2010-2013 Semiconductor Market Forecast Seizing the economic & political momentum in Europe for Key...

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© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.1

ESIA & WSTS European Chapter - June 8th, 2010

Brussels June 8th, 2010

2010-2013 Semiconductor Market Forecast Seizing the economic & political momentum

in Europe for Key Enabling Technologies



Semiconductors: so what?

� Economic momentum� Latest WSTS market forecast – hot off the press – a very good year and

a positive outlook in front of us.� Will Europe be able to capitalise on these market opportunities?� Why care? => S/c bellwether / key enabling technology: if you get it right

here, then there are good chances of getting it right elsewhere

� Political momentum� Renewal of industrial/innovation policy also in Europe � Unique new political constellation� Key Enabling Technologies (KETs) initiative as test cases – from words

to deeds

� In back up: � about ESIA and WSTS� unit growth forecast� distribution of European s/c market by application & EU Member State� List of KETs EC High Level Group members

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CAGR

2009 2010 2011 2012 2009 2010 2011 2012 09/'12

Americas 38.520 48.125 50.401 52.088 1,7 24,9 4,7 3,3 10,6

Europe 29.865 38.183 40.103 41.805 -21,9 27,9 5,0 4,2 11,9

Japan 38.300 44.756 47.277 49.187 -21,0 16,9 5,6 4,0 8,7

Asia Pacific 119.628 159.887 169.606 177.081 -3,5 33,7 6,1 4,4 14,0

Total World - $M 226.313 290.951 307.388 320.161 -9,0 28,6 5,6 4,2 12,3

Discrete Semiconductors 14.175 18.429 19.242 20.275 -16,3 30,0 4,4 5,4 12,7

Optoelectronics 17.043 21.970 24.679 27.491 -4,8 28,9 12,3 11,4 17,3

Sensors 4.753 6.552 6.996 7.363 -7,0 37,8 6,8 5,2 15,7

Integrated Circuits 190.342 244.001 256.471 265.031 -8,8 28,2 5,1 3,3 11,7

Analog 32.001 42.502 44.833 46.736 -10,2 32,8 5,5 4,2 13,5

Micro 48.330 59.302 64.445 68.844 -9,1 22,7 8,7 6,8 12,5

Logic 65.215 76.986 81.494 84.673 -11,3 18,0 5,9 3,9 9,1

Memory 44.797 65.211 65.699 64.777 -3,3 45,6 0,7 -1,4 13,1

Total Products - $M 226.313 290.951 307.388 320.161 -9,0 28,6 5,6 4,2 12,3

Spring 2010Amounts in US$M Year on Year Growth in %

Development World Semiconductor Market

Source: WSTS, ESIA



Final Sales 2009 (01/2010)& Autumn 2009 Forecast

2009 $226B -9%2010 $267B 18%2011 $292B 9%2012 $313B 7%

Spring-Forecast (05/2010)

2010 $291B 29%2011 $307B 6%2012 $320B 4%

-40%

-20%

0%

20%

40%

Ann

ual G

row

th R

ate

CAGR 6%

-32%

1995 2000 2005 2010

Source: WSTS, ESIA

Sales Development from 1995 to 2012

100

150

200

250

300

Sal

es (

Bill

ion

Dol

lars

)


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Development European Semiconductor Market

Source: WSTS, ESIA

Sales Development from 1995 to 2012

Ann

ual G

row

th R

ate

-20%

0%

20%

40%

Sal

es (

Bill

ion

Dol

lars

)

21

27

33

39

45

-29%

CAGR 2%Final Sales 2009 (01/2010)& Autumn 2009 Forecast

2009 $30B -22%2010 $36B 19%2011 $39B 9%2012 $41B 7%

Spring-Forecast (05/2010)

2010 $38B 28%2011 $40B 5%2012 $42B 4%

1995 2000 2005 2010




Source: WSTS, ESIA

� American and Asian market is mainly driven by computing. Consumer plays a minor role and the rest is negligible.

