of the "calculated" supply and demand figures.
• Dataquest believes that there will be several semiconductor foundry
construction projects armounced over the next year that will increase
supply in 1998 and beyond, many of these from new entrants into the
market. Also, some older 4Mb DRAM fabs will be allocated to contract
manufacturing above the current plan. This new capacity has been factored into the forecast, starting in 1998 and gradually increasing the
capacity available to 2000. The net addition of 3.5 new 200mm fabs by
2000 has been assumed.
• Demand will increase if the combination of lower prices and available
capacity is present. This is the projected scenario for 1998,1999, and
2000. An expansion in SCM capacity from 1998 to 2000 has been built
into the forecast. This, coupled with the assumption that the SCM market is price-elastic, provides the basis for SCM market growth during
the forecast years.
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
17
Tables 3-3 and 3-4 summarize the forecast for the SCM market in terms of
MSI of silicon demand and dollar revenue, respectively. Also shown is the
regional distribution of the SCM market. Japan is currently the largest
SCM market in terms of MSI demand, but is expected to be surpassed by
North America in the next few years. In dollar revenue, the North American SCM market is larger than the Japanese SCM market because Japanese
SCM suppliers tend to provide favorable foundry pricing for their longtime customers—mostly other Japanese companies. This has resulted in
the formation of a Japanese "internal" SCM market and a dichotomy in
wafer pricing between the Japanese SCM market and the external world
(see Chapter 2). The long-term SCM relationship between Japanese suppliers and users stems from a long history of strategic cooperation that is
unlikely to change and that will allow a continuation of relatively lower
average selling prices in the Japanese SCM market.
Continual expansion in personal computer usage and telecommunicatiorts
applications is the principal driver in the European semiconductor market. Reliance on SCM for semiconductor supply is expected to increase
because it is likely that captive manufacturing capacity alone will not be
able to satisfy Europe's continual growth in semiconductor consumption.
Asia/Pacific's purchase of SCM services is small but is expected to grow
rapidly as the development of indigenous fabless industries in Taiwan and
Singapore leads to increasing demand for SCM wafers.
Table 3-3
SCM Market Forecast by Region, 1993-2000 (Millions of Square Inches of Silicon)
Total Forecast
North America
1993
166.7
1994
1995
213.3
68.6
263.9
100.1
128.2
29.9
5.6
Japan
54.8
94.4
Europe
15.2
117.4
23.8
2.4
3.5
Asia/Pacific
1996
313.4
126.7
1997
146.0
33.5
372.5
161.3
164.4
37.4
7.2
9.4
1998
445.7
203.7
1999
2000
542.5
258.2
186.0
43.6
214.2
53.7
649.9
327.6
235.7
12.3
16.4
CAGR {%)
1994-2000
20.4
29.8
65.3
12.3
18.3
21.3
35.1
Table 3-4
SCM Market Forecast by Region, 1993-2000 (MUlions of U.S. Dollars)
Total Forecast
North America
Japan
Europe
Asia/Pacific
1993
3,222
1,537
1,367
248
69
1994
1995
1996
1997
1998
4,565
6,219
7,505
9,204
2,200
1,789
471
3,265
2,192
4,153
2,467
5,242
592
669
216
105
170
2,923
754
284
11,320
1999
14,075
2000
17,502
6,606
3,452
8,386
4,087
894
1,113
10,694
4,801
1,371
369
490
635
CAGR (%)
1994-2000
25.1
30.2
17.9
19.5
35.0
SCI\/1S-WW-FR-9601
©1996 Dataquest
April1,1996
18
Table 3-5 highlights the characteristics of Dataquest's projection of the
"realistic" supply-demand dynamics in the SCM market for each of the
forecast years. The key difference between the "calculated" and the "realistic" oversupply or undersupply figures is the assumption that, in a balanced market, the total supply figures would be 3 percent to 5 percent
higher than the demand figures.
Table 3-5
Dataquest Interpretation of the SCM Supply and Demand Analysis by Year, 1995-2000
Year
1995
"Calculated"
Oversupply or
Undersupply
2 percent oversupply
"Realistic"
Oversupply or
Undersupply
1 percent to 3 percent
undersupply
Market
Characteristics
Tight supply
Dataquest Forecast
Assumptions
Average of supply and
demand figures
Price firmness
1996
1997
1998
1999
2000
Seller's market
Continued seller's
market
demand figures
undersupply
Slight price increases
Continued seller's
market
demand figures
Becoming balanced
by end of year
oversupply
Price firmness sofliening by end of year
Convert to buyer's
marke
Increase supply: one
200mm fab
(Essentially balanced)
Price softness
2 percent undersupply 5 percent to 7 percent
undersupply
Balanced
11 percent oversupply 6 percent to 8 percent
oversupply, but
increased demand
anticipated to
absorb supply
Balanced to 2 percent
oversupply
Increased demand
coming from
elasticity
Buyer's market
More aggressive
pricing
More increased
demand
Neutral market to
buyers and sellers
Price declines
lessening
Increase demand to
absorb 30 percent of
excess supply
Increase supply:
2.5 200mm fabs
Increase demand to
excess supply
Increase supply:
3.5 200mm fabs
Increase demand to
excess supply
New investment
begins again
SCIVIS-WW-FR-9601
©1996 Dataquest
April 1,1996
19
This is primarily because the market has inefficiencies built into it caused
by mismatches between a buyer's requirements and a supplier's capabilities (technology, volume, and yield). Suppliers generally provided information based on full capacity assumptions. However, a longer-term
realistic operating model suggests that about 3 percent of capacity would
be used by engineering and sample lots, which are deemed nonproductive. Mismatches in the regional distribution of buyers and suppliers may
also contribute to inefficiency.
The aim of the "realistic" oversupply or undersupply projection is to provide a meaningful and somewhat practical means of characterizing the
SCM capacity availability. Also important is the recognition that SCM
users' perceptions of the SCM supply situation tend to have a great impact
on wafer pricing and the notion of an oversupply or an undersupply in
SCM. The "realistic" over- or undersupply indicator is designed to capture
the projected users' perception about the SCM market in the years ahead.
Figure 3-1 shows the projected "realistic" SCM supply and demand imbalance. Undersupply in SCM capacity ranging from 1 percent to 7 percent
during 1995 and 1996 will boost SCM suppliers' business and embolden
plans for aggressive SCM capacity buildup. New foundry fabs plus the
transition of older DRAM capacity (4Mb and 1Mb) to SCM services will
cause a surge in overall SCM supply by 1998. This oversupply in SCM
capacity is expected to take a couple of years (1998 to 1999) for price elasticity and demand growth to absorb the excess.
Figure 3-1
Worldwide "Realistic" SCM Supply and Demand Imbalance Projection
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
20
SCM Technology Analysis and Key Findings
Table 3-6 presents the worldwide SCM supply capacity projection segm.ented by line width, wafer size, interconnect level, and process technology. Technology segmentations of SCM supply for the four geographical
regions (North America, Japan, Asia/Pacific-ROW, and Europe) are
shown in Tables 3-7 to 3-10.
Analysis of the technology segmentation of the SCM supply and demand
base reveals some notable issues indicative of the SCM market business
model. The first is the aggressive migration of suppliers toward 200mm
wafers. SCM providers are projected to have more than half of their wafer
slice capacity at 200mm by 1999, as compared with an expected 20 to
25 percent for the semiconductor industay in general. This aggressiveness
in the migration to larger wafers is necessitated by the business model that
drives low-cost production. Dataquest does not, however, expect any nearterm activity in the SCM market in 300mm wâfers because technologies
need to be fairly mature and established before they can be cost-effective, a
critically important criterion in the SCM business model. Dataquest
expects SCM suppliers to begin migration toward 300mm after 2004.
Another finding is that there exists a potential mismatch in the area of
multilevel interconnect metallization. Input from SCM users indicated
demand for SCM capacity capable of three or more levels of interconnect
that far exceeds the expected ramp-up in multilevel supply. Motivated by
higher device performance and lower wafer costs, SCM customers are
designing ICs with ever-higher transistor density. A clear method is to
employ multilevel interconnect metal layers in the chip design. Although
customers look forward to incorporating three, four, or even more layers
of interconnect into their design, SCM suppliers seem to be less optimistic
about ramping up yield in multilevel intercormect processes quickly
enough to meet the customers' expectations. It is very common in semiconductor manufacturing for the users to lead the suppliers in the arrival
and maturing of new process technologies. Fabrication of multilevel interconnect ICs, requiring chemical mechanical polishing (CMP) and
advanced gapfiU and deposition techniques, is symptomatic of some the
inherent mismatch between the supplier's and the user's expectation.
SCI\/1S-WW-FR-9601
.
