HALF MOON BAY, Calif. — April 5, 2022 — SEMI Industry Strategy Symposium (ISS) 2022 opened yesterday with the theme Semiconductors Leading a Transforming World to highlight semiconductor industry growth opportunities and challenges. The annual three-day conference of C-level and senior industry executives gives a comprehensive outlook of global electronics manufacturing, examining international economic, technology, market, business and geopolitical developments influencing the industry.
Today, the second day of the April 4-6 conference, will feature deep discussions on key issues including the next decade of semiconductor innovation, deep learning hardware, artificial intelligence (AI) in healthcare, automotive and mobility, sustainability, trends in deposition technologies and advanced packaging, and the role of chip design in new product innovation. Day three will be marked by discussions on quantum computing and the resurgence of 200mm manufacturing and also convene a panel on the $100 billion wafer fab equipment frontier.
Yesterday, opening keynote speaker Mark Papermaster, CTO and Executive Vice President of Technology and Engineering at AMD, observed that “the vast amount of data today is automatically generated. We are in a day of complete data overload.” Together, machine learning and AI are key in putting “data efficiently to work.” The accuracy of machine learning in analyzing “reams of data and recognizing patterns is simply astounding and has revolutionized the chip industry” by enabling AI to mimic decision-making, he said. AI will also “tremendously speed chip design.”
Higher compute performance is driving semiconductor innovation, and vertically stacking chip components has emerged as one way the industry is meeting the demand. “The need for more high-performance computing is phenomenal,” Papermaster said. “Once you start thinking in 3D, everything is different. It is an innovation engine,” he noted. Optical interconnects that enable bandwidth improvements will also drive performance gains. Papermaster called on the chip industry to “continue to work together on heterogeneous architectures, emphasizing that “new computing architectures require deep collaboration among semiconductor ecosystems.”
In the Economic Trends session, presenters took on macroeconomic trends and detailed industry-specific forecasts:
Tim Mahedy, Senior Economist at KPMG Economics, noted that Organisation for Economic Co-operation and Development (OECD) economies saw strong growth rates in March and that many developing economies are back to pre-pandemic levels. While the war in Ukraine caused commodity prices to surge, Mahedy noted the conflict poses little risk to the U.S. economy since the linkages across U.S. and Russia trade and banking are “not strong.” He said “the global economy is slowly starting to heal” from the shocks of the pandemic and that, in the U.S., “consumers will drive the economy in 2022.” Mahedy sees the probability of recession low, at about 10%. “We don’t appear to be entering a period of economic contraction.” Mahedy added. “There’s a lot of reason for optimism that once we get through current geopolitical events we’ll still be on very strong footing.”
Michael Yang, Senior Director of Semiconductors Research at OMDIA, a spinoff of IHS Markit, said that every segment of the industry grew in 2021 as it reached record revenue of $587 billion, and “nine companies of the top 10 logged double-digital revenue growth.” From 2019 through 2021, the semiconductor industry saw a “historic 36% revenue increase.” Top semiconductor growth drivers over the next five years will include the buildout of the metaverse as it increases smartphone demand; continuing cloud infrastructure expansion driven by AI, machine learning and other leading-edge technologies; and automotive as the industry sees hockey-stick growth of electric vehicles. While the pandemic drove surging demand for consumer and business PCs in 2020, Yang expects demand “to drop back to pre-pandemic levels or lower” this year.
Inna Skvortsova, Market Analyst on the Market Intelligence Team at SEMI, observed that global GDP is set to grow at 4.4% GDP this year and expand again in 2023. This year, electronic end-use markets are expected to remain robust on the strength of emerging applications. For its part, “the semiconductor industry is performing extremely well,” she noted, with projected revenue growth of 9.4% in 2022. The total materials market is forecast to grow 6.7% in 2022, with wafer fab materials expanding 8.4% and packaging materials rising 3.9%. Potential industry headwinds include inflationary pressures, ongoing trade and export restrictions and geopolitical conflicts, and the industry talent shortage.
E. Jan Vardaman, President and Founder of TechSearch International, said the adoption of advanced packaging is fueled by key performance metrics such as low latency, bandwidth and data rates, better power efficiency, IO density and routing density increases. “We’re in a new era of semiconductor packaging,” Vardaman said. “Chiplets will be a key enabler over the next 10 to 20 years. You have to think of your design in a different way, changing from silicon-centric thinking to system-level planning and co-design of IC and packages.” She said that a new era of heterogeneous integration (HI) including chiplets has spawned with a variety of solutions that require a robust HI ecosystem. The solutions include organic substrate, embedded bridge on laminate, fan-out on substrate with embedded bridge, and 3D stack.
