Japan Fading in Semiconductor Fabrication?

The article below discusses the fab materials market in Japan and states that Japan is maintaining its global position. I don't believe that Japan will be able to maintain its share.

The cause is the rising cost of new process technology. One of the casualties of the $10 Billion cost of developing new semiconductor technologies is Japan's semiconductor industry as is detailed in the March 2012 comment Are Japan's Fabs stuck above 28nm Process Technology?







Ron
http://www.maltiel-consulting.com/




Japan's semiconductor industry: Fabs, equipment, and materials


by Dan Tracy, senior director, SEMI Industry Research and Statistics

October 3, 2012 - Semiconductor manufacturers in Japan are either consolidating or closing fabs, and, in several cases, transitioning to a "fab-lite" strategy, all in a restructuring effort to meet the market challenges ahead. While device manufacturers are consolidating manufacturing operations and plan to outsource more wafer fabrication and package assembly to foundries and packaging subcontractors, a large installed fab capacity remains in Japan. Recent data for the year shows overall wafer area shipments into Japan's fabs being the same as shipments into Taiwan.

By 2014, the total installed fab capacity Japan should increase slightly from about 4.5 million to 4.6 million 200mm equivalent wafers per month. Installed 300mm fab capacity is expected to increase from about 760,000 to 840,000 300mm wafers per month -- representing, by region, the third largest 300mm fab manufacturing capacity base globally. Over the next several years, fab spending in the Japan market will be directed towards the production of NAND flash memory, power semiconductors, high-brightness LEDs, and CMOS image sensors.

Regional share forecasted for 2013 fab materials market. Total market size: $25.7 billion.

Overall equipment spending in Japan will likely range on the order of $4 billion per year. Expected NAND flash investments in 2013 could approach up to $2.5 billion. LED fab equipment spending is estimated to be $340 million next year. Finally, Sony is expected to invest about US$ 1 billion or more in its CMOS image sensor production.

Japanese equipment and material suppliers are leading players on the global semiconductor industry stage. It is estimated that Japan-headquartered equipment companies collectively capture about 35% share of the global semiconductor industry spending per annum. Like their North American and European counterparts, customers in the rest of the Asia Pacific region are the largest base for new equipment sales.

Chemical and other material suppliers in Japan are market leaders in the manufacturing of silicon wafers, III-V wafers, advanced chemicals, packaging resins, and packaging substrates. It is estimated that the Japanese material suppliers sales represent about 70% of the global semiconductor materials market, both fab and packaging.

Japanese suppliers showcase the latest products at SEMICON Japan 2012

Leading Japanese equipment and materials suppliers will exhibit at SEMICON Japan 2012 on December 5- 7, along with global key players, at the Makuhari Messe, Japan. Find the latest products and innovations this companies offer to customers globally that enable key technologies for the future including 450mm, EUV, TSV, power devices, and HB-LEDs to name a few. Also, the show will co-locate with a major photovoltaic show, PVJapan 2012 so you can connect to two major microelectronics industries in a single visit.

Qualcomm, Intel Fastest Growing Semiconductor Companies

It is not surprising that Qualcomm, which supplies chips to the mobile revolution, grew 41.6% in 2011. However, Intel, which supply chips to the slow-growing PC market, increased its revenues by 20%. Acquisitions were key drivers for Intel's and Qualcomm's growth in 2011.

As I have been pointing out for many years the rankings are missing two major companies: Sandisk and ARM Holdings.



Ron Maltiel


Chip rankings: Intel had highest share in over 10 years

http://www.eetimes.com/electronics-news/4369843/Chip-rankings--Intel-had-highest-share-in-over-10-years
Dylan McGrath , 3/26/2012 4:34 PM EDT

Intel accounted for 15.6 percent of the overall semiconductor market in 2011, as brisk sales of its core chips and the acquisition of Infineon AG's wireless chip business unit helped the No. 1 chip vendor achieve its highest share of the overall chip market in more than 10 years, according to market research firm IHS iSuppli. SAN FRANCISCO—Intel Corp. accounted for 15.6 percent of the overall semiconductor market in 2011, as brisk sales of its core chips and the acquisition of Infineon AG's wireless chip business unit helped the No. 1 chip vendor achieve its highest share of the overall chip market in more than 10 years, according to market research firm IHS iSuppli.
Intel's overall market share in 2011 improved by 2.5 percentage points from 13.1 percent in 2010, according to IHS's final tally of the 2011 chip market. The firm issued a preliminary report on the 2011 chip vendors rankings last December.

"Intel in 2011 captured the headlines with its major surge in growth," said Dale Ford, head of electronics and semiconductor research for IHS, in a statement. "The company’s rise was spurred by soaring demand for its PC-oriented microprocessors, and for its NAND flash memory used in consumer and wireless products."

Intel's sales grew by 20.6 percent in 2011, the highest level of growth among the top 20 semiconductor vendors with the exceptions of Qualcomm Inc. and On Semiconductor Corp., each of which saw high levels of growth based on a combination of organic expansion and key acquisitions, IHS said.
In recent years, South Korea's Samsung Electronics Co. Ltd. had been getting closer to overtaking Intel and becoming the No. 1 chip supplier. But in 2011, Intel lengthened its lead over Samsung, which accounted for 9.2 percent of overall chip sales, unchanged from 2010, IHS said.