©1996 Dataquest
April1,1996
21
Table 3-6
SCM Supply-Side Capacity by Technology, Worldwide
Percentage of Worldwide Wafer Supply
1994
1997
2000
By Wafer Size (mm)
100
125
3.5
31.6
0
17.8
150
200
57.6
7.2
48.9
33.3
Total
100.0
100.0
Percentage of MSI
0
5.1
26.3
68.6
Thousands of Wafers
1997
1994
294
2,619
4,776
597
2
2,006
5,522
3,754
2000
3
778
4,041
10,533
100.0
8,286
11,284
MSI
15,355
1994
1997
2000
1994
1997
2000
>1.0
0.8 to <1.0
17.9
22.7
3.7
6.4
38.1
48.5
25.2
39.1
23.5
41.1
0.6 to <0.8
0.5 to <0.6
0.35 to <0.5
<0.35
31.6
23.6
4.2
0
6.8
10.5
24.2
38.4
16.5
3.6
9.6
32.4
34.2
13.7
67.5
50.3
8.9
0
90.2
142.9
61.5
13.3
61.3
207.0
218.4
87.2
100.0
100.0
213.3
372.3
638.5
18.2
10.8
21.8
45.2
64.7
68.7
95.4
67.8
126.0
149.7
28.2
By Line Geometry (Microns)
Total
100.0
By Interconnect Level (Levels of Metal)
1
2
30.3
44.7
3
4
23.6
33.9
40.2
1.3
7.6
16.0
50.3
2.9
0
0.1
6.3
0.0
0.4
100.0
100.0
100.0
213.3
372.3
79.2
82.8
87.0
168.9
308.2
>4
Total
By Process Technology
CMOS
139.1
288.4
102.1
40.3
638.5
555.6
73.2
15.1
2.2
11.5
1.5
38.8
5.6
56.0
8.0
100.0
Total
By CMOS and BiCMOS Product
Technology Segments
32.7
DRAM/Flash
7.8
Analog
100.0
100.0
213.3
372.3
638.5
26.9
9.3
20.5
7.4
69.8
16.7
130.9
47.0
59.5
100.0
63.8
100.0
72.1
100.0
126.8
213.3
100.3
34.6
237.4
BiCMOS
Bipolar and Others
AU Others
Total
18.2
2.6
372.3
9.8
460.6
638.5
SCIViS-WW-FR-9601
©1996 Dataquest
Aprii 1,1996
22
Table 3-7
SCM Supply-Side Capacity by Technology, North America
1994
1997
2000
Thousands of Wafers
1994
1997
2000
By Wafer Size (mm)
100
125
150
200
Total
0
75.1
20.4
4.5
0
19.3
28.8
51.9
100.0
100.0
Percentage of MSI
1997
1994
0
3.2
17.7
0
372
79.1
101
22
0
136
203
367
189
845
100.0
495
706
1,068
0
34
MSI
2000
1994
1997
2000
in
3.9
11.4
2.5
20.8
3.2
7.5
0
0
26.0
1.5
14.3
7.9
0
47.0
>1.0
0.8 to <1.0
71.0
29.0
14.8
43.9
5.4
44.3
0.6 to <0.8
0.5 to <0.6
0
0
3.1
30.4
0.35 to <0.5
<0.35
0
0
12.5
28.8
0
0
100.0
100.0
0
0
10.9
100.0
Total
By Intercormect Level (Levels of Metal)
16.7
0.0
3.1
0
0
1
2
14.1
78.0
3.6
49.2
2.3
17.0
1.5
8.5
0.9
12.8
1.1
8.0
3
4
5.2
32.8
14.4
50.3
22.8
0.6
0.3
8.5
3.8
23.6
10.7
0
100.0
0
100.0
7.6
100.0
0
10.9
0
26.0
3.6
47.0
99.4
99.2
99.1
0.9
10.8
25.8
0.2
0
46.6
0.4
0
0.1
0
2.6
>4
Total
CMOS
0.6
0
0.8
0
100.0
Total
Technology Segments
100.0
100.0
10.9
26.0
47.0
0
0
0
0
18.8
4.9
11.8
81.2
25.1
74.9
0
1.4
9.4
35.2
100.0
100.0
10.9
21.1
26.0
BiCMOS
Bipolar and Others
DRAM/Flash
Analog
AU Others
Total
0
13.0
87.0
100.0
0
47.0
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
23
Table 3-8
SCM Supply-Side Capacity by Technology, Japan
1994
1997
2000
Thousands of Wafers
1994
1997
2000
By Wafer Size (mm)
100
125
150
200
Total
4.9
35.5
51.7
0
1,387
0
264
3,675
1,683
6,744
MSI
1997
2,568
4,066
6,897
22.8
56.5
47.4
4.0
14.2
3.6
2.7
47.2
83.7
21.6
75.9
38.6
23.4
8.9
0
46.6
13.3
100.0
100.0
147.6
209.0
105.5
64.1
273.4
26.0
32.6
32.4
8.8
0.2
20.2
25.8
49.7
31.8
13.0
48.3
2.6
0
147.6
54.2
68.1
67.8
18.5
0.4
209.0
55.2
70.6
87.0
35.6
24.9
273.4
0.0
3.8
37.2
283
2,061
3,004
8.0
100.0
100.0
Percentage of MSI
58.9
100.0
465
5,813
1994
1997
2000
1994
8.2
1.9
12.1
0.8 to <1.0
15.4
6.8
0.6 to <0.8
38.3
32.1
22.6
40.0
1.3
1.0
7.9
27.7
6.0
0
22.3
6.4
0.0
20.6
54.5
24.9
2000
>1.0
0.5 to <0.6
0.35 to <0.5
<0.35
Total
100.0
33.7
1
2
31.8
32.7
3
4
>4
1.8
47.0
0
100.0
100.0
9.1
100.0
CMOS
70.2
69.9
70.0
103.7
146.0
191.4
BiCMOS
Bipolar and Others
26.2
26.6
26.4
38.7
3.5
3.5
5.2
100.0
Total
Technology Segments
41.5
DRAM/Flash
9.0
Analog
100.0
3.6
100.0
55.6
7.4
147.6
209.0
72.3
9.8
273.4
40.8
9.2
41.0
61.3
13.3
85.2
49.5
100.0
50.1
100.0
49.9
Total
AU Others
Total
9.1
100.0
73.0
147.6
19.1
104.7
209.0
112.2
24.8
136.5
273.4
SCIVlS-WW-FR-9601
©1996 Dataquest
April 1,1996
24
Semiconductor Contract IVIanutacturing Worldwide
Table 3-9
SCM Supply-Side Capacity by Technology, Asia/Pacif ic-ROW
Thousands of Wafers
1997
1994
1994
1997
2000
0
6.9
0
10.1
0
5.7
0
122
0
342
0
382
88.1
5.0
43.6
46.2
16.5
77.7
1,475
1,563
100.0
1,558
88
1,767
1,101
5,175
6,658
2000
1994
5.1
4.6
15.2
20.5
10.7
2000
By Wafer Size (mm)
100
125
150
200
Total
100.0
100.0
Percentage of MSI
1994
1997
3,380
MSI
1997
2000
>1.0
0.8 to <1.0
0.6 to <0.8
0.5 to <0.6
0.35 to <0.5
<0.35
Total
30.8
41.6
21.7
12.0
7.8
28.7
11.4
37.2
14.7
14.7
9.6
13.2
2.9
35.4
48.9
33.1
107.7
0
0
14.4
0
97.9
22.8
289.4
5.9
39.8
0
0
11.7
0
33.8
7.9
100.0
100.0
100.0
49.3
123.0
3.7
12.2
35.8
10.4
37.1
48.8
1.3
0
69.6
5.9
165.1
53.3
4.0
0
0
1
2
24.8
72.6
8.5
30.1
3
4
2.6
0
56.6
>4
Total
CMOS
BiCMOS
Bipolar and Others
0
4.8
0
100.0
100.0
100.0
49.3
123.0
11.5
289.4
99.3
99.5
100.0
48.9
122.4
289.4
0
0.7
0
0
0.4
0
0.6
0
0.5
0
0
100.0
100.0
49.3
123.0
289.4
11.0
5.1
6.3
82.7
2.0
7.8
1.4
13.5
7.7
14.6
5.7
93.0
100.0
40.1
49.3
101.7
269.1
289.4
100.0
Total
Technology Segments
DRAM/Flash
Analog
All Others
Total
16.9
57.1
18.4
10.7
15.8
2.9
81.3
100.0
100.0
123.0
0
SCI\/IS-WW-FR-9601
©1996 Dataquest
April1,1996
25
Table 3-10
SCM Supply-Side Capacity by Technology, Eiu"ope
1994
1997
2000
Thousands of Wafers
1994
1997
2000
By Wafer Size (mm)
100
125
5.2
30.7
0.3
31.1
0.4
13.4
11
64
2
141
3
98
150
200
Total
53.9
37.4
31.2
25.1
61.1
113
22
169
141
183
447
100.0
100.0
Percentage of MSI
100.0
209
731
1994
1997
2000
1994
453
MSI
1997
2000
56.8
37.5
5,7
18.6
27.1
9.3
15.4
3.1
2.1
2.6
3.9
2.7
4.4
31.5
19.3
17.9
31.7
0.3
0
4.5
2.7
3.4
0
24.7
1.1
P
0.5
e
0
100.0
100.0
5.5
14.2
5.1
9.1
7.1
0.3
28.7
21.3
75.4
15.5
56.8
5.9
40.7
1.2
4.2
22
8.1
1.7
11.7
3.3
26.6
0.2
0
8
3.8
0.1
12.6
2.4
0
100.0
1.0
0
100.0
43.9
8.4
1.1
100.0
0
5.5
0
14.2
0.3
28.7
98.9
98.4
98.4
5.5
28.2
1.1
0
1.6
0
100.0
1.6
0
0.1
14.0
0.2
100.0
5.5
0
14.2
14.4
0.7
0.6
1.5
2.8
4.1
4.3
9.9
14.2
19.9
28.7
10.3
>1.0
0.8 to <1.0
0.6 to <0.8
0.5 to <0.6
0
0.35 to <0.5
0
0
<0.35
Total
100.0
1
2
3
4
>4
Total
CMOS
BiCMOS
Bipolar and Others
100.0
Total
Technology Segments
DRAM/Flash
11.9
10.5
Analog
10.8
19.8
All Others
77.6
69.4
16.1
69.4
Total
100.0
100.0
100.0
D
5.5
0.5
0
28.7
4.6
Note: Columns may not add to totals shown because ot rounding.
SCMS-WW-FR-9601
©1996 Dataquest
April1,1996
Chapter 4
SCM Supply/Demand Update, February 1996
^ ^ . . . ^ ^
Recent Capacity Events and Their Impact
In the months since Dataquest completed the comprehensive worldwide
SCM supply/demand analysis, there have been a number of new developments in the supply side of SCM that warrant a revisit of the analysis.
These new developments include the following:
• Announcement of a joint venture by TSMC, Altera, and other customers
to build a dedicated foundry in the United States. The decision to locate
the joint-venture fab in the United States has moved capacity of 25,000
wafers per month from Asia/Pacific to North America but left the total
worldwide SCM supply unchanged.
• InterCormect Technology (ICT), a new dedicated foundry venture in
Malaysia, has been added to the SCM supply base. SCM capacity to be
brought u p by ICT's new 8-inch fab has been factored into ti\e supply
analysis.