Andrea Lati, Vice President of Market Research at TechInsights, noted “the outlook is looking very bright for the IC industry” as structural changes and secular drivers such as the data economy and AI accelerate the growth of the semiconductor and chip equipment markets. While IC inventories are tight and expected to remain elevated through the rest of the year, they are rising. Shipments of 5G ICs for smartphones are forecast to grow 20% in 2022 while automotive is expected to see an 18% increase in IC shipments this year. Over the longer term, Lati sees IC shipment growth accelerating from mid-single digits over the past decade to high single digits over the next decade.
New IC investments include more than $120 billion over the next two years primarily in logic and foundry. Capital expenditures for advanced logic and foundry are expected to increase 30% driven by Intel, GlobalFoundries and TSMC. Bob Johnson, Vice President at Gartner, forecasts that semiconductor industry revenue will reach $790 billion in 2026, growing at a just below 6% CAGR to reach $1 trillion in revenue in the next 10 to 12 years. Growth drivers include AI, electric vehicles, advanced driver-assisted systems, cloud and edge computing, 5G and the metaverse. Reaching that milestone will require not only a volume increase but a higher average selling price (ASP). He also cautioned that “the industry will need to find the resources to double its size from 2020” such as an expanded workforce, more real estate for new facilities, and the funding to finance it all. “The bottom line is that it’s going to take a lot of money.”
The Economic Trends session concluded with a panel on the semiconductor industry outlook moderated by Clark Fuhs, senior director of Corporate Analytics at Lam Research with Yang, Vardaman, Lati, Johnson and Mario Morales, group vice president of Enabling Technologies and Semiconductors at IDC. The afternoon session focused on Market Perspectives on geopolitics and post-COVID supply chains:
Chase Blazek, Asia Pacific Analyst at RANE, addressing U.S.-China trade relations, said that “now we’re competing more than we’re cooperating,” adding that “U.S. politics is united on hawkishness on China.” He sees a 75% likelihood of tensions between China and Taiwan increasing over the next five years with no war. Despite the cross-strait tensions and the ongoing trade war between the U.S and China, he expects U.S-Sino and China-Taiwan relations and industrial supply chains to remain stable. One reason is the interdependence of China and Taiwan in semiconductor trade: China needs chips made in Taiwan to grow its semiconductor industry, and China is a key Taiwan chip customer.
Bindiya Vakil, CEO and Founder of Resilinc, noting that modern supply chains face over 200 disruptive events weekly on a global level, said that semiconductor companies need greater visibility into their supply chains to increase resilience and reduce risk. “We really don’t understand the supply chain networks we live in,” she said. “The world is changing at a pace faster than supply chains can keep up with.” Company procurement departments must shift from reacting to supply chain changes to anticipating disruptions by outlining worst-case scenarios, deepening collaborations with supply chain partners, and taking deliberate action. “Understanding the supply chain is critical,” she said. An important step companies can take is to work with supply chain partners by focusing first on continuity and risk management, not on cost.
Day one ended with comments on the U.S. CHIPS Act objectives and implementation from Sreenivas Ramaswamy, senior policy advisor in the Office of Policy and Strategic Planning at the United States Department of Commerce, followed by a panel on U.S. semiconductor incentives moderated by Joe Pasetti, vice president of global public policy and advocacy at SEMI, with Ian Steff, president and CEO of mySilicon Compass and Gene Irisari, vice president and head of semiconductor policy at Samsung Electronics America.
Day two and three presenters will include Google, Intel, Micron Technology, NVIDIA, Varian Medical Systems, Center of Automotive Research, Lam Research, National Gem Consortium, Tosoh Quartz, imec, ASM International, IC Knowledge, Synopsys and SEMI.
The SEMI Industry Strategy Symposium (ISS) examines global economic, technology, market, business and geopolitical developments influencing the global electronics manufacturing industry along with their implications for strategic business decisions. For more than 35 years, ISS has been the premier semiconductor conference for senior executives to acquire the latest trend data, technology highlights and industry perspective to support business decisions, customer strategies and the pursuit of greater profitability.
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