� Japanese and European market is more diversified. Computer is also important, but

� In Japan consumer is the main market

� In Europe communication and automotive are main markets, industrial is also important

2009

Computer42% ($95B)

Communication22% ($50B)

Consumer19% ($42B))

Industrial10%

($23B) Automotive 7% ($16B)

Indu

stria

l

Com

pute

r

Americas 43% 20% 17% 7% 13%

Japan 28% 19% 31% 10% 12%

Asia/Pacific 49% 24% 18% 3% 6%

Europe 33% 21% 9% 20% 17%

Com

mun

icat

ion

Con

sum

erAu

tom

otiv

e

Sales Development by Application per Region

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Source: WSTS, ESIA

Sales by Country in EMEA1) 1999 to 2009

2

4

6

8

10

12

14

UK

&

Irel

and

Ger

man

y

Fra

nce

Italy

Nor

dic

Eas

tern

E

urop

e

Bill

ions

of D

olla

rs p

er Y

ear 1999 2003 2007

Mid

dle

Eas

t &

Afr

ica

Res

t of

W. E

urop

e

2009

1) EMEA = Europe (incl. Russia), Middle East & Africa



0%

10%

20%

30%

40%

50%

60%

Japan

Europe

Americas

Asia/Pacific(incl. China)

China(as part of Asia/Pacific)


Source: WSTS, ESIA

1986 1990 1995 2000 2005

Reg

iona

l Sha

re o

f Sal

es

Till 1993 Japan sales region #1, then replaced by the Americas

At that time the shift to Asia started

Since 2001 Asia/Pacific – and here mainly China, Taiwan and Korea –became the #1 region, due to shift of electronic equipment production.

Share of Europe till 2002 more or less constant, then gradual loss of market share in Europe.

The Chinese semiconductor market has passed the American and European in 2008 and the Japanese in 2009. Today about one quarter of the total world wide microelectronic production is shipped to China.

2010

Regional Change of Sales (consumption of chips)

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� USA semiconductor companies produced still nearly half of world wide sales

� Japan’s share now below one quarter– slight increase again since 2004

� With the EU counted as one country, just five countries in the world are controlling the microelectronic market.

� Chinese companies produce <1%

� More then half of the Taiwanese production comes from foundry business (not included here)0% 10% 20%

Share30% 40%

Taiwan

Japan

USA2004

Share of production by country of origin (sales in US-Dollars):99% of semiconductor sales belongs to companies from 5 countries in the world

Regional Share of Production (Sales in USD, w/o Foundries)

Source: ZVEI, ESIA

South Korea

European Union

2009




Share 0% 5% 10% 15% 20%

Singapore

USA

South Korea

Taiwan

Japan

Source: ZVEI, ESIA

Regional Share of Production (Waferstarts, incl. Foundries)

Share of production by country of Wafer Fab (Wafer Starts, Area of Silicon):97% of semiconductor production is located in 7 countries in the world

European Union

China

20042009

25%

� Highest loss of share for USA and EU, together -9%

� Japan still #1 in wafer production capacity

� Strongest growth of fab capacity in Taiwan, China & Singapore, mainly driven by pure play foundries

� Korean companies are producing nearly only memory products

� China’s share is with 9.9% significantly driven by foreign companies (indigenous <1%), up from nearly zero

� European Union ranks #6 with 9.6% share

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Seizing the economic momentum


Real GDP vs. Chip Market[year-on-year growth rates]

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 '10

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%Global real GDP[left y-axis]

Global Semiconductor Market[right y-axis]

Semiconductors about onequarter ahead of GDP



Seizing the economic momentum (2009 figures)Semiconductors are a key enabling industry

ElectronicsWW$1100B / Europe $150B

Automotive / Industrial / Defense

Medical / Space

Semiconductors$226B / Europe$30B

Service ProvidersWW$6300B / Europe $1600B

EquipmentWW$25B / Europe $3B

MaterialsWW$38B / Europe $4B

2009 World GDP=69800BUS$ (ppp based)

2009 European Union GDP=14800BUS$ (ppp based)

- Internet Services Providers

- Games

- Broadcast- TelecomOperators

Semiconductors provide the knowledge & technologies that generate some 10% of global GDP.

Source: IMF, ESIA, WSTS, IC Insights

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Communications –wired and wireless, mobile, RF connectivity solutions (Bluetooth, GPRS..), telecommunications, traditional telecom equipment, home networking equipment

Consumer - entertainment, radio, TV, VCR, personal or home appliance, cameras, games, etc.

Automotive –powertrain, safety management, body and convenience, engine controls entertainment...