• ASMC-Taiwan was removed from the SCM supply base. Capacity projection was provided by ASMC-Taiwan to Dataquest in 1995 and
included in the September 1995 SCM supply/demand analysis. Subsequent input from Dataquest contacts suggests the ASMC-Taiwan
foundry fab may be put on hold. Also, the recently armounced H P / W K
technology joint venture fab in Taiwan is not included in the current
SCM capacity update. Plans for the H P / W K joint venture fab were cancelled because of changing market and political conditions in Taiwan.
• The favorable reception of TSMC's recentiy introduced capacity option
program has allowed acceleration of TSMC's Fab 3 production buildup
and construction of Fab 4. This is accounted for in the supply analysis
by a sbc-month advance in TSMC's 1996-to-1997 ramp-up. TSMC's
total projected new SCM capacity for 1995 to 2000 remains the same,
however.
• There have been a few transitions of IDMs from production of standard
products to foundry. VLSI Technology is offering foundry services at its
San Jose, California, facility. UMC has reduced its SRAM production
output to devote more capacity to SCM services.
• Signs of slowing semiconductor orders have begun to surface. The
North America semiconductor book-to-bill ratio declined to 0.90 in February 1996, a level that the industry bellwether has not reached in five
years. Also, Cirrus Logic, the biggest consumer of SCM services, has
announced a slowing in orders in the current quarter. These and other
events indicating weakening in semiconductor demand will be closely
monitored. However, Dataquest has not factored in any changes in SCM
demand (compared with the September 1995 forecast) for the present
analysis. We view the weak order rate as a near-term inventory correction and Cirrus Logic's issue as competitive in nature. Long-term industry trends remain intact.
SCMS-WW-FR-9601
©1996 Dataquest
27
28
• Dataquest continues to use the guideline that a supply and demand-balanced SCM market would require about 3 to 5 percent higher supply
than demand to allow for the inevitable inefficiencies in mismatch of
customer requirements and supplier capability. The assumption that the
SCM market is price-elastic is also maintained.
Tables 4-1 and 4-2 present the revised SCM supply and demand segmented by regional distribution and types of sources, taking into account
these recent developments.
Table 4-1
SCM Supply and Demand,* Regional Summary, 1993-2000 (Millions of Square
Inches of Silicon)
Total Demand
North America
Japan
Europe
Asia/Pacific
Total Supply
North America
Japan
Europe
Asia/Pacific
1993
166.7
213.3
1995
261.2
1996
1997
1998
99.1
126.9
316.5
128.0
147.4
372.8
161.4
434.0
198.4
181.2
54.8
944
68.6
117.4
240.5
199.4
15.2
2.4
166.7
8.5
23.8
3.5
213.3
10.9
29.6
5.6
266.6
14.7
33.9
7.3
314.5
22.1
42.5
12.0
464.7
50.0
15.3
562.4
46.0
53.9
121.8
2.0
34.4
147.6
5.5
179.2
9.4
191.6
13.1
230.5
19.4
49.3
63.4
87.7
251.6
23.8
233.2
1994
164.5
37.4
9.4
382.4
31.6
209.0
14.3
127.4
168.9
1999
505.2
2000
CAGR (%)
1994-2000
605.6
305.3
219.6
19.0
28.3
11.0
60.9
19.8
639.8
62.2
16.9
33.6
273.4
10.8
31.8
33.2
20.1
33.8
29.0
275.3
'Includes exclusive contract manufacturing relationships; that is, a company is either a sole supplier for a specific product or has shared
proprietary technology for three years or longer
Table 4-2
SCM Supply and Demand Sources, 1993-2000 (Millions of Square Inches of Silicon)
Total Demand
Fabless
Companies
IDMs
System OEMs
Total Supply
Dedicated
IDM
1993
166.7
41.4
123.7
1.6
166.7
1994
213.3
47.1
162.3
3.9
1995
261.2
66.1
24.0
213.3
36.5
189.8
5.3
266.6
47.8
142.7
176.8
218.8
1996
1997
1998
316.5
83.7
372.8
105.5
434.0
132.9
225.9
6.9
258.5
8.8
314.5
67.8
246.7
1999
505.2
2000
CAGR (%)
1994-2000
19.0
162.9
605.6
210.7
28.3
290.0
11.1
328.2
14.1
376.0
18.9
15.0
30.3
382.4
98.8
464.7
138.3
562.4
188.1
639.8
232.5
20.1
36.1
283.5
326.5
374.3
407.3
14.9
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
29
SCM Market Forecast Update, February 1996
As in the previous chapter, analysis of the updated "calculated" SCM supply and demand figures (shown in the first table in this chapter) is carried
out to arrive at a "realistic" SCM supply and demand outlook that captures
what will likely be the users' perception of the capacity available in the
SCM market in the years ahead. This analysis and Dataquest forecast
assumptions are shown in Table 4-3.
Table 4-3
Year
1995
"Calculated"
Oversupply or
Undersupply
"Realistic"
Oversupply or
Undersupply
1 percent-to-3 percent
undersupply
Market
Characteristics
Tight supply
Dataquest Forecast
Assumptions
demand figures
Price firmness
1996
1 percent undersupply 3 percent-to-4 percent
imdersupply overall
Balanced-to-1 percent
oversupply in mainstream capacity by
year's end
Seller's market
Continued seller's
marke
demand figures
Bifurcation of SCM
market into mainstream and leading
edge
3 percent-to-6 percent Mainstream (0.6 to
undersupply in lead- O.Spm) transitions to
buyer's market
ing-edge capacity
1997
1998
0.5 percent undersupply in overall SCM
market
Slight price rises in
leading edge (0.5pm
and lower
Continued seller's
market in leading
edge until second or
third quarter
2 percent-to-4 percent
undersupply in lead- Price firmness begins
to soften starting
ing-edge capacity
midyear
begins to ease by
midyear
2 percent-to-4 percent Convert to buyer's
oversupply
naarket
Essentially balanced
with "comfortable"
slack
Price softness
Increased demand
coming from
elasticity
demand figures
Increase supply: one
200mm fab
Increase demand to
excess supply
(Continued)
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
30
Table 4-3 (Continued)
Year
1999
2000
"Calculated"
"Realistic"
Oversupply or
Oversupply or
Undersupply
Undersupply
11 percent oversupply 6 percent-to-8 percent
oversupply, but
anticipate increased
demand to absorb
the supply
Balanced-to-2 percent
oversupply
Market
Characteristics
Buyer's niarket
More aggressive
pricing
Greater increase in
demand
Neutral market to
buyers and sellers
Price declines lessen
New investment
begins again
Dataquest Forecast
Assumptions
Increase supply:
2.5 200mm fabs
Increase demand to
excess supply
Increase supply:
3.5 200mm fabs
Increase deniand to
excess supply
An updated projection of the "realistic" SCM supply and demand imbalance for 1995 to 2000 is shown in Figure 4-1. Compared with the forecast of
September 1995, updated supply and demand SCM data suggest a significant amelioration in the undersupply of SCM will occur in 1996 and 1997.
Specifically, a nearly 7 percent undersupply for 1996 expected in the
September 1995 analysis is now reduced to a 3 percent undersupply.
Undoubtedly, SCM suppliers, both existing and new players, have
responded to what was seen as an imminent serious shortage of SCM supply by adding or accelerating new capacity during the past few months.
Much of the added capacity, however, will come on line in the second half
of 1996 and in 1997. Continuation of the SCM capacity ramp-up in 1997, as
now planned, will likely lead to a significant oversupply of 3 percent in
1998 and 7 percent in 1999. An oversupply will exert downward pressure
on foundry wafer prices—a situation ttiat may spur demand growth that
will, in turn, bring more balanced SCM supply and demand by the year
2000.
Tables 4-4 and 4-5 show the February 1996 SCM market forecast by regions
in terms of MSI of processed silicon and dollar revenue, respectively. The
principal difference between the current and the September 1995 forecasts
is the increase in projected SCM silicon consumption in cormection to the
announced increases in SCM supply. The actual difference is about 0.6 percent for 1996 and 1.5 percent for 1997. In dollar revenue terms, a similar
percentage increase is expected for 1996 and 1997. An oversupply in 1998
and 1999 is expected to keep SCM suppliers focused on technology migration and transition to a higher-margin product mix. This should help
attract higher SCM usage and permit higher foundry wafer prices. The net
result, as shown in the new forecast, is a significant increase in the average
selling price (ASP) of SCM services by 2000. This also means a higher
overall SCM market, in dollar revenue terms.
SCI\^S-WW-FR-9601
©1996 Dataquest
April 1,1996
31
Figure 4-1
"Realistic" Worldwide SCM Capacity Imbalance Projection, February 1996
Percent MSI Oversupply/Undersupply
8-fl
w///^M/^
1995
1996
1997
1998
2000
1999
9813»
Source: Dataquest {February 1996)
Table 4-4
SCM Market Forecast by Regions, 1993-2000, February 1996 Update (Millions of Square
Inches of Silicon)
Total Forecast
North America
Japan
Europe
Asia/Pacific
2000
37.9
186.5
43.7
544.1
259.0
214.8
53.9
650.6
328.0
235.9
65.4
9.6
12.3
16.4
21.3
12.3
18.3
35.2
CAGR (%)
1994-2000
1995
1996
1997
54.8
94.4
15.2
213.3
68.6
117.4
23.8
263.9
100.1
128.2
29.9
315.5
127.6
377.6
163.5
166.7
2.4
3.5
5.6
7.2
146.9
33.8
CAGR (%)
1994-2000
1999
1994
1993
166.7
1998
446.7
204.2
20.4
29.8
Table 4-5
SCM Market Forecast by Regions, 1993-2000, February 1996 Update
(Millions of U.S. Dollars)
Total Forecast
North America
Japan
Europe
Asia/Pacific
1993
1994
1995
1996
1997
1998
1999
2000
3,222
1,537
4,565
2,200
7,555
4,180
9,329
5,313
2,483
4,278
248
592
674
2,963
765
18,525
11,319
5,082
26.3
31.4
1,789
471
11,655
6,801
3,554
14,731
8,776
1,367
6,219
3,265
2,192
920
1,165
1,452
20.6
69
105
170
218
288
380
513
672
36.3
19.0
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
32
SCM Contribution to tlie Semiconductor ii/iarlcet
Figure 4-2 shows the forecast for the SCM market and its contribution to
the semiconductor market on a revenue basis. A previous Dataquest study
revealed that SCM products are sold on the merchant semiconductor market at a multiple of the wafer price paid by the SCM customers. This multiple ranges from 1.6 to as high as 4, depending on the specific market (for
example, graphic chips, chipsets, mass flow controllers for the PC, programmable logic devices, or mixed-signal devices) and the SCM customer's marketing power (distribution, brand recognition, and designwins). In the present analysis, an average of 2.3 for 1995, rising to 3 for
2000, is used to account for the migration of SCM products to the highermargin mix enabled by SCM suppliers' continued adoption of advanced
semiconductor process technologies. As shown in the figure, the contribution of SCM products to the overall merchant semiconductor market is
expected to rise from about 10 percent in 1995 to 16 percent by the year
2000. In other words, by 2000,16 percent of the semiconductor products
sold worldwide will be manufactured by semiconductor contract
manufacturers.
