Semiconductor Market Trends
Semiconductor markets in 2017 far outstripped the average revenue forecast of 5 percent growth at the start of the year, logging a robust 22 percent increase for a second consecutive year of record revenues, according to the World Semiconductor Trade Statistics (WSTS). The equipment market mirrored the device market with a brisk 37 percent upsurge, catapulting the equipment market past its historical high of $48 billion set in 2000. Not to be left behind, the semiconductor materials market grew at a respectable 10 percent in 2017.
Sources: Equipment and Materials - SEMI; Semiconductor - Semiconductor Industry Association-WSTS
Much like 2016, 2017 was a growth year for segments tracked by SEMI. Semiconductor silicon shipment volumes increased 10 percent, marking the fourth consecutive record-setting year for volume shipments, while silicon revenues surged 21 percent. Likewise, semiconductor revenue shot up 22 percent, with shipments rising 13 percent.
Annual Industry Trends
Sources: SEMI; * Semiconductor Industry Association-WSTS
Semiconductor Equipment
Worldwide sales of semiconductor manufacturing equipment totaled $56.6 billion in 2017, a year-over-year increase of 37 percent, to finally surpass the market high set 17 years ago. According to SEMI, all equipment sales by major equipment category increased:
- Other Front End segment (includes Wafer Manufacturing, Mask/Reticle, and Fab Facilities equipment) increased 40 percent.
- Wafer Processing equipment grew 39 percent.
- Assembly and Packaging and Test equipment segments expanded 29 percent and 17 percent, respectively.
For the first time ever, South Korea claimed the top spot in equipment rankings, ending Taiwan’s five-year hold on the position. Investments in Korea were so strong that the region set an all-time regional spending record of $17.9 billion. SK Hynix and especially Samsung invested heavily last year in 3D NAND memory capacity.
The rate of equipment spending dropped 6 percent last year in Taiwan as TSMC, UMC, and other companies in the region reigned in equipment expenditures. China continued its ambitious spending, growing over 27 percent to hold onto the third spot for the second year in a row. Stoking China’s equipment market last year was aggressive spending by Intel, Tacoma Semiconductor, SK Hynix, Texas Instruments, UMC, and Hua Hong, as well as strong assembly and packaging investments.
Japan and North America maintained the fourth and fifth positions, respectively, last year, while Europe climbed to the sixth position as Intel, GLOBALFOUNDRIES, Infineon, and Texas Instruments accelerated investments in the region. The Rest of World region – an aggregate of Singapore, Malaysia, Philippines, other areas of Southeast Asia and smaller global markets – fell to the seventh position.
Semiconductor Equipment Markets – Regional Trends
Source: SEMI/SEAJ Worldwide Semiconductor Equipment Market Statistics Report
Semiconductor Materials
The global semiconductor materials market, which includes both fab and packaging materials, jumped 10 percent in 2017 to $46.9 billion, with the wafer fab materials segment growing 13 percent and the packaging materials segment 5 percent. Had bonding wire and substrates been excluded, the packaging materials segment would have increased 9 percent last year. Three factors have cut demand for substrates while exerting downward pricing pressure on substrate manufacturers:
- The continuing transition to copper-based bonding wire from gold
- The adoption of fan-out wafer-level packaging
- The use of a coreless structure based on a modified leadframe
The large year-over-year increase for the wafer fab materials market was driven largely by strength in silicon pricing, although aggregate average silicon pricing per square inch remained well below 1990s levels. The upshot is that, under these market conditions, the semiconductor materials market fell just short of its record $47.0 billion set in 2011 but reached the second highest level ever.
Worldwide Semiconductor Materials Market
Source: SEMI, Materials Market Data Subscription, April 2018
Taiwan maintained the top spot in the materials market for the eighth year in a row, followed by China, South Korea, Japan, Rest of World, North America, and Europe (figure above). Advanced packaging operations and foundries continue to drive the Taiwan materials market. China nudged past South Korea last year due to the migration of more advanced packaging to the region and its burgeoning fab base. The materials market in Rest of World is dominated by packaging materials, while the materials market in North America is weighted heavily toward fab materials.
2018 Outlook
Forecasts for the 2018 semiconductor market are very optimistic with projections ranging from 7 percent to 16 percent growth. The bullish outlook is supported by strong, initial 2018 monthly data for silicon shipments, mass flow controllers, leadframes, and semiconductor equipment. With these buoyant expectations for the device market, SEMI projects that the semiconductor materials market will grow 4 percent this year. The outlook for the semiconductor equipment market is also upbeat thanks to recent capital expenditure announcements. If this year’s equipment market forecast for growth in the low teens materializes, the market will reach another historic high and extend its growth string to three years – a run last seen in the mid-1990s.
Portions of this article were excerpted from the SEMI Worldwide Semiconductor Equipment Market Statistics (WWSEMS) and the Material Market Data Subscription (MMDS). These reports are essential business tools for any company tracking the semiconductor equipment and material market. Additional information about this and other market research reports is available at www.semi.org/marketinfo.