SEMI Korea Members Day SEMI Market Outlook – Fab ... Market Outlo… · Global semiconductor...
Transcript of SEMI Korea Members Day SEMI Market Outlook – Fab ... Market Outlo… · Global semiconductor...
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SEMI Korea Members DaySEMI Market Outlook – Fab Investment, 300mm, Equipment and Materials Markets
Clark Tseng, Director, SEMI August 27 2019
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Outline
• 2019 Year-to-Date Trend & Industry Headwinds
• Fab Investment Outlook
• 300mm Fab Outlook
• Equipment and Materials Markets
• Trade War & New Asia Supply Chain
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Year-to-Date Trend & Industry Headwinds
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2Q19
Hyperscale Fabless Capex
Alibaba Amazon Apple Baidu Facebook Google MSF Tencent
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US$B
Weak Cloud Capex in 1H19
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Inventory Level Remains a Concern
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IC Inventories
Total Inventory OEM IC Inventory Die Bank Inventory Total Inventory to Billings
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Headwinds Continue into 2H 2019• Industry headwinds: Excess inventory, Weak demand, Trade tension (Huawei incident)• Weaker than expected market demand in 1H19 and too little supply adjustment worsen the inventory
situation • Industry inventory digestion/correction will continue into the second half. It may not come back to the
seasonal level until the end of 2019• High-end smartphone demand at risk in 2H19: Huawei on the U.S. entity list; cautious procurement• PC demand was affected by CPU shortage. The situation will be eased some into 2H19. • Auto and Industrial demand also lukewarm• Memory demand remain challenging in 2H19
• Korea DRAM export continued to decline in July 2019 (-48.7% YoY and 12.8% MoM)• Mobile DRAM demand soft for both Apple and Chinese OEMs• Server DRAM demand visibility low, though customer inventory is normalizing• DRAM ASP may see further mid-teen% decline in 3Q19; pricing pressure will continue into 4Q19
though to a lesser degree • Other major risks in 2019: escalation of trade tensions between U.S. and China; Japan-Korea export
restriction
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Year-to-Date Equipment Trends
$Billion2019 YTD
(June)2018 YTD
(June)Year/Year
%Europe 1.41 2.46 -43%Japan 2.93 4.41 -34%
North America 3.38 2.61 29%Korea 5.42 11.12 -51%
Taiwan 7.01 4.45 57%China 5.64 6.43 -12%
Rest of the World 1.18 2.24 -47%Total 26.97 33.73 -20%
Year-to-Date Device Trends
$Billion2019 YTD (June)
2018 YTD (June)
Year/Year %
Americas 35.81 49.30 -27%Europe 20.08 21.80 -8%Japan 17.44 19.82 -12%China 68.19 76.74 -11%
Asia Pacific/ All Other 54.47 61.58 -11.5%
Total 196.00 229.24 -14.5%
2019 Year-to-Date Trends
Source: WSTS Blue Books
Source: SEMI/SEAJ Worldwide Semiconductor Equipment Market Statistics Report, July 2019
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2019 Semiconductors Forecasts – Downward Revision
Jan-19, 2.0%
Jan-19, 5.6%
Dec-19, 2.9%
Nov-18, 2.6%
Dec-18, -1.4%
Dec-18, 2.6%
May-19, -12.0%
May-19, -12.8%
Jun-19, -12.5%
Jun-19, -12.1%
Jun-19, -9.7%
July-19, -9.6%
-15% -10% -5% 0% 5% 10%
IC Insights-IC
Cowan LRA
IHS Markit
WSTS
VLSI Research
Gartner
Mid-Year Initial
Initial Forecast Average = 2.4%Mid-Year Average = -11.5%
Source: August 2019, SEMI
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2020 Semiconductor Forecasts – Positive Outlook
WSTS (Jun-19),5.4%
IC Insights IC (Aug-19), 6.0%
UBS (Jun-19), 6.8%
VLSI Research (Jan-19), 7.0%
Cowan (Jun-19), 8.7%
Gartner (Apr-19), 11.7%
0% 2% 4% 6% 8% 10% 12% 14%
Source: August 2019, SEMI2020 Forecast Average = 7.6%
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Fab Investment Outlook
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Fab Investment – Deep Correction in 2019
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Source: Prelim. World Fab Forecast Report, August 2019, SEMI
Front-end Fab Equipment Spending, 2010-2020
Memory & China
• 2019 investment correction is deeper than previously expected
• 2019 will see spending correction by ~20% due to near-term demand weakness and excess inventory throughout the supply chain
• 2020 recovery may be smaller than previously anticipated with close to 10% increase supported by memory capex and China projects
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Fab Investment by Region Strong Taiwan Investment, Sharp Decline in Korea
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Japan Korea SE Asia Taiwan
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Source: Prelim. World Fab Forecast Report, August 2019, SEMI
Fab Equipment Spending by Region
2013 2014 2015 2016 2017 2018 2019 2020
YoY Change
2018 to 2019 (%)
2019 to 2020 (%)
Taiwan +30% -4%
America +7% -20%
China -10% 30%
Europe -15% 35%
SEA/ROW -33% 14%
Japan -42% 19%
Korea -45% 2%
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Memory Capex Trend – Correction in 2019, Expect Recovery in 2020
• Memory capex to decline over 40% in 2019 for both DRAMand NAND
• Majority of the capacity additions plan has been pushed out into 2020
• Technology migration schedule may be affected by lower capex
• Both DRAM and NAND Flash are expected to see some recovery in 2020
• NAND spending shall come back earlier than DRAM
Source: Prelim. World Fab Forecast Report, August 2019, SEMI
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Memory Capex Trend
DRAM NAND Flash DRAM YoY (%) NAND Flash YoY (%)
US$ BillionChange %
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Foundry and Logic Capex Trend –Strength from Leading edge Investment
• Foundry and logic investments are strong in 2019 driven by advanced technology
• Leading edge investment continues to be driven by 7nm/10nm ramp and EUV insertions
• Some upside potential for 2020 investment from 5nm
• Mature technology investment stable driven by new 28nm capacity built in China as well as 200mm investment
• Return of Crypto demand? (too early, too little) *Legacy technologies refer to 32nm and above processes in 2014-2016 and 22nm and above from 2017-2020.