Figure 4-2
SCM Market Forecast and Contribution to the Semiconductor Market (Revenue Basis)
Percent
18
Billions of U.S. Dollars
2018
Worldwide Foundry
Revenue
16-
Percentage Contributed
by Foundries
141210
8
6
4
2
0
1993
1994
1995
1996
1997
1998
1999
2000
961365
SCMS-WW-FR-9601
©1996 Dataquest
Apri!1,1996
Chapter 5
Economics of Semiconductor Contract Manufacturing
Fab Cost Drives SCM Growth
The most important driving force in the growth of SCM is the escalating
cost of new fabs. The semiconductor industry's continual march toward
ever-finer line width results in each new generation of wafer fab equipment incorporating more complex and sophisticated features. This has led
and will continue to lead to higher costs for semiconductor production
equipment. Moreover, requirements for a higher level of in-fab cleanliness
and reduced particle count means cleanrooms will get more expensive,
too. Collectively, wafer fab equipment, cleanrooms, and higher-purity
chemical and gas standards will ensure that each generation of new fabs
will be significantly costlier. Figure 5-1 shows the rising cost of a new fab.
In 1993, a new fab cost about U.S.$500 million. In recent years, the cost has
been typically quoted as U.S.$800 million to U.S.$1 billion. The price for a
new fab is projected to rise to U.S.$1.8 billion by the year 2000, when the
industry will be building plants for the 0.25-micron (and less) line width
generation.
Figure 5-1
The Rising Cost of New Fabs
Millions of U.S. Dollars
1,8001,6001,4001,200
1,000
800
600
400
200
0
m^
1982-1986:1.2Micron, 4-Inch
1986-1990:1.0Micron, 5-Inch
1990-1994:0.8Micron, 6-Inch
1993-1996:0.5Micron, 8-Inch
1995-1998:0.35Micron, 8-Inch
1997-2001:0.25Micron, 8-Inch
961366
SCMS-WW-FR-9601
©1996 Dataquest
33
34'
Method of Financing Fab Capacity: Fab Affordability
The impact of the escalating cost of new fabs on the IC industry is simply
that fewer and fewer companies will be able to justify the costs of building
captive fabs. In addition, there are many operation, process technology
R&D, and overhead costs associated with running a modern fab. Using a
company's armual revenue as a measure of new fab affordability. Figure
5-2 provides a measure of the revenue thresholds that a company needs to
achieve in considering the various methods of obtaining manufacturing
capacity. It is very important to note ithat this figure assumes a fab cost of
$1 billion. Fabs come in all shapes and sizes, so actual figures may change
based on specific situations.
Greenfield Fabs
Giving that the cost of an 8-inch fab manufacturing logic devices built
new from the ground up can be as much as U.S.$1 billion, the financial
resources required to build and sustain a fab today would require a company to have about U.S.$1.6 billion or more in armual revenue and a profitability comparable to the industry average. In 1995, there are about 25
IDM companies worldwide with revenue streams that fit the bill. These
companies will continue to rely principally on internal manufacturing in
existing and new fabs to provide the capacity for future growth.
Figxu"e 5-2
Annual Revenue as a $1 Billion Fab-Aff ordability Index, 1995 and 2000
'n
$100 Million
•^n
$100 Million
\
$250 Million
\
Annual Revenue 1995
$3 Billion
Annual Revenue 20D0
$50b Million
T"
\
$400 Million
$1.6 Billion
$1 Billion
961367
Source: Cirrus Logic, Dataquest (February 1996)
SCMS-WW-FR-9601
©1996 Dataquest
April1,1996
35
This figure, however, does not apply to companies in the foundry business. Foundry companies are, by the nature of the SCM business, critically
dependent on fab expansion for growth. This means a foundry company
must seek to expand a n d / o r upgrade its manufacturing capability at a significantly higher capital cost ratio relative to revenue and invest in technology to secure revenue in the future. The very nature of the SCM service
is to provide IC manufacturing with the capacity and technology that customers demand. Perhaps the most important goal for any foundry provider is to develop cost-effective methods of financing its manufacturing
expansion and technology migration.
Shared Investments
Shared investment arrangements are of two common types: equity investments and joint ventures. Equity investments are arrangements in which a
foundry user purchases an equity stake in a foundry company that ranges
from less than one percent to a few percent of the foundry's total outstanding shares. Such equity investments have been popular and generally
involve an exchange of guaranteed future wafer capacity for a sharing of
the financial burden of a foundry's maintenance and expansion of its fab
capacity. The most notable examples of equity participation are the
arrangements between Qiartered Semiconductor and Actel, Rockwell,
Brooktree, LSI Logic, and Toshiba.
Shared investments in which the investment by the foundry user is greater
than a few percent have also been popular, especially with larger fabless
companies that have considerable financial resources and are looking for
sizable fab capacity to continue their revenue growth. Shared investments
of this type usually take the form of a joint venture. A joint venture is a
separate legal entity (company) in which the foundry provider and its customers partner to fund construction of a new foundry fab jointly. The partners in the joint venture have right-of-first-refusal access to the new fab
capacity. The recentiy armounced three joint ventures between UMC and
many fabless companies are prime examples of joint ventures. (The three
joint ventures are UMC joint venture No. 1, United Semiconductor, formed
by UMC, S3, and Alliance Semiconductor; UMC joint venture No. 2,
United Integrated Circuits, which includes UMC, Oak Technology, ATI,
OPTi, Lattice Semiconductor, Trident, Integrated Silicon Solution Inc., and
ESS; and United Silicon, UMC joint venture No. 3, formed by UMC, Xilinx,
Cirrus Logic, and Alliance Semiconductor.)
Joint venture arrangements such as UMC's involve partners of two types.
One is the foundry or manufacturing partner (UMC), which has sole
responsibility in the joint venture fab's manufacturing and process technology R&D. The other partners (which are all fabless companies in
UMC's joint ventures) contribute funds for building the joint venture fab.
The contributors become part owners of the joint venture fab and receive a
portion of the fab's output. Although both will share in the gain or loss of
the joint venture fab's operation, the manufacturing/foundry partner and
the funding partners do have somewhat distinct (but overlapping) sets of
responsibility. The foundry partner is responsible for the manufacturing of
the wafers and the fund partners take care of consumption of the wafers.
Under this type of arrangement, the funding partners could be considered
to be fabless because their participation is strictly financial.
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
36
A joint venture arrangement in which the partners have more overlapping
responsibility is MiCrus, the joint venture between Cirrus Logic and IBM.
Cirrus Logic is the majority owner of MiCrus and takes an active role in all
aspects, including operations, R&D, and direction, of the joint venture
fab's manufacturing. This arrangement was likely motivated by Cirrus
Logic's extensive portfolio of analog products. Good designs of analog IC
products, in general, require an intimate knowledge of the device's manufacturing. Cirrus' desire to gain control of the joint venture fab's manufacturing was probably an important reason for its majority share in the joint
venture. In this situation. Cirrus Logic is considered to own a fab because
of its participation in manufacturing.
Because manufacturing is the essence of a foundry's competence, the
difference between the UMC-type joint ventures and MiCrus-type joint
ventures is noteworthy. Dataquest calls the UMC-type joint venture a
"nonpartidpatory joint venture," with the implication that the fund partners do not participate in the manufacturing aspects of the joint venture's
fabs. A MiCrus-type arrangement, on the otiier hand, is called a "participatory joint venture." Moreover, as most foundry demand stems from CMOS
digital designs that do not require close access to manufacturing, nonpartidpatory joint ventures are likely to gain popularity and could be the
model of many future joint ventures.
Foundry capacity achieved through contractual agreements tends to be
of two types: prepa5ntnent agreements and options for the right to future
foundry capacity. Contractual foundry agreements are generally intended
to secure capacity for six month to a few years—prepayment for future
foundry capacity involves paying a portion or all of the expenses for the
delivery of an agreed amount of foundry wafers. An option for foundry
capacity is the a right to purchase a certain amount of wafers to be delivered at a spedfied date. Purchase money for the option can be applied
toward payment of the foundry wafers when they are delivered. The
option to purchase future capacity has been offered by TSMC, which is
reporting an enthusiastic response from its customers. Strong participation
in the option program has emboldened TSMC to set a goal of raising
U.S.$1 billion from options to help accelerate its fab expansion plan. In
fact, TSMC is scheduled to bring up two new 8-inch fabs before mid-1997.
In contrast to prepayment, capacity option arrangements tend to be used
when the wafer volume is larger, the delivery date is more distant, and the
supply agreement is longer term.