Computer & Office -mainframe, peripheral office equipment and personal computers

Industrial & Instrument -lab, test, control and measurements

Source WSTS

Semiconductors are for the Information Society what grain Semiconductors are for the Information Society what grain was for the agrarian, and iron & steel were for the was for the agrarian, and iron & steel were for the

industrial societyindustrial society ……

Shanghai Museum of Urban Development, 2004Shanghai Museum of Urban Development, 2004

Seizing the economic momentum Semiconductors are a key enabling industry



Seizing the political momentum

� April 2010 - Industrial policy: no longer a taboo

� President Barroso (II): reinforced EU economic governance

� VP Tajani: new integrated strategy, as head of Competitiveness group of Commissioners

� Monti: A new recalibrated EU industrial competitiveness policy

� Münchau: ideal conditions for new decision making - new Commission, new EP, new treaty

⇒ whatever term is used, there is a new proactive interest in a mixture of industrial and innovation policy in and for Europe

⇒ … and guess what…⇒ This is something ESIA welcomes and has been promoting for a long time.

We already have an bottom-up approach that combines industrial and innovation policies

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EU Legislative EnvironmentEnvironment, safety & health,

customs & security, IP rights

Free & Fair Trade PolicyReciprocal world free trade

Environment, elimination of tariffs

Strength of European Internal

MarketEnd-user / consumer demand in

Enlarged 25 EU Internal Market

Global Strength of

European End-User

IndustryGlobal industry leadership,

Electronics value added driven

Target Investment Support /

Incentives LevelsTax havens, access to capital,

property incentives

R&D SpendingR&D & innovation policies,

research investment targets Pre-competitive Co-operation /

Partnership EffectivenessJoint research and design centres,

framework programmes, technology

Educational System ReinforcementCurricula, industry-university research,

exchange programmes, brain retention

European Labour Policies Sectoral flexibility of working hours

and employment conditions

Globally Effective EU

Monetary PoliciesStability of exchange rates relative

to other currencies

Seizing the political momentum - 2005: Alternative scenarios based on assessment of selected competitiveness factors



Seizing the political momentumESIA & ‘KETs’ Recommendations & Actions

Mastering Innovation

Develop a European industrial innovation policy -

with nano- / microelectronics at its core

Shaping the Future

R&D Give priority to the

European-wide micro- /

nanoelectronics R&D eligibility criteria, R&D in

framework programmes, public-private partnerships (EUREKA, ETPs, JTIs),

national programmes

Market PullStimulate ‘market

pull’ across Europe in chosen lead

markets

(Health and wellness; transport and

mobility; security and safety; energy and

environment; communication;

infotainment)

ManufacturingLaunch a strategic European industry plan that aims at

revitalising sc manufacturing

capabilities in Europe. Upgrading /converting

of existing fabs.

Developing technology capabilities for devices in areas where Europe

has strengths.

EducationMake micro- and

nanoelectronics in education an objective for filling the European

talent pipelineStimulate science and

technology; awareness of the micro-/nano-

electronics innovation potential; foreign talent; research infrastructure as invention incubators

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Seizing the political momentum - ESIA & KETs

� S/c industry is symptomatic of Europe’s challenges:�Lack of global level playing field & EU framework conditions are leading to the potential loss of attractiveness of Europe for the s/c industry.

� Industrial/innovation policy applicable across many sectors, potentially delivering answers to:

�R&D recommendations - soaring R&D costs for European R&D intensive industries)�Market pull - falling European market shares�Manufacturing - falling European production levels�Lack of a global playing field



� As markets surge, semiconductors are a test case for a revived industrial / innovation policy� New Commission, New Parliament, new Treaty

� Commission Key Enabling Technology initiative & High Level Group

� Cross sectoral & enabling,

� ‘Crisis’ comes from the Greeks and means ‘choice’,� Post-crisis is the opportunity to make that choice

Seizing the political momentum - ESIA & KETs

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Seizing the political momentum – key enabling technologies

Importance of KETs

� Driving force of the development of future goods and services

� Being at the forefront of competitiveness, innovation,knowledge-based economy .

� Modernisation of the industrial baseand in the further strengthening of the research base

� Creating related eco-systems of SMEs.

Defining KETs

� Knowledge intensive (high R&D and capital expenditure)

� Associated with highly-skilled employment

� Multi-disciplinary , cutting across many technology areas, converging

� Create multiplier effects� Enabling process, good and service

innovation and are of systemic relevance .

