The Drives and Dives of the Semiconductor Market

Transcription

1 The Drives and Dives of the Semiconductor Market Notes accompany this presentation. Please select Notes Page view. These materials can be reproduced only with Gartner s official approval. Such approvals may be requested via quote.requests@gartner.com. Jim Walker Gartner/Dataquest GBC Market Forum IMAPS 37th International Symposium on Microelectronics Long Beach, CA November 16,

2 Summary of DQ Indicators INDICATOR JUDGEMENT DEMAND SUPPLY Gartner IT Watch INDICATOR JUDGEMENT DQ Inventory Index INDICATOR JUDGEMENT DQ WF Util Index INDICATOR JUDGEMENT DQ Semi Lead Indicators INDICATOR JUDGEMENT DQ Semi Investment Index DQ PA Util Index INDICATOR JUDGEMENT INDICATOR JUDGEMENT

3 Forecast Growth Scorecard Revenue Growth (%) -3Mos Current -3Mos Current World Real GDP U.S. Real GDP E Equipment* Semiconductor Capital Spending Equip. Spending WFE Equipment P&A Equipment AT Equipment *Production revenue

4 Electronic Applications Production Growth: Strong Outlook Continues for Growth (%) % 10.7% 7.3% -11.8%

5 Worldwide Semiconductor : Strong Recovery in Revenue ($B) % 5.2% % 14.1%

6 DQ Semiconductor Inventory Index: Comparing Cycles Dataquest Semiconductor Inventory Index Cycle Cycle Ideal Range -4Q -3Q -2Q -1Q End 2Q +1Q Comparison Excess inventories are concentrated in few hands, mostly SC vendors, distribution and EMS for Speed of excess inventory development is significantly slower Anticipate industry actions in 3Q to harness and reduce excesses Unlike in prior cycles, industry initiates inventory burn before overcapacity emerges

7 Comparison of Up-Cycles: Fundamentals Are Stronger Than Expected 1999/2000 Current Delta Start: 1Q Q2003 End: 4Q 2000 Length: 8 Q 4Q -4Q Downcycle cause: Demand Supply Capex Growth [b-p] annual: 109% 65% -44pts quarterly: 254% 130% -124pts Total spending: Capex: 97.6B 61.8B [4Q 04] -35.8B WFE: 51.1B 37.9B [4Q 04] -13.2B New capacity [annual] 820MSI 665MSI -155MSI 23% 15% -8pts Capex Efficiency [MSI/B$]: [+28%] Maj. Wafer size: 200mm 300mm Inventory

8 Wireless Everywhere WANs Personal-area networks P2P networks Campus networks Metro broadband networks Satellite networks, GPS Cable replacement, room networks Sensor networks Home networks

9 2.5 Strong and on Target! Cell Phone Unit Production Forecast Annual (Million) G 3G 2.5G Cell Phone G 273M 2.5G 160M 3G 78M 2G 114M 2.5G 360M 3G 153M 2G 67M 2.5G 397M 3G 189M

10 Digital Home Market Segments The digital home has external pipes, platforms, internal pipes, components and services. Services include information, communication, entertainment and commerce. Digital castle (multiple platforms with maximal connectivity) Digital house (typically one platform with minimal connectivity) Digital shack (no digital connectivity)

11 Broadband Is the Key Households "in thousands" 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 PC and any broadband connection Achieved "critical mass" in Million to 51 Million PC and wireless link PC and satellite link PC and xdsl link PC and cable modem

12 Broadband Changes Everything "Online activities frequently or always include..." Entertainment Games, music, video clips Communication , chatting online, using instant messaging Accessing shopping-related information Getting product information, comparing prices Conducting transactions Purchasing, banking, trading stocks Accessing news and information Reading news, conducting information searches Dial-up users 24% 74% 28% 21% Broadband users 40% 83% 37% 36% 32% 41% Broadband users spend twice as much time online and visit twice as many pages as dial-up users Key question: What happens to share of TV time? Source: GartnerG2, Cross Vertical II, September 2003

13 Digital Television Households "in thousands" 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Digital set-top box platforms Moving toward ubiquity 45 Million to 76 Million DSL-based TV Digital Cable Digital Satellite

14 OLED/LEP Displays Very low power Very high contrast Read in bright light Extreme wide-angle viewing Flexible and malleable Vendors include: Kodak Covion Phillips Siemens Dupont Universal Display Cambridge Display Technology OLED PLED TOLEP LEP FOLEP Olight Source: Universal Display Corporation FOLED Movie Source: Sarnoff Laboratories Source: Phillips

15 Online Game Consoles Households "in thousands" 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Network-ready game consoles Maintains niche status, but big in families with children 5 Million to 19 Million Net-ready consoles

16 DVD Players and Burners Households "in thousands" 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 DVD players and recorders Redefining digital distribution of entertainment 62 Million to 109 Million DVD players DVD burners