Arm's-length Foundry Capacity: Wafer Purcliases
For many medium-size and smaller fabless companies, securing wafers is
much like a straightforward purchase of foundry wafers. Because of its
relatively fewer product lines and smaller volume requirement, a small
fabless company may find it somewhat easier and less pressured to secure
supply on a long-term basis. But when industry capacity does get very
tight or when resources are insufficient to pay for wafers, trading tecltnology for capacity has also been practiced.
SCI\/IS-WW-FR-9601
©1996 Dataquest
April 1,1996
37
For larger SCM users, short-term foundry wafer purchases may often
complement other capacity-securing arrangements (such as the ones mentioned previously). Tfiis would accommodate a sudden surge of customer
orders or potential mishaps in one of the long-term suppliers. A combination of shared-rnvestments/contracts for long-term, high-volume supply
and wafer purchases for short-term, low-volume needs may be the ideal,
risk-balanced solution toward overall wafer supply. Such an arrangement
would, however, also suggest maintaining relationships with a larger
number of SCM suppliers than might seem required.
Are Fabless Companies in Joint Ventures Still Fabless?
An interesting issue precipitated by the rush of fabless companies entering
into joint ventures is the question of how the definition of "fabless" is
altered by the fact that the fabless partners have, by the virtue of a joint
venture's fab construction, become part-owners of a fab. In other words,
does being part-owner of a fab disqualify a company from being fabless?
Dataquest has adopted the convention that a fabless company ceases to be
fabless and becomes an IDM when it enters into a participatory joint venture that produces more than 25 percent of the wafers it requires. Fabless
involved in nonparticipatory joint ventures continue to be recognized as
fabless.
Comparison in Capacity-Financing Methods
Traditional wafer fab investment have principally been driven by the need
to secure guaranteed production capacity, by an attractive wafer cost
structure—obtaining wafers at cost, and by the need to ensure access to
state-of-the-art process technologies. Table 5-1 compares the trade-offs in
the various capacity financing methods. Clearly, building one's own fab is
the most risky venture with the strongest positive return. Shared investment in a new fab through a joint venture arrangement will provide all
three advantages but also incurs a good portion of the high costs associated with operating a captive internal fab. Contractual capacity agreements and foundry purchases have reduced risks at the expense of
reduced advantages.
As fab costs continue to rise, more and more companies will shy away
from building new plants and look for an alternative that meets its needs
and resources most appropriately. Arrangements such as shared investments (joint venture and equity participation), contractual supply agreements (prepayments and options), as well as straight wafer purchases,
have allowed companies a range of choices. Dataquest believes that as
new fabs get more expensive and bigger, fewer new fabs will be built.
As shown in Table 5-2, fewer new fabs means that fewer companies in the
semiconductor industry will be building them. Dataquest estimates that
by 2002, about 30 percent of semiconductor companies wiU be building
their own fabs, compared with about 50 percent in the first half of the
1990s. The rest, 70 percent of all semiconductor companies, will be resorting to supply arrangements with SCMs for mo^t, if not all, of their wafer
needs.
SCI\/IS-WW-FR-9601
©1996 Dataquest
April 1,1996
S8
Table 5-1
Trade-Offs in Methods of Financing Fab Capacity
Attractive wafer cost
XXX
XXX
Negative
Fab costs from opeAccess to latest
ration, R&D, and
process technology overhead
XXX
XXX
XX
XX
XX
XX
-
X
X
-
Positive
Own Fab
Shared Investment/
Joint Ownership
Guaranteed Capacity
Indefinite
Indefinite
Long term to medium
term
Foundry Purchases Short term
Note: Number of Xs indicates degree of importance.
Table 5-2
Rising Cost of New Fabs Means Fewer Companies Can Afford to Go Solo
1985-1990
New Fabs
Companies Building Solely Owned Fabs
Companies Relying on SCM
258
80 percent
20 percent
1991-1996
202
50 percent
50 percent
1997-2002
About 175
About 30 percent
About 70 percent
SCM User Strategies
There can be many advantages in using SCM services to meet manufacturing needs, including decreased capital outlay requirements and more
focused company direction. However, not all advantages are afforded to
all users of SCM. In general, optimal SCM user strategies can be classified
by the two principal types of users: fabless and IDM companies.
Fabless SCM User Strategies
Fabless companies, by design, rely completely on the SCM market for
manufacturing their products. In a tight market such as today's, this group
of companies is most at risk when negotiating for capacity. The fabless
companies have, by and large, four choices in today's tight market: to limit
growth, to acquire an existing fab (thus becoming an IDM), to enter into a
joint venture with others to build a fab, or to make sizable cash payments
either in advance for wafers or as an equity investment in a fab operated
by someone else. All of these options are being adopted by fabless companies today. As manufacturing capacity continues to be tight over the
course of 1996, there will probably be more creative methods developed
for securing capacity.
When should a fabless company build a fab? At what level of revenue?
There is not a single magic number, but rather a set of conditions that must
be met in order for the construction of a fab to qualify as the lowest-risk
alternative. The first condition is only indirectly related to the level of
business and involves management of the number of suppliers and the
products they produce. A fabless company's business is at risk, in terms
of reliability of a device produced, if different suppliers of the same part
SCi\/IS-WW-FR-9601
©1996 Dataquest
April 1,1996
39
produce chips of different quality and performance. Quality control for the
shipped device may be difficult to manage if the fabless company has too
many suppliers. Dataquest understands that Cirrus Logic has on the order
of a dozen or so suppliers for its products, and the motivation to consolidate production was one of the key reasons in Cirrus' investing in MiCrus.
The second condition, which does relate to the size of the company is
related to what kind and size of fab needs to be built or planned. A financial model in which capital spending exceeds 25 percent of revenue on an
annual basis would be risky compared with alternatives such as prepayment and equity investment in a joint venture. The average capital spending for the semiconductor industry has been around 20 percent of the total
market, historically. Including a reasonable assumption of how an investment in a fab would be spread over time, we conclude that for a fabless
company to build a fab, it should have an armual revenue stream that
exceeds 1.6 times the cost of the project. For example, to build a U.S.$1 billion fab over 2.5 years, the minimum annual revenue for the fabless company today should be $1.6 billion. The 1.6 revenue-to-fab-cost ratio is also
consistent with the analysis based on a comparison of fab cost versus company' revenue in recently announced projects (see Figure 5-3). As shown
in the figure, companies building fab or fab expansion projects typically
have revenue that is at least 1.6 times the cost of the project. The handful of
companies that fall below the "fab affordability line" are not significantly
below, and many of them are tempering the project risk by pursuing concurrently an SCM solution. Likewise, an IDM with a current project that
exceeds 1.6 times its revenue may be taking on excess risk, considering the
capacity procurement options available in the SCM market.
IDM Company Strategies for Using SCIM Services
There are principally three distinct strategies that IDM companies are
employing in their use of SCM services.
The first strategy may be characterized as a "low-cost" strategy in which
the decision about outsourcing production is based on achieving the lowest cost of manufacturing the chip. This is the traditional "make or buy"
decision in which the costs of outsourcing (wafer costs and managing and
monitoring the SCM relationship) are weighed against those of internal
production (direct costs for labor and materials, overhead, and inventory
costs). IDMs using this approach can move in or out of the market based
on internal capacity availability or the cost from the supplier. An example
of a company that has used this approach is Motorola.
The second strategy views the SCM market capacity as an extension of the
IDM customer's own capacity. Dataquest calls this approach the "riskaversion" strategy. The IDM bases the decision to subcontract on attaining
the most efficient balance between the two sets of capacity—internal versus external. This can lead to more efficient overall capacity use if lowervolume products are subcontracted or if higher-volume products with a
unique set of process requirements are subcontracted. This would free u p
the IDM's internal capacity and allow it to be managed at a higher-capacity utilization. IDMs employing the "risk-aversion" strategy tend to have
longer-term and more stable volume requirements, as they are more strategic users of capacity. An example of a company that is likely to follow
this practice is LSI Logic.
SCiVlS-WW-FR-9601
©1996 Dataquest
April 1,1996
40
Figure 5-3
Revenue versus Fab Cost Map: Companies Primed for Increased Use of SCM Services
1994 Revenue (Millions of Dollars)
3,000 •
•
Motorola, Intel
IBM/Toshiba, T l ,
Samsung
SGS-Thomson
2,500-
AMD
2,000Fab Affordablllty
Line (Slope = 1.6)
1,500-
1,000-
Micron
• LSI Logic
A Hewlett-Packard
A Analog Devices
A VLSI Technology
500Linear
Technology
•IRC
•
IDTAtmel
GEC-Plessey
1
400
Microchip
T
600
I
806
1
1—
1,000
— I —
1,200
Cost of Fab Project (Millions of Dollars)
A
Companies Already Using SCM Strategically
•
Companies Beginning to Use SCM
•
Companies with No Significant SCM
asiasa
The final IDM user strategy that has been identified is one that may be
labeled a "growth" strategy, where the IDM uses more advanced capability
external to the company to develop new products and grow the business
strategically. This kind of strategy is more typical of a company whose
internal capacity is significantiy behind the leading edge (such as 1 micron
or higher today) or that uses its internal capacity to manufacture highmargin proprietary products. An example of a company with this type of
strategy is Analog Devices.
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
Chapter 6
Foundry Wafer Pricing
Summary of September 1995 Survey
Table 6-1 summarizes the foundry wafer pricing for CMOS unprobed
wafers in the fourth quarter of 1995. The table shows one representative
price level and a range that reflect the variance in pricing for each process
combination for both the 150mm and 200mm wafer sizes. Information on
150mm and 200mm wafer pricing at or below 0.6 micron is well established because wafers of these sizes and at 0.6 micron and higher were
standards for the vast majority of foundry capacity at the time of the pricing survey. Pricing information shown in the table for 200mm wafers at
0.5 microns is based on projections provided by foundry users and providers surveyed by Dataquest. Manufacturing of 200mm foundry wafers is
likely to begin at least at the 0.8-micron line width level and most likely at
the 0.6-micron line width level. Thus, no pricing for 200mm wafers at line
widths greater than 0.8 micron is available.