Based on the final numbers, IHS said the chip market grew by a paltry 1.3 percent in 2011, down from an earlier estimate by the firm of 1.9 percent growth. A sequential decline of 5.9 percent in the fourth quarter of 2011 pulled the full-year results down, IHS said.

Qualcomm grew 41.6 percent in 2011 to became the sixth largest chip vendor by sales, up from ninth in 2010, IHS said. Qualcomm accounted for 3.3 percent of overall chip sales, just behind No. 5 player Renesas Electronics Corp., which had 3.4 percent, according to IHS.
On Semi moved to No. 18 in chip sales in 2011, up from No. 26 in 2010, the largest jump of any vendor in the top 25, IHS said. Light-emitting diode (LED) maker Nichia Corp ranked No. 23 in chip sales in 2011, thanks to 34 percent growth, IHS said.

In 2011, just over half of 302 chip suppliers tracked by IHS grew sales compared with 2010, IHS said.

Overall, companies headquartered in the Americas saw the greatest improvement to their semiconductor revenues among all regions, at 7.5 percent growth, IHS said. In comparison, revenue fell 7.2 percent as a whole for Japanese firms, which suffered from the impact of the 2011 earthquake, according to the firm.

Are Japan's Fabs stuck above 28nm Process Technology?

One of the casualties of the $10 Billion cost of developing new semiconductor technologies is Japan's semiconductor industry as is detailed below.

Ron Maltiel



Japan's aging semiconductor industry revealed by 2011 earthquake

http://www.electroiq.com/articles/sst/2012/03/japans-aging-semiconductor-industry-revealed-by-2011-earthquake.html


March 20, 2012 -- One year ago, Japan's semiconductor industry was rocked by a devastating earthquake and tsunami. However, the real disaster for Japan's chip industry occurred during the years before the earthquake -- a period when the country lost its status as one of the world's leading semiconductor manufacturing regions, according to the IHS iSuppli Semiconductor Value Chain Service.

The limited impact of the quake on the global semiconductor industry dramatically illustrated Japan diminished status in the worldwide chip hierarchy and underscored the pressing need for the country to revitalize its business in this area, said Len Jelinek, director and chief analyst for semiconductor manufacturing at IHS.

Suppliers headquartered in Japan accounted for more than one quarter of global semiconductor revenue in 2003, commanding a 27% share. During the next eight years, Japan's share suffered a general decline, dropping 8 points to 19% in 2011 (see the figure).

Semiconductor Revenue

2003 2004 2005 2006 2007 2008 2009 2010 2011 % of Global

27.0% 25.4% 23.4% 22.3% 23.4% 23.5% 21.4% 20.4% 18.7%

Figure. Share of Global Semiconductor Revenue Held by Suppliers Headquartered in Japan (Share of Global Revenue in U.S. Dollars). SOURCE: IHS iSuppli March 2012.


Of the major global semiconductor manufacturing regions, Japan now has the smallest number of number of advanced 300mm wafer fabs and the largest number of mature 6" wafer fabs. Companies in Japan have resisted the trend of closing mature facilities and either outsourcing manufacturing or rebuilding manufacturing facilities to current state-of-the-art facilities. Once one of the worlds most advanced semiconductor producers, Japans semiconductor manufacturing operations have become senescent relative to the rest of the world.

In the aftermath of the disaster, the immediate concern was that the semiconductor supply chain would grind to a halt. Massive component shortages were predicted with the potential for recovery pushed out as far as a year. However, by most accounts, things are now back to normal. Of the damaged manufacturing facilities, only one operated by Freescale Semiconductor was shut down permanently after the disaster.

Freescale previously had announced that it intended at the end of 2012 to close the fab in Sendai, an older 6-inch facility that originally manufactured analog products. The earthquake simply hastened the closure.
It is now clear that the impact of the earthquake and tsunami on the global semiconductor market fell far short of some prognosticators' dire predictions.

Unfortunately for Japanese semiconductor companies, the disaster uncovered an issue that had been known but not openly acknowledged: Japan is no longer in a leadership position for the manufacturing of semiconductor components. The long-overdue revitalization of the Japanese semiconductor industry has surfaced as the real issue.

In February, a proposal emerged to address Japan's semiconductor industry weakness that called for the consolidation of manufacturing operations at semiconductor giants Renesas, Fujitsu and Panasonic.

The plan separates out design and manufacturing into two separate companies. Furthermore, the proposal calls for a large capital injection to revitalize the manufacturing company.
Sadly, the plan is really a well-disguised roadmap for significant reduction in semiconductor manufacturing.


Can the plan actually lead to the revitalization of wafer manufacturing in Japan? IHS believes it is highly unlikely.

As the leading chip manufacturing companies transition to sub-28-nanometer manufacturing, Japan is facing the fact that it currently has no company capable of volume manufacturing using this advanced technology node. History has shown that success is driven by experience. Without a strong technical platform on which to gain experience and move forward, there is little chance of the country achieving the transition to sub-28-nanometer production.

How will the semiconductor industry reshape itself? Will Japan's focus shift to design?

Only time will determine the answer, but the probability of Japan successfully sustaining its mature manufacturing engine diminishes with each passing day.