17 PVR and Media Center Households "in thousands" 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Personal Video Recorder Platforms (PVRs) 0 Pay-TV competition pushes PVRs to mainstream 3 Million to 45 Million Independent Satellite Cable

18 Home Networking Households "in thousands" 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Home networks Still the No.1 bottleneck, but this could change in 8 Million to 26 Million Powerline PNA Wireless Ethernet

19 Personal Computers Households "in thousands" 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Personal computer platforms Second PC drives home networks 70 Million to 78 Million Any PC More than one PC

20 Digital Home Market Segments Households "in thousands" 120, ,000 80,000 60,000 40,000 20,000 Digital home market segments Rise of digital castle has major implications for media access Shack: 38 Million to 27 Million Digital Shack Digital House Digital Castle Castle: 5M 23M

21 Media Wallet Share Market prediction $250 $200 $150 $100 $50 $0 Consumer wallet (dollars per month/household) Consumer Internet Consumer magazines Consumer books Newspapers Video games Recorded music Satellite radio Home video Box office Video-on-demand/pay-per-view Premium cable and satellite Basic cable and satellite

22 ASSPs Lead Device Share: Market Size & AGRs by Device, 04 & 05 Total Market = $251B Share by Device ASSP 24% Memory 21.4% Total Market = +$226.1B AGR by Device 10% 12% 16% 25% ASSP ASIC 25% Non-optical 29% Sensors 12% Opto 30% ASIC 8.6% Nonoptical Sensors 0.8% Opto 3.6% Discrete 6% Analog 5.3% Logic 5.4% Micro 20.7% -3% 2% 8% 12% 11% 17% 20% 25% Discrete Analog Logic 35% Micro Memory 44% 0% 5% 10% 15% 20% 25% 30%

23 INDICATOR: DQ Wafer Fab Utilization Index Gartner Industry INDICATOR JUDGEMENT Research Ratio of Silicon Consumed to Fab Capacity 100% Leading Edge 90% 80% 70% 60% 50% 40% 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06

24 Wafer Fab: Foundry Services Market Revenue Forecast Revenue [$ Billion] Summary : Demand growth, price pressure : Strong growth; inventory build : Demand and capacity correction 2006: Slow demand growth 2007: Tightening capacity

25 Wafer Fab Equipment Most-Likely Scenario - Shallow Downcycle Billions of Dollars 10 9 Shallow Downcycle Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 Most Likely

26 Factory Utilization 100% 90% 80% 70% 60% 50% 40% 30% Gartner Industry INDICATOR JUDGEMENT Research Leading Edge Q3/05 Q1/06 Q3/06 Q1/05 Q3/04 INDICATOR: DQ P&A Utilization Index Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04

27 Back-End: SAT Services Annual Revenue Forecast Revenue [$ Billion] Highlights : Transition to QFN, Flip-Chip & 3D : SIP moves mainstream 2006: WLP growth

28 Back-End (PAE +ATE) Equipment Market Quarterly Revenue Forecast Scenarios Billions of Dollars % +50.3% +56.4% NOW (0.15) (0.7) (0.15) -13% -5% -0% NOW (0.2) (0.6) (0.2) Growth Prob. Growth Prob Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 Alternate 1 Most Likely Alternate 2

29 PAE Consumption by Region 100% 80% 60% Asia/Pacific 40% 20% EMEA Japan 0% NA

30 China s Percent of PAE Consumption % 20% CAGR=33.5% 10% China PAE Growth 0%

31 Long-Term View: Cycles Continue Capital Spending Semi Equipment [incl. Test] Billions of Dollars Billions of Dollars

32 INDICATOR: Summary of DQ Indicators INDICATOR JUDGEMENT DEMAND SUPPLY Gartner IT Watch INDICATOR JUDGEMENT DQ Inventory Index INDICATOR JUDGEMENT DQ WF Util Index INDICATOR JUDGEMENT DQ Semi Lead Indicators INDICATOR JUDGEMENT DQ Semi Investment Index DQ PA Util Index INDICATOR JUDGEMENT INDICATOR JUDGEMENT

33 Conclusions Economy Global economy on sound growth path but less lofty and more uncertain Watch for oil price movement, inflation and weakness in US Corporate spending sentiment strong for Electronic equipment Improving macro conditions drive broad recovery in Slowing demand growth expected in ; PC shipments slow Semiconductors Expect revenue growth of 27 percent in Expect slow, single-digit expansion in Supply-side and capital equipment Industry watches inventories, correcting slight excess in 2H 04 WF utilization recedes with inventory burn Industry remains vigilant in adjusting capex to anticipated demand Strong supply-side fundamentals push up CapEx to 54% growth in semi capital equipment growth forecast at 66% Strong spending raises risk; possible downcycle - 3Q