Wafer pricing is a moving target, swayed by the changing supply and
demand dynamics in foundry capacity. Although foundry wafer pricing
shown in tiie table will probably change within six months of the survey
(and already have, to some degree), the information presented could still
be used as a guide for future wafer pricing. Considering that foundry
capacity will remain in tight supply through 1996, there is a greater probability of increases than of decreases in foundry wafer prices at 0.5-micron
and 0.6-micron technologies. This table could be viewed as providing a
minimum in foundry wafer pricing, especially in the technologies that
have higher demand (0.6-micron and smaller line width and 200mm
wafers) through the projected tight-supply period of 1996 to 1997.
Table 6-1
1995 Foundry Wafer Prices, CMOS Unprobed Wafers, 13 to 15 Mask Levels*
(U.S. DoUars per Wafer)
200mm Wafers
150mm Wafers
Line Geometry (Microns),
Metal Levels
Price Range
Est Average Price
Price Range
636
684
475 to 780
544 to 830
NA
NA
NA
772
844
670 to 860
720 to 1,000
927
Est. Average Price
1.0,2
1.0,3
0.8,2
0.8,3
0.6,2
NA
1,352
1,391
1,200 to 1,613
1,250 to 1,613
1,680 to 2,000
1,031
775 to 1,050
800 to 1,300
1,844
0.6,3
1,958
1,600 to 2,400
0.5,2
1,205
1,307
875 to 1,400
910 to 1,700
2,169
2,370
1,700 to 2,600
1,800 to 3,000
0.5,3
NA = Not applicable
'Assumes no epitaxial; single-level polysillcon
SCMS-WW-FR-9601
©1996 Dataquest
41
^
February 1996 Update
Since the conclusion of the survey, the memory market (particularly
SRAM) has softened. Older SRAM-type capacity has found its way into
the foundry market and is putting downward pressure on prices at
0.8 micron and higher. Dataquest has heard of declines of as much as
15 percent to 20 percent, but we believe that 10 percent is more typical.
The high end of the range, typically from Southeast Asian suppliers, is
under the greatest pressure, tightening the range of prices found in the
market
Overview by Technology and Region of Supply
For 1.0-micron wafers, the primary sources of supply are Europe and the
United States, with some in Japan and Asia/Pacific. The only regional
variation in 1.0-micron wafer pricing was that European providers tended
to be lower than average. This could be a result of more plentiful capacity.
The supply of 0.8-micron wafers is broad, with a relatively narrow price
range. There are no clear variations among the regions in pricing.
For 0.6-micron and 0.5-micron wafers, there is a significant difference in
supply and pricing among the regions. Regional pricing variation is most
pronounced at the 0.5-micron level. The bulk of the capacity for 0.5-micron
(and even 0.6-micron) line width is in Japan and Asia/Pacific, where the
customers are most likely to get favorable pricing. Moreover, it has been
reported that the most favorable wafer pricing is enjoyed by Japanese
foundry customers in Japan. Because the SCM market is more developed
in Japan than in other regions and Japanese manufacturing is very much at
the leading edge, wafer pricing issues in that market tend to be a bit more
settled. Also, foundry relationships in Japan, especially between a Japanese manufacturer and a Japanese customer, have traditionally been long
term, so that continuing a relationship of trust is often as important as
wafer pricing. Another difference in Japan is that there are relatively
fewer new customers bidding for the same foundry capacity (most startup fabless companies are in the United States and Asia/Pacific), so there is
less urge on the part of the suppliers to set premium prices.
Asia/Pacific providers are more closely following the letter of the law of
supply and demand. If the demand for foundry capacity exceeds supply,
the imbalance quickly and efficiently translates into higher prices. However, if the customer is a fast-growing U.S. fabless company or prefers to
do business with a dedicated foundry, the Asia/Pacific providers can be a
little more accommodating. Flexibility has been cited as an important
element in a successful foundry relationship, and many Asian providers
seem to be more inclined to "deal."
BiCMOS processes currently account for less than 20 percent of worldwide
foundry supply, and most BiCMOS foundry capacity belongs to Japanese
suppliers. The technologically more complex BiCMOS process is likely to
continue to decline in popularity. This could result in a greater imbalance
between the supply and demand of BiCMOS capacity, with an increasing
mismatch in the regional distribution of BiCMOS users and suppliers.
A typical BiCMOS process today involves about 18 to 20 mask levels, compared with 13 to 15 for the base CMOS process flow. Also, most BiCMOS
processes include an epitaxial silicon layer and two levels of polysilicon
SCI\/IS-WW-FR-9601
©1996 Dataquest
April 1,1996
43
(as opposed to no epitaxial layer and one polysilicon level for CMOS).
Generally, for comparable line widths and metal layers, BiCMOS wafer
pricing can range between 25 and 40 percent higher than CMOS pricing.
Pricing of Process Options
Table 6-2 provides an estimate of the pricing for various processing
options. Again, the optional process pricing tends to be lower in Europe
and Japan and higher in Asia/Pacific. Some foundry suppliers, notably
Japanese companies, have internal capability for epitaxial depositions,
which allows lower pricing than if these wafers were obtained from a
merchant silicon company. Perhaps a more critical consideration for
choosing a process or a provider is not pricing, but rather the expertise
and experience of the provider's ability to execute the process option correctly. An example is the salicide process, a difficult process where the
actual yield may vary considerably from one foundry to another.
Chemical mechanical polishing (CMP) is another critical application
essential for the fabrication of sub-0.5-micron devices with multilevel
interconnects. However, the CMP process technology is not fuUy mature
and true process ownership is not available in current CMP equipment
offerings, so much of the CMP process capability has to be provided by the
IC manufacturers. Given that dedicated foundry companies, in general,
have devoted relatively fewer resources to R&D, CMP and other advanced
processing techniques (for example, salicide and some critical etch and
lithography processes) may not be readily available in foundry for a few
more years. Alternatively, customers with advanced process option
requirements may need to bring their own process technology to a
foundry. An example is AMD's providing CMP technology to TSMC for
the manufacturing of 486 microprocessors. While manufacturing capacity
remains tight, technology-for-capacity trades wiU remain a viable option.
For customers that do not have or do not choose the technology-for-capacity option, IDM foundries with extensive processing R&D programs, such
as IBM, SGS-Thomson, NEC, and Fujitsu, have clear advantages over dedicated foundries in providing advanced IC manufacturing capabilities.
Table 6-2
Estimated 1996 Foundry Wafer Process Option Pricing (U.S. Dollars per Wafer)
Process Option
Epitaxial Silicon
Salicide
Tungsten (per Level)
Added Polysilicon Level
(Above One)
CMP
Bach Added Mask Level
(Above 15)
200mm Wafers
150mm Wafers
Price Range
Est. Average Price
Price Range Est. Average Price
144
100 to 225
58
40 to 90
200
200
109
50 to 150
75 to 100
90
20 to 60
40
130 to 150
140
50 to 80
69
NA
69
NA
50 to 100
300
170
250 to 350
150 to 190
NA = Generally not available on 150mm wafers
Source: Dataquest (January 1996)
SCIVIS-WW-FR-9601
©1996 Dataquest
Aprii1,1996
44
This table also shows that the differeiices in the prices of process options
for 150mm and 200mm wafers are greater than tiie difference in square
inches of silicon between the two wafer sizes. This is probably caused by
the greater demand for the relatively newer and fewer 200mm foundry
wafers. (For instance. Chartered and TSMC began volume production of
200mm foundry wafers orJy in late 1995.) The imbalance in supply and
demand of 200mm foundry wafers has allowed suppliers to increase margins on process options on the 200mm wafers. This situation is likely to
persist well into 1997.
Volume Pricing Discounts and Premiums
Most foundry suppliers place a minimum on the number of wafer delivered to a customer. The minimum may range from a few hundred to as
many as a couple of thousand processed wafers per month. The actual
minimums also vary according to the agreement made with the customer.
Price premiums begin as customers take delivery on volumes under the
minimum. Premiums typically start at about 10 percent and can scale up
to 30 percent. Although the practice of take-or-pay (pay for the agreed
minimum number of wafers) is not widespread now, it could become
more common as a capacity surplus begins in the next few years.
In the more developed Japanese foundry industry, volume discounts are
an established practice. For a CMOS foundry in Japan, volumes of 7,000 to
10,000 wafers per month can command about a 5 percent discount and
volumes over 10,000 command a 7 percent to 8 percent discount. For BiCMOS, volumes of 5,000 to 10,000 wafers per month can command a 5 percent discount, going up to 7 percent to 8 percent for volumes over 10,000.
Wafer price premiums, not discounts, have been reported for volume
demand in technologically leading-edge products. A maximum, not a
minimum, is likely to be applied on the number of 0.5-micron wafers customers can receive from a foundry supplier. Until 1997, when the constraint in advance capacity will begin to ease, requests for volumes of
foundry wafers greater than the maximum are likely to be met with
higher prices.
Foundry Wafer Revenue Productivity—Another Measure of Pricing
A useful metric for gauging productivity in the foundry industry is the
dollar revenue per square inch of processed ICs. Table 6-3 shows foundry •
wafer revenue productivity on the basis of dollar revenue per square inch,
using an average of 27.5 square inches of revenue area per 150mm wafer
(excluding 3 percent for the wafer edge). For IDMs using or considering
using foundries, this provides a convenient means for comparing the relative economics and efficiency of the IDM's captive manufacturing versus
outsourcing. For fabless companies, foundry wafer revenue represents the
cost basis of their products. A recent Dataquest study has found that, in
general, merchant revenue—revenue from finished chips sold on the merchant market—ranges from 1.5 to 4 times the foundry costs. The average
ratio of merchant revenue to foundry cost is about 3.