Who are they?

Nanotechnology, Micro/ nanoelectronics, Photonics, Advanced materials,

Biotechnology



Conclusions / key messages

Economic momentum:� S/c industry is looking ahead again - WSTS forecasts a 29% growth

ww & a 28% growth in Europe for 2010, followed by two further growth years.

� Will Europe continue to lose market share & production levels? Can the negative trend be reversed?

� As a bellwether and enabling sector for the economy, companies are forced to find solutions everywhere – Europe has it in its hands to capture trends in Europe for this and other key enabling technologies

� We all have to move fast– the time is now!

Political momentum:� New Commission, new EP, new EU Treaty

� New industrial innovation policy (at last)

� KETs & HLG as test case – let’s move from words to deeds in Europe!

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Background info



About ESIA & WSTS

� EECA-ESIA and WSTS: ESIA, the European Semiconductor Industry Association holds an exclusive license agreement with the WSTS for the region of Europe, Middle East and Africa (EMEA). WSTS monthly data in full product detail are available via subscription.

� ABOUT EECA-ESIA: The mission of the European Semiconductor Industry Association (EECA-ESIA) is to represent, promote and defend the vital interests ofthe European-based semiconductor industry and ensure its competitiveness in the global market. The semiconductor industry provides the key enabling technologies at the forefront of the development of the Information Society. This sector supports around 115,000 jobs directly and up to 500,000 induced jobs in Europe, in a market valued at over EUR 21bn ($30bn) in 2009. Website: www.eeca.eu

� About WSTS: Established in 1986, WSTS is an organization of 65 semiconductorcompanies from all over the world representing more then 80% of the world's semiconductor market. Its mission is to provide timely, accurate and authentic semiconductor market data on industry product shipments in a product line form serving the broad marketing and executive needs, therefore documenting past - and anticipating future business trends. More information on the WSTS website at www.wsts.org

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Source: WSTS, ESIASource: WSTS, ESIA

2009

Industrial17%

(-26%)

Automotive20% (-23%)

Consu

mer

9% (-

33%

) Communication21% (-18%)

Computer33% (-18%)

Industrial12%

Automotive9%

Consumer11%

Communication26%

Computer42%

1995Sales 1995 2009 CAGRComputer $11.6B $9.9B -1.1%Communication $7.2B $6.2B -1.1%Consumer $3.2B $2.6B -1.6%Automotive $2.4B $6.0B 6.9%Industrial & other* $4.0B $5.2B 1.9%

Total S/C $28B $30B 0.4%

Micro** $6.5B $9.7B 2.9%Memory $10.6B $5.0B -5.2%Analog IC $3.8B $4.8B 1.7%Logic IC $3.6B $4.9B 2.3%

IC Total $24.5B $24.4B 0,0%

Discrete & Opto &Sensors/Actuators $3.8B $5.4B 2.6%

* Other: Government (e.g. Military & Avionic)** Microprocessors, Microcontroller & DSP

Sales Development by Application (1995 – 2009)




Source: WSTS, ESIA

Overheated growth leads – in addition to rising prices – to high excess inventory (extreme in 2000). The result are decreasing units and prices and as consequence collapsing sales.

Best example 2001: Extreme crash of total semiconductor market

Since mid 2005 IC unit development again significantly above long term trend, although no excess inventory build up was reported.

Since 10.2008 strongest collapse and since 3.2009 strongest growth ever recognized in semiconductor history.Consequence: In spite of the worst economic crises since more then 60 years, IC units reached the long term trend again since 12.2009.

Bill

ions

of

ICs

per

Mon

th

2

4

6

8

10

12

14

16

1991 1995 2000 2005

Again built upof [excess] inventory?Long term

growth9% per year

Extreme growthleads to extremeexcess inventory

Market collapsedue to burn ofexcess inventory

IC Unit Development per Month (3MMA)

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Key Enabling Technologies

�� Semiconductors are for the Information Society what grain was Semiconductors are for the Information Society what grain was for the agrarian, and iron & steel were for the ind ustrial sociefor the agrarian, and iron & steel were for the ind ustrial socie tyty ……

Shanghai Museum of Urban Development, 2004Shanghai Museum of Urban Development, 2004

““Key Enabling Technologies such asKey Enabling Technologies such as …… semiconductorssemiconductors ……are of are of exceptional importance for being at the forefront o f managing exceptional importance for being at the forefront o f managing the shift to a low carbon, knowledgethe shift to a low carbon, knowledge --based economybased economy …… They are They are the main driversthe main drivers …… needed for addressing major societal needed for addressing major societal challenges. Therefore the Commission proposes to de velop and challenges. Therefore the Commission proposes to de velop and implement a European vision for the industrial depl oyment of implement a European vision for the industrial depl oyment of such technologies in the EU.such technologies in the EU. ””

EU Commission Communication on EU Commission Communication on KETsKETs, Sept. 2009, Sept. 2009



ESIA

ESIA Mission

To represent, promote and defend the vital interests of the European-based semiconductor industry and to ensure its competitiveness in the global market

“The Semiconductor Voice of Europe”

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ESIA Membership

TEXAS INSTRUMENTSINFINEON TECHNOLOGIES

INTEL CORPORATION

MICRON TECHNOLOGY

MICRONAS

NXP SEMICONDUCTORS

RENESAS TECHNOLOGY

STMICROELECTRONICS

ALTIS SEMICONDUCTOR

ARM

ATMEL

ROBERT BOSCH

FREESCALE SEMICONDUCTORS

ZVEI (Germany)

AETIC (Spain)

AGORIA (Belgium)

ANIE (Italy)

FEEI (Austria)

Hellenic SIA (Greece)

NMI (UK and Ireland)

SITELESC (France)

LETI Grenoble

S/C Companies National Associations Research Institutes

FRAUNHOFER (Germany)

IMEC (Belgium)

NUMONYX

GLOBALFOUNDRIES



The changing global landscape for the SC industry

� Rapidly changing global landscape for the Semiconductor industry� Since 10 years, Europe is steadily loosing market shares

� Slowing down of market growth in value terms

� Increasing demand from consumer applications creates market potential while generating SC price decrease

� Increased pace of innovation & electronic product penetration

� Skyrocketing cost increases are forcing alliances: CAPEX 20% sales

� Deverticalisation of the value chain and financial markets

� The landscape is driving the industry to 3 different manufacturing models, while maintaining and enhancing its process expertise is key

� Memories and microprocessors manufacturing� Logic products manufacturing

� More than Moore manufacturing

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KETs - HighLevelGroup composition

President: Mr Jean THERME (Director of CEA (French Atomic Energy Commission) in Grenoble).

Members:Prof. Luigi AMBROSIO , (Director of the Institute for Composite Biomedical Materials). Mr Giorgio ANANIA (Chairman of Cube Optics). Dr. A-J AUBERTON-HERVE (CEO of SOITEC). Mr Andrea BENASSI (Secretary General of UEAPME). Mr Peter BAUER (CEO of Infineon). Dr. Daniel BERNARD (Scientific Vice President of ARKEMA). Mr Carlo BOZOTTI (CEO of STMicroelectronics). Prof. Hans-Jörg BULLINGER (President of Fraunhofer-Gesellschaft). Dr. Spase DRAKUL (CEO of THYIA Tehnologije). Lord (Paul) DRAYSON, State Minister for Science and Innovation. Mr Javier EGUREN (CEO of NICOLAS-CORREA). Ms Anne De GUIBERT (Research Director of Saft Group). Dr. Winfried HOFFMANN (President of the European Photovoltaic Industry Association, EPIA). Jochen HOMANN , Staatssekretär in the Ministry of Economics. Dr. Andre KOLTERMANN (Group Vice President of Süd-Chemie). Prof. Erkki LEPPÄVUORI(President of VTT Technical Research Center of Finland). Mr Jan MENGELERS (President of the Netherlands Organization for Applied Scientific Research). Mr Jim O’HARA(General Manager Intel Ireland). Mr J Richard PARKER (Director at Rolls Royce). Mr Richard PELLY (Chief Executive of European Investment Fund). Dr. Wolfgang PLISCHKE (Board Member of BAYER). M. Luc ROUSSEAU , General Director in the Ministry of Industry. Mr Frank ROZELAAR (Non-executive Chairman of QinetiQ). Mr Marc van SANDE (Chief Technology Officer and Vice President of UMICORE). Mr Gerald SCHOTMAN (Chief Technology Officer of Royal Dutch Shell). Dr. Lars STROMBERG(Vice President Vattenfall AB).

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