Source: Prelim. World Fab Forecast Report, August 2019, SEMI
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Leading-edge vs. Legacy* Investment
Advanced Legacy Legacy YoY (%) Advanced YoY (%)
US$ BillionChange %
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Product Type Change (%) 2018 to 2020
3D NAND 20%
Opto (Logic/Opto, CIS, Sensor) 19%
Discrete/Power 14%
Foundry 11%
MEMS 10%
Micro (MPU, MCU, DSP) 5%
DRAM <3%
Analog 0% (flat)
Fab Capacity by Product Types – 3D NAND and Opto See Strong Momentum
Excludes EPI which has over 30% growthData from 4Q18 to 4Q20
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300mm Fab Outlook
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300mm Fab Construction by Region
Source, SEMI August 2019
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300mm Equipment Spending Forecast
Source, SEMI August 2019
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300mm Equipment Spending by Region
Source, SEMI August 2019
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300mm Fab Spending by Segments
Source, SEMI August 2019
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300mm Fab Capacity by
Source, SEMI August 2019
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Equipment and Materials Forecasts
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Total Equipment Revenue vs. Total Material Revenue Trends
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Memory Boom in 2017/2018
Source: Equipment: SEMI/SEAJMaterials: Rose and Associates 1987-1999, SEMI 2000-present
200 mm ramp
“IrrationalExuberance”
300 mm ramp
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Source, SEMI August 2019
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Source, SEMI August 2019
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SEMI® 2019 Mid-year Total Equipment ForecastBy Market Region
Source: SEMI Equipment Market Data Subscription, July 2019
New equipment, includes wafer fab, test, and A&P. Totals may not add due to rounding
• 2019 will be a down year due to memory correction and market volatility
• Taiwan and North America are expected to see some growth in 2019
• Taiwan will be the largest equipment market in 2019
• China could become the largest equipment market in 2020
2016 2017 2018 2019F 2020FKorea 7.69 17.95 17.71 9.22 11.75China 6.46 8.23 13.11 11.69 14.50Taiwan 12.23 11.49 10.17 12.31 11.55Japan 4.63 6.49 9.47 6.14 8.98North America 4.49 5.59 5.83 6.32 5.19SEA/ROW 3.55 3.2 4.04 3.22 3.47Europe 2.18 3.67 4.22 3.79 3.35
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SEMI ® 2019 Mid-Year Total Equipment ForecastBy Equipment Segment
2017 and 2018 surpassed the previous records, except for Test
Previous Records:Total (2000) = $47.7B
WFE (2011) = $34.3B
Other (2007) = $2.2B
A&P (2010) = $3.9B
Test (2000) = $9.2B
Source: Equipment Market Data Subscription, July 2019, SEMI
New equipment, includes wafer fab, test, and A&P. Totals may not add due to rounding
2016 2017 2018 2019F 2020FOther FE 1.80 2.52 2.75 2.64 2.78Test 3.70 4.71 5.63 4.71 4.95Assembly & Pack. 3.01 3.88 3.95 3.06 3.22Wafer Process 32.73 45.52 52.19 42.23 47.84
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$52.68
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Silicon Shipments Trends by Diameter
300mm Equivalents
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• Record shipments in 2018• Near-term supply growth is slowing down• 2019: Weak demand in 1H19; Inventory
correction will continue into 2H19; Expect stabilization in early 2020
• Long-term contracts intact though near-term flexibility in purchase commitments are allowed
• Contract prices are stable while spot prices are facing more pressure in 2H19. High exposure to to spot market would hurt near term revenue and margins
• 200mm pricing environment a tad better than 300mm. 150mm is comparatively weaker.