Semiconductor products manufactured by foundries have been logic
devices. Table 6-4 shows the semiconductor industry's end-chip merchant
revenue productivity (in dollars per square inch) for different device types
at three levels of technology. Mainstream logic device production
SCiVIS-WW-FR-9601
©1996 Dataquest
April 1,1996
45
Table 6-3
150mm Foimdry Wafer Revenue Productivity (U.S. Dollars per Square Inch)
ISOinm Wafers
Line Geometry (Microns),
Levels of Metal
1.0,2
Est Average Price per Wafer ($)
1.0,3
0.8,2
0.8,3
0.6,2
0.6,3
0.5,2
0.5,3
Foundry Wafer Revenue
Productivity
636
684
772
844
927
23.1
1,031
1,205
1,307
37.5
43.8
24.9
28.1
30.7
33.7
47.5
Table 6-4
Semiconductor Industry End-Chip Merchant Revenue (U.S. Dollars per Square Inch)
Leading Edge
Microprocessor
ASIC, Logic, and Microcontroller
DRAM
Power/Discrete and Analog
^^K;.
Mainstream
Lagging Edge
S90-S150
$300-5600 • ^'^"*"'' S1,S0-$25O
$l(K>r$l<lO .^:„j^.ffi"™$S0-$'?5,;^ ^ f c , ^ . $50$7<}:
$80-$90
CMicron-$130)
$30-$35
$65'$75
$45-$50
$25
<$15
Note: Shaded areas show categories occupied by most foundry wafer products outside of Japan. Shading indicates the highest relative
concentration of foundry fab capacity, with mainstream logic the most popular.
(currently 0.6-micron to 0.8-micron line vîdths) accounts for the bulk of
foundry revenue. The $80 to $95 revenue productivity for mainstream
logic devices (0.6-micron to 0.8-micTOn, 2LM) is consistent with prevailing
foundry wafer pricing and the merchant-to-foundry multiple of about 3.
Migration toward leading-edge (0.5-micron line width and below) logic
device manufacturing is in full stride, with many foundry companies,
both existing and new, rapidly adding new fab capacity equipped with the
latest generation of semiconductor manufacturing equipment. Dataquest
expects that within the next few years, more than 50 percent of worldwide
foundry capacity will be at 0.5-micron and finer line width technology.
Another area in which contract manufacturing will remain significant is in
the production of lagging-edge logic devices. This will stem from the
migration into foundry services of older, fully depreciated IDM fabs. Fully
depreciated fabs with low overhead costs could find many more good,
profitable years serving as foundry fabs making technologically less
demanding products with high yields.
SCIVIS-WW-FR-9601
©1996 Dataquest
April 1,1996
Chapter 7
Future Trends in SCM
How Will SCM Change over Time?
In this chapter, Dataquest explores the future of the SCM industry. As the
SCM players grow in sales and resources, they are expected to expand
into related businesses to gain greater competitive advantages. We will
describe the two expansion strategies that are being adopted by existing
and new SCM suppliers. Competitive issues such as SCM's technological
lag, dedicated foundries' competitive strengths, and potential new SCM
entrants are also discussed.
Expansion of the Traditional Foundry Model
Early participants in the SCM market had relatively simple product and
service concepts. They offered to manufacture wafers for fabless or IDM
customers that provided them with pattern generator tapes or masks. This
"traditional" foundry model is being expanded in two different directions.
One strategy is described as "manufacturing integration" and the second
strategy is called "design integration." These two strategies are depicted
in Figure 7-1.
Figure 7-1
Contract Manufacturing Services Strategies
Drop Ship
ii
Assembly and
Test
Fab
Tradi tional
Fou ndry
GDS-II or Masks
Netlist
VHDLor
Verilog Files
Design Integration
SCMS-WW-FR-9601
©1996 Dataquest
47
48
Today, less than 20 percent of the SCM industry supplies the complete
process from wafer start to either packaged chip or known good die. Fully
60 percent of capacity is produced as unprobed wafers. This is likely to
change significantly. Semiconductor contract assembly manufacturers are
expected to be the most common new entrants into SCM services, embarking on a strategy that we call manufacturing integration. The first Asia/
Pacific entrants from this group seem to have a well-conceived strategy.
For example, Alphatec, a Thailand-based contract assembly manufacturer,
has armounced its entry into the foundry business through its establishment of SubMicron Technology. The strategy is to offer to Alphatec's existing contract assembly customers, as well as potential new customers, the
combined services of Alphatec's contract assembly services and SubMicron's semiconductor front-end foundry capabilities to provide turnkey
contract manufacturing, including wafer fab, assembly and test, and drop
ship to the end customer.
This is a compelling strategy and must be considered as a viable market
entry position. QPL Holdings Ltd. has implemented a similar strategy.
Other major contract assembly companies are expected to make similar
announcements during the next year. Dataquest believes that five to 10
new entrants from Thailand, Malaysia, Indonesia, Korea, Taiwan, China,
and Singapore will adopt this strategy during the next five years.
This approach is further supported by the backward integration of the
dedicated foundry companies into contract assembly for their customers.
Chartered Semiconductor already offers tunikey services because it has
both front-end manufacturing and assembly operations. TSMC also offers
turnkey services through alliances with a number of contract assembly
companies.
Dataquest believes that the turnkey model will be a strong strategy for
SCM. We also think that the strongest turnkey suppliers will offer wafer
processing through drop shipment of products to customers. They will
take total responsibility for semiconductor manufacturing and logistics for
their customers. Dataquest believes that the turnkey model may become
the predominant model that the industry will follow.
Design Integration
Today, just under 90 percent of the SCM services market interfaces with
the customer at GDS-Il or masks. Silicon layout is not generally done at
the foundry. TSMC, the current leader in semiconductor foundry services,
has expanded its offerings to include access to ASIC libraries, a move that
makes TSMC look more like an ASIC supplier. This model has been pioneered by Japanese companies that prefer to interface with their customers
at a higher design level than GDS-II/mask manufacturing. Our pricing
survey has shown that companies in Asia/Pacific and Japan have different
pricing structures for their services. Japanese companies' prices are somewhat lower than those of Asia/Pacific foundry suppliers today, in spite of
the fact that Japanese companies typically provide services at the netlist
interface level, which is more profitable tihan the GDS-II interface level
preferred by the Asia/Pacific companies. This apparent contradiction can
be explained by examining the evolution of the market inside Japan.
SCI\/IS-WW-FR-9601
©1996 Dataquest
April 1,1996
49
When the contract manufacturing services market developed in Japan in
the late 1980s, Japanese companies tended to price their services with relatively low margins compared with today's standards. By the early 1990s,
Japanese companies wished to increase their margins on these services
and they migrated to a higher interface level. The SCM market outside of
Japan has been evolving primarily along a GDS-II interface path serving
PC chipset companies. These chips typically have higher value per square
inch of silicon, and thus the non-Japanese foundry companies have
enjoyed higher prices.
Many foundry users prefer to use GDS-11 tapes or masks as the interface
with their foundry sources. This approach has the advantage of providing
control of the layout design of their products and also provides some protection of their intellectual property. Although several years ago some
fabless companies transferred their designs to their foundry sources by
netlist, by 1995, those companies switched to GDS-11 or masks, indicating
a clear shift in this direction.
Dataquest believes that only small fabless companies will use a netlist
interface until they have the financial resources to acquire electronic
design automation (EDA) layout tools and can produce their own GDS-11
tapes. We think that TSMC offers cell libraries and netlist interface in order
to provide such companies these services when they are small and growing and establish itself as their preferred foundry supplier.
Dataquest believes that design integration will play a less significant role
than manufacturing integration as a strategy for success in contract manufacturing services. The key interface will be GDS-11 or masks for the foreseeable future. ASIC libraries and netlist interfaces will be a preferred way
of doing business for only a small minority of customers of SCM services.
SCM Technology Will Continue to Lag Leading-Edge IC Manufacturers
Although the SCM technology road map is being driven by user demand
toward increasingly advanced levels, Dataquest believes that SCM services providers will continue to lag the leading-edge IC manufacturers in
technology. This is a natural result of the SCM business model. The SCM
business is designed to offer customers low-cost manufacturing of proven
process technology. Instead of investing resources in the development of
advanced technologies, SCM providers are investing in cost-effective
200mm capacity with technology that lags leading-edge capability by onehalf generation to one full generation. Figure 7-2 shows the technology
gap, as measured by minimum line width, between the leading-edge capabilities of SCM and the semiconductor industry. During the past 10 years,
SCM suppliers have gained ground, catching up withtibieindustry leaders
in semiconductor process technology, and the gap has shrunk from about
1.3 micron to less than 0.15 micron in 1996. The lag between SCM and the
semiconductor leaders is likely to be maintained at about a 0.1-micron separation, or a lag of one-half to one generation, for the remainder of the
decade.
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
50
Figure 7-2
Leading-Edge Line Widths of SCM and the Semiconductor Industry
Microns
2.5SCM Leading-Edge Line Width
2.0Semiconductor Leading-Edge Line
Widtti
1.51.00.5-
—I—
1995
—I—
1990
1985
2000
961370
Dedicated Foundry Positioned to Dominate SCIVI li/larlcet
Dataquest asked foundry users if they preferred dedicated or IDM
foundry providers, and 65 percent of the respondents stated a preference
for dedicated foundries over IDM SCM providers. Most of the remaining
responses expressed no preference for either dedicated or IDM SCM providers, while a few stated a preference for IDM foundries. In analyzing the
SCM users' stated preference for dedicated foundries, the following seven
key reasons were identified, all of which Dataquest categorizes as having
an emphasis on customer focus:
• Better customer service
• Lower cost
• Better turnaround time
• No potential competitive situation
• More flexibility regarding design rules
• No conflict with internal demands
• Better assurance of available capacity
These key reasons provide insight as to why dedicated foundries are preferred. The success of dedicated foundry companies is totally dependent
on satisfying their foundry customers' needs. IDMs generally have other
priorities to balance with the demands of their foundry customers.
