Industry News, Trends and Technology, and Standards Updates

When I posted a blog back in April, I wrote about the change in the industry outlook over the previous six months. In October 2012, the semiconductor equipment industry looked as if it was going to go into a decline, perhaps a steep decline, but by January 2013, the outlook looked brighter. By March 2013, industry analysts were predicting 2013 would be down, but not as badly as analysts originally thought. Still, TSMC was reporting they are adding capacity and Applied Materials announced they were on an up cycle. In addition, the forecast for 2014 was looking bright, with predictions of healthy growth.

By Dave Faulkner

Executive VP, Sales and Marketing, Cimetrix

Back in October of 2012, the outlook for the semiconductor equipment industry was dominated by dark clouds. First, the U.S. and European economies were in the doldrums, and there was a great deal of discussion about an economic slowdown in the China. But the economy was not the only factor that weighed upon the industry. There was also a significant amount of uncertainty about what was happening with the personal computer market. Demand for PCs was dropping, which impacted not just microprocessors, but DRAMs as well.

With all the news about the global economic health and the trends in PCs, analysts were calling for a significant fall-off in semiconductor equipment orders. Gartner, in October of last year, forecasted 2012 would end with a 13% drop in equipment revenue from 2011 levels, and that 2013 would be flat to slightly down. (See Semi Equip Spending To Drop 13.3% In 2012, Gartner Says).

However, the story became even worse. In December, Gartner’s forecast changed to a drop of 17% in revenue in 2012 and a further decrease of 10% in 2013 (Gartner: Fab equipment still getting softer, next up cycle starts in 2014). SEMI’s forecasts for 2012 and 2013 reflected a similar decline of 12% and 2%, respectively (See Semiconductor New Equipment Market $38.2 Billion for 2012; Recovery in 2014.

Analysts were so focused on the bad news that they did not consider the good news coming out. For example, the drop in PCs was accompanied by an increase in demand for tablet computers and smartphones, both of which used processors, flash memory, and mobile communications chips. Just a couple of months after the dismal forecasts, the three largest semiconductor manufacturers announced their intent to continue or increase equipment expenditures.

When industry analysts started to see some of the brighter signs, the picture improved. In January, SEMI called for a flat to down year, with an uptick in the second half of 2013 (In 2013, Fab Equipment Spending for Front-End Fabs to Shrink Back to 0% Growth). Here is what they predicted, effectively forecasting 0% growth in 2013:

While 0% growth does not sound very good by itself, it certainly sounds better than down 10% or more!

In January 2013, market analysts were calling for a strong increase in semiconductor device sales, led primarily by communications chips (See EETimes: Semi Upswing Seen in 2013). TSMC described plans to increase their capital expenditures by 8% to a record $9 billion for 28nm production and initial 20nm technology. Intel announced they would invest $13 billion in 2013, including $2 billion on construction of a 450mm facility. Samsung even stated they would invest $11-$12 billion in 2013, approximately what they spent in 2012.

In addition, Applied Materials’ latest quarterly report showed a strong forecast, up 15-25% (http://finance.yahoo.com/news/applied-materials-announces-first-quarter-210302893.html). In SEMI’s February and March 2013 semiconductor book-to-bill reports, we had some very good news, showing the market for equipment growing with a robust book-to-bill of 1.10 for each month.

Over the last four months, we have seen a significant shift in the semiconductor industry forecast, from a flat-to-down year to an overall positive year for semiconductor equipment revenue. When we look at history of the semiconductor equipment industry over the last 15 years, we see how the industry cycles up and down. It is our belief we are currently experiencing the industry trough, when capital equipment sales are at their lowest in the cycle and they are about to trend upwards. At this point, it is difficult to forecast accurately what that increase will be, but we think the trends are positive.

Stay tuned and we will continue to update the story.

by Dave Faulkner,
EVP, Sales & Marketing

Engineers love data. Business people love information. But it all starts with high-quality, real-time data. The possibilities are endless with good data.

As an equipment supplier, history probably has you living with a tool architecture from the early 300mm days. The focus was on implementing AMHS systems and meeting the GEM300 standards. A data driven architecture wasn't on the radar screen. And it wasn't a business priority. Times have changed. Fabs started asking for more data by creating the SEMI Interface A standards - and equipment suppliers are learning they can produce more productive equipment by leveraging the right data.

Interface A was an interesting concept when it started in the early 2000s. Discoverable data available to the fabs in real time would seem to be the answer to many problems. But the adoption has been less than stellar - even with strong endorsement and technical support by ISMI. Lack of fab side applications plumbed to use the Interface A data and "ownership" issues of the data haven't helped. These are real business problems that must be solved and will be solved with the next wave of fab purchases.

But what have we learned as equipment suppliers and software providers? Tool data models are helpful. Self description is great. We can create high performance data gathering applications that integrate with existing tool control architectures to make data available and controllable by the equipment supplier. Look at the performance of CIMPortal, our comprehensive equipment data acquisition (EDA) solution. We also learned that given the opportunity to "start over", we can create new tool control architectures that are data driven and prepared for the future. Look at CIMControlFramework. So the data is available - or you can make it available with an existing or new tool control architecture.

Let's put this data to work. Either to benefit you as the tool supplier or to help your customer. How is your tool accepted at the fabs? Do you have contingencies on your customer's payments? Does tool uptime have an impact on the tool price? Are your warranty costs too high? You get the point. With high-quality, real-time data at our fingertips, we can solve some of these business issues. We are at the beginning of a phase where the tool supplier makes use of this data and it directly impacts business results. Tool side fault detection, preventative maintenance, whatever is needed. The important point is we are finally starting from a strong foundation with the right data at the right time - and it can lead to increased margins or higher levels of customer satisfaction. Bring us your business problem and let's build something together to put this data to good use. Let's do it now!

by Dave Faulkner
Executive Vice President, Sales & Marketing

It is starting to feel like a recovery in the semiconductor industry.  Wall Street is saying to keep on eye on semiconductor stocks and even semiconductor equipment stocks.  SEMI just reported that worldwide semiconductor equipment bookings for Q2 2009 were 83% greater than Q1 2009.  Capacity utilization is likely to reach 88% in Q3 2009 according to IC Insights, up from 57% in Q1 2009.   And the SEMI World Fab Forecast is now calling for a 64% increase in fab spending in 2010.  The fear is starting to subside.   Q1/Q2 2009 appear to be the low point for equipment suppliers and we appear to be heading up the hill, but starting from a very low elevation.  I think we are finally in the recovery.

We have a very unique look at the semiconductor industry.  Our customers report tool shipments based on license orders.  And our customer base is very broad including all tool types in the frontend and backend.  We see who is booming and who is busting.  While we would never, never, never discuss individual company progress, I can say that shipments (via way of license revenues) have hit their bottom and are on the way back up.  And we are seeing this in all areas of the semiconductor industry.  It is like seeing a bit of blue sky during the storm, it gives us hope for all.  We just need to give the rest of the storm clouds time to move on…..