Silicon Trends and Outlook
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Quarterly Silicon Trends
Source: July 2019, SEMI Silicon Manufacturers Group
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Source: IHS Markit Semiconductor Silicon Demand Forecast Tool, Q2 2019
• Smartphone and PC/Server drive most of 300mm demand at 55%
• Other (consumer & wired) applications drive most of 200mm and 150mm demand
• Automotive & Industrial applications drive ~45% of 200mm and 150mm demand
• Overall, the market weakens with inventory headwinds to the end of year; added risk for Phones & Servers, but EV still growing strongly
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Worldwide Wafer Fab Materials ForecastActual Forecast
2016US$ B
2017US$ B
2018US$ B
2019FUS$ B
2020US$ B
Silicon Wafers1 $7.65 $9.25 $12.10 $11.92 $12.36
Photomasks2 3.32 3.75 4.04 4.14 4.29
Photoresist 1.45 1.60 1.73 1.68 1.74
Photoresist Ancillaries3 1.91 2.11 2.28 2.22 2.30
Wet Chemicals4 1.59 1.88 2.16 2.20 2.35
Gases 3.63 3.87 4.27 4.20 4.37Sputter Targets4 0.67 0.74 0.78 0.77 0.79 CMP Slurry & Pads4 1.67 1.85 2.18 2.17 2.35
Other/New Materials5 2.96 3.14 3.28 3.34 3.43
Total $24.84 $28. 32.79 32.65 33.98
Y-o-Y % Growth 4% 13% 16% 0% 4%
Totals may not add due to rounding Source: Materials Market Data Subscription, May 2019, SEMI
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Annual Trends Snapshot
2018 2019F 2020F 2018Y/Y %
2019 Y/Y %
2020Y/Y %
Device (WSTS) $469 B $412 B $424 B 14% -12% 5.4%
Equipment (SEAJ/SEMI; SEMI Forecast) $64 B $53 B $59 14% -18% 12%
Total Materials (SEMI) $52 B $52 B $54 B 11% 0% 3%
Wafer Fab Materials $33 B $33 B $34 B 16% 0% 4%
Packaging Materials $20 B $20 B $20 B 3% 0% 2%
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Trade Wars & New Asia Supply Chain
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The Shift of Electronics Production
•Overall U.S. imports of electronic equipment were $58.8 billion in 1Q 2019, down $2 billion or 3.4% from 1Q 2018.
• Imports from China were down $3.7 billion, or 11%. Imports from Mexico held steady at $10.9 billion.
•Vietnam has emerged as the third largest source of U.S. electronics imports, with $4.4 billion in 1Q 2019, up $2.2 billion or 95% from a year ago.
Source: SC-IQ
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OEM/EMS/ODM - Out of China
• Businesses moving supply chains out of China long predates the current trade dispute
• The challenges is to set up component supply chain outside China• For CM, the relocation started with Networking and Servers in 2H 2018,
followed by Notebook and ODMs• Smartphone will be slower (due to complexity of production line)
• Production relocation to Taiwan and Southeast Asia has started since 2H 2018.• New production lines/capacity are expected to come online in 2019• HP (Taiwan, Thailand), Dell (Taiwan, Vietnam and Philippines)• Foxconn (Vietnam or Thailand), Pegatron (Indonesia); Wistron (India)• Inventec (Taiwan, Penang, Mexico); Compal (Vietnam); Quanta (Taiwan)
• The consensus is to move 30% of the production out of China
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Trade War Continues or Getting back to the Table?
• Earlier this month• The US announced 10% additional tariffs on about $300 billion of Chinese
exports, ~$135bn to go into effect September 1 and another of ~$165bn to go into effect December 15.
• Computer & electronic products account for 37% of the September 1 list.• The December 15 list contains a greater concentration of consumer goods (71%)
and capital goods (28%), but with higher concentration of tech products (56%)• Over the weekend (August 23/24 2019)
• China will apply new tariffs of between 5% and 10% on $75 billion worth of imported goods from the U.S.; Reinstate 25% tariff on U.S. automobiles and auto parts
• U.S. reply: On Oct. 1, tariffs on $250 billion such products will rise from 25% to 30%.
• Tariffs planned for Sept. 1 on $300 billion worth of Chinese goods will now be 15%, instead of 10%.
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Huawei ban
• The extension of U.S.-China trade war• Huawei and affiliates are still on entity list though temporary permit is
granted• Components for Huawei’s mobile phones are allowed to some extent.• Components for mobile infrastructure are on hold.• The escalation could have further impact to multiple industries, e.g.
semiconductor, communication, PC and others. • China cloud capex (recovery) could be affected.
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New China Supply Chain• The ban on Huawei has sparked the search of new suppliers to replace U.S.
components. New opportunities emerges as Chinese OEMs start their supply chain diversification
• Korea, Japan and Taiwan companies could benefit from new China (IