Consumer Demand Will Drive Next Growth Cycle in Semiconductors


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Consumer Demand Will Drive Next Growth Cycle in Semiconductors

Technology Partnerships Essential as R&D Costs Escalate

Napa, California, April 24, 2006 – The semiconductor industry is at the beginning of a new 20 year growth cycle that will largely be driven by consumer electronics demand, according to the keynote speaker at SEMI Strategic Business Conference (SBC) 2006, which opened today at the Silverado Resort, Napa, California.

Eli Harari, president and CEO of flash chip maker SanDisk, said consumer electronics will create the same kind of growth engine in the next 20 years that PCs did from 1980 to 2000. “When you have dramatic cost reductions, and the key driving force is Moore’s Law…you enable completely new markets,” he said. “That’s why you have a tripling of the market demand [for NAND flash].” He noted that three of the top five markets for NAND flash did not exist five years ago.

SanDisk has budgeted $1.4 billion in capital expenditure this year, even though it’s been characterized in the past as a fabless semiconductor company. The tremendous growth in flash that is projected to occur over the next five years will generate the need for multiple new 300mm fabs, said Harari. “Huge capex additions are needed to meet the insatiable NAND market demand. If the demand is going to continue at this rate definitely there is not enough capacity in place today,” he said.

In 2006, NAND flash will account for an estimated $13.2 billion of the total flash market of $21.5 billion, according to IM Flash Technologies, a joint venture between Intel and Micron Technology. The market is being driven by applications such as MP3 players, USB drives, PDAs, digital cameras and mobile phones. NAND is also now competing with hard disk drives in MP3 players and PDAs. In future, NAND flash will begin to replace disk drives in hand held games and laptop computers, according to Rod Morgan, executive officer, IM Flash Technologies.

SanDisk’s Harari pointed out that NAND flash has replaced microprocessors and DRAMs as the industry’s technology driver. “There is no doubt about it, NAND flash will be the driver for immersion lithography,” he said.

Echoing Harari’s earlier observations, Pushkar Apte, vice president of technology programs for the Semiconductor Industry Association, noted that semiconductor end-use has spread to a vast number of individual consumers and is no longer the exclusive realm of “geeks and techies.”

Apte presented data that showed in 1965 the U.S. government purchased 80 percent of all semiconductors. During the 1980s and 90s corporate users became the most significant purchasers in the market. An inflection point was reached in 2005 when individual consumers overtook the corporate sector as the single largest user of semiconductor-enabled products.

Ludo Deferm, vice president of business development for research consortium IMEC, stressed the need for technology partnerships to share cost, risk, IP and talent because industry revenues were not increasing as quickly as R&D costs. “Partnerships and tight collaboration with industrial partners are crucial for IMEC’s future,” he said.

IMEC was conducting the world’s largest 193 nm research effort, involving partnerships with 10 IDMs and foundries and 23 equipment and materials suppliers. “We can only play a role if we work together with all the companies worldwide,” said Deferm.

Apte of the SIA agreed with the need for partnerships, saying, “No single entity, no matter how big it is, no matter how smart it is, can do it alone.”

SEMI is a global industry association serving companies that provide equipment, materials and services used to manufacture semiconductors, displays, nano-scaled structures, micro-electromechanical systems (MEMS) and related technologies. SEMI maintains offices in Austin, Beijing, Brussels, Hsinchu, Moscow, San Jose (Calif.), Seoul, Shanghai, Singapore, Tokyo and Washington, D.C. For more information, visit www.semi.org.

ASSOCIATION CONTACT

Scott Smith/SEMI
1.408.943.7957
ssmith@semi.org