For those in the semiconductor industry, a recent headline for an EE Times blog post seemed heartening: “Wafer Demand Increasing.” The author cites a study by Phoenix, Ariz.-based research consultant Semico Research Corporation that says the semiconductor sector will improve this year from last, with wafer demand expected to increase by 10 percent. Last year the sector was disappointed by tepid response in the PC sector to Windows 8 and the Ultrabook, but optimism is on the rise in with PC/tablets and tablet/phones. Semico says the semiconductor supply chain pipeline is likely not ready if either of these form factors really take off.
Speaking from one company’s perspective, Munich, Germany-based Wacker Chemie AG, a provider of silicon to the sector, says in an article on Chattenoogan.com that the company expects to be challenging. “The semiconductor market is currently moving sideways,” said Wacker CEO Rudolf Staudigl.
According to xbitlabs.com, after reaching a high in tQ3, global semiconductor inventories held by chip suppliers fell at a surprisingly fast rate in the Q4, led by dramatic reductions for market leader Intel Corporation. Market research analyst IHS iSuppli notes that Days of inventory (DOI) for semiconductor suppliers in the fourth quarter declined by 5 percent compared to the third quarter, appreciably higher than the 1.5 percent initially forecast. This was in response to weakening demand.
The economy’s continuing slow recovery may reverse this trend. X-bit labs concludes:
“Semiconductor suppliers will be positioning their inventories in the first quarter this year to prepare for anticipated demand. Inventories are expected to rise in response to slightly positive global economic indicators as well as favorable semiconductor and end-equipment forecasts—unless major swings occur once more from the larger suppliers that could then end up skewing the industry.”
EE Times adds that companies will focus on manufacturing efficiencies as they take advantage of the learning curve for the processes that are already in place. Despite more efficient manufacturing, specific challenges remain, including:
- Cost reduction for 28/20nm volume production
- Cost containment for process development of 14nm development
- Yield challenges associated with new materials and multiple patterning layers
- Managing design time and design costs
- Incorporating system-level software at the chip level
Nevertheless, Semico is optimistic that innovative products will continue to roll out of the fabs and semiconductor sales will improve.
This reminds us of the inherent difficulty in forecasting, particularly when the range of semiconductor product markets is so broad. As has often been said (variously attributed to Albert Einstein, Nils Bohr, Casey Stengel and Yogi Berra), “Never make predictions, especially about the future.”