SCMS-WW-FR-9601
©1996 Dataquest
April1,1996
51
The few responses that indicated a preference to IDM foundries also gave
important insights into the benefits of doing business with IDM SCM providers. These benefits are grouped into three categories as follows:
• Manufacturing experience
a Better at solving problems requiring knowledge of both the
manufacturing process and the product
Q More experience in testing
a Established quality control process in place
a Driven to high yield and quality by total manufacturing economics
• Applications experience
Q Understand applications better
• Leading-edge technology
• Offer more advanced technology
Dataquest believes that the dedicated manufacturers will close the manufacturing experience gap over time. However, companies that require
more advanced technology and applications support may well continue to
use IDMs to support their foundry needs. In this regard, system OEM
users are the most likely to require applications support for their product
designs.
New Entrants in SCM
A significant long-term threat to the current SCM provider is new
entrants. Although these new entrants may contribute to excess capacity
in 1998 to 1999, Dataquest believes that they will not have a significant
competitive impact on the market until 2001 to 2003.
Near-term competitive threats to the SCM industry could come from two
directions: Japan and Korea. We consider these threats to be only moderate
at best.
The Japanese IDM SCM suppliers can be characterized as a wild card.
These companies would have to reposition themselves to become competitive threats outside of Japan. This is because foundry operations are
decentralized operations within the companies. They tend to make independent decisions about providing foundry services to their customers.
This decentralized approach means that there is no corporate-level strategy toward pursuing foundry as a business opportunity. Japanese IDMs,
for the most part, prefer technology alliances and joint ventures rather
than long-term foundry relationships. Foundry or OEM ASIC relationships are viewed as a means to build the initial relationship with target
companies. There are a few exceptions to this strategy, for example, Seiko
Epson and Sharp.
The second possible short-term threat is the large Korean DRAM manufacturers. Dataquest believes that they pose no immediate threat today. These
companies are focused on pursuing other product strategies that provide
them with greater visibility in the global semiconductor market. They
have stated that they do not intend to become major players in the
SCMS-WW-FR-9601
©1996 Dataquest
April 1,1996
52
Semiconductor Contract Manulacturing Worldwide
foundry business. Korean companies have little revenue to date from supplying nonexclusive SCM services. This is a result, in part, of a negative
cultural connotation that can be seen in Korea: that if a company produces
someone else's product, it is not really a manufacturer. Dataquest believes
that this cultural issue may become less significant over time.
We note, however, that Korean companies should not be discounted
entirely. Their strengths are formidable, and they could become serious
competitors if they chose to enter the SCM services business. They have
manufacturing strength, access to resources, and can apply single-minded
focus to projects if they choose to do so. SCM services companies should
monitor the Korean companies carefully, particularly if there is weakness
in the DRAM market.
Value-Added Manufacturing Services Are tiie Key to Success
It is critically important to understand that the SCM services business is
not a manufacturing business, but a service business. That's why we call it
SCM services. Although an SCM services supplier cannot exist without
offering manufacturing, it will not succeed if its management is not customer-focused. Once a customer focus is established, we believe that offering value-added services is the key to success. Value-added services
reduce the customers' cost of doing business while increasing the margins
of the supplier. We think that a successful model for the SCM services
business will incorporate the following services with basic wafer fab
capability:
• Appropriate technology that provides the right technology for the
customer's needs at the optimum cost
• Manufacturing effectiveness in the form of reduced cycle times and
high yields, resulting in lower manufacturing costs that can be passed
on to the customer
• Assembly and test capability to relieve or minimize the customer concerns witti test and manufacturing-related issues. Manufacturing will
become a given, just as quality has become a given. With a fully vertically integrated (turnkey) SCM provider, the customer can provide the
design to a supplier, which will manufacture and ship the product
directly to the end customer.
• Inventory and logistics management that will provide the customer
with real-time information about the status of its products just as if it
had its own manufacturing operation
By focusing on these value-added services, SCM service providers and
their customers can be cost-competitive compared with the vertically integrated device manufacturers. This is also the essence of the SCM model,
that a clear division of labor is established between product design and
product manufacturing. While SCM customers focus on product design,
marketing, and sales, SCM suppliers concentrate on providing costeffective manufacturing with competitive turnaround of finished
products.
SCI\/1S-WW-FR-9601
©1996 Dataquest
April1,1996
Appendix A
Glossary ^ ^ ^
Definitions of Terms
Dedicated Foundry Providers
Dedicated foundry providers include any of the following companies
whose charter is to fabricate devices for other companies exclusively.
Dedicated foundries that Dataquest recognizes are Taiwan Semiconductor
Manufacturing Company, Chartered Semiconductor, Tower Semiconductor, Newport WaferFab, SubMicron Technology, Advanced Semiconductor
Manufacturing Company, MidWest Microelectronics, and Orbit
Semiconductor.
Integrated Device Manufacturer (IDM)
An IDM is a company that has its own front-end fabrication facilities and
is a merchant or captive supplier of semiconductors; can refer to either a
foundry user or a foundry provider.
Fabless Companies
Fabless companies are merchant semiconductor companies that purchase
more than 75 percent of their wafers (or product) from a foundry (for
example Altera, S3, Xilinx, and Brooktree, among others. See also
Appendix C).
System OEM
A system OEM is an electronics equipment company that is not a merchant or captive semiconductor company (for example, Apple Computer,
Sun Microsystems, and Compaq).
Foundry Purchases
Foundry purchases include unprobed wafers, probed wafers, tested
wafers (known good die), or packaged chips.
SCMS-WW-FR-9601
©1996 Dataquest
53
Appendix B
Worldwide Semiconductor Contract IIAanufacturers
The following are companies that participate in semiconductor contract
manufacturing:
•
•
•
•
•
•
ABBHafo
Allegro Microsystems
Applied Micro Circuits Corporation
Asia Semiconductor Manufacturing Company (Shanghai, China)
Atmel
Chartered Semiconductor
•
•
•
•
•
Daewoo
Fujitsu
GMT MicroElectronics
Gould AMI
Hitachi
•
•
•
•
Holtek
Honeywell
Huajing
Hualon Microelectronics Corporation
•
•
•
•
•
H5^ndai
IBM Microelectronics
IC Works
IMP
• LG Semicon
•
•
•
•
Matra
Matsushita
Micrel
MidWest Microelectronics
• Mitel
• Mitsubishi
• NEC
• Newport Wafer Fab
• NMB (Nittetsu)/Nippon Steel Semiconductor
• Oki
SCMS-WW-FR-9601
©1996 Dataquest
55
56
•
•
•
•
•
•
•
•
•
•
Orbit
Raytheon
Ricoh
Robert Bosch
Rohm
Samsung
Sanyo
Seiko/Epson
SGS-Thomson
Sharp
• Sony
• SubMicron Technology
• Symbios Logic
• Texas Instruments
• Thesys (Austria Mikro Systeme)
•
•
•
•
•
•
•
SCI\/iS-WW-FR-9601
Toshiba
VLSI Technology
Virginia Technology
Wafertek
•V^^nbond
Yamaha
©1996 Dataquest
April 1,1996
Appendix C
Fabless Companies in 1995
The following are fabless companies:
• 3Dfx
• ACC Microelectronics
•
•
•
•
•
•
•
•
Acer Labs
Actel
Adaptec
Admos Inc.
Advanced Hardware Architectures
Advanced Logic
Advanced Microelectroruc Products
• Altera
• Aptos Semiconductor
• Arcus Technology
• Array Microsystems
• ASIC Technologies Solutions
• ASPEC Technologies
• AuraVision
• Benchmarq Microelectronics
• Brooktree
• C-Cube
• Catalyst
• Chip Design Technology Inc.
• Chips & Technologies
• Chrontel
• Cirrus Logic
• Crosspoint Solutions
• Cyrix
• DSP Group
• ESS
• ETEQ Microsystems
• Etron Technology
• Exar
SCMS-WW-FR-9601
©1996 Dataquest
57
58
• Eupec (Germany)
• Fagor
• Genesis Microchip Inc.
• Hall Technologies
• IChips
• Ideal Semiconductor
•
•
•
•
•
•
•
Information Storage Devices
Integrated Circuit Systems
Integrated Information Technology
Integrated Silicon Solution Inc. (Taiwan)
Integrated Telecom Technology Inc.
International CMOS Technology
• International Microcircuits
• Irvine Sensors
• KMOS Semiconductor Designs
• Lattice Semiconductor
• Level One
• Logic Devices
• Lucas Novasensor
• Micro Linear
• Mosdesign Semiconductor Corporation
• MoSys Incorporated
• Myson Technology
• NeoMagic
• NexGen
• NVidia
• Oak Technology
• OPTi
• Optimum Semiconductor
• Pericom Semiconductor
• Q Logic (formerly Emulex)
• Quality Semiconductor
• Quality Technologies
• QuickLogic
• Rambus
SCI\/IS-WW-FR-9601
©1996 Dataquest
April 1,1996
Fabless Companies in 1995
59
• Realtek Semiconductor Corporation
• S3
• Seeq Technology
• Sensory Circuits
• SiArc
• Sierra Semiconductor
• Silicon Integrated Systems (Taiwan)
• Silicon Storage Technology
• Silicon Systems
• Siquest
• Standard Microsystems
• Star Semiconductor Inc.
• Startech
• Sunplus Technology Company
• Symphony Laboratories
• Syntek Design Technology
• Tamarack
• TCS
• TranSwitch
• Trident Microsystems
• Tseng Labs
• ULSI Systems
• Unichip
• United Technologies Microelectronics Center
• Vandem Inc.
• Vivid Semiconductor
• WaferScale Integration
• Weitek
• Weltrend Semiconductor Company
• Western Digital
• V\^nbic Semiconductor Inc.
• Worltek International
• Xilinx
• Zycad (Formerly Appian Technology)
SCI\/1S-WW-FR-9601
©1996Dataquest
April1,1996
i
Calvin Chang, Industry Analyst
Internet address
Via fax
^^
IjOTO/^l I^^Cf
^"^•^^^^•^Sr
(408) 468-8605
[email protected]
(408) 954-1780
P3rt to other parlies shall be made upon the written and express consent of Dataquest.
Dauquest is a registered trademark of A.C. Nielsen Company
i
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Dataquest
©1996 Dataquest
i

Semiconductor Contract [Manufacturing

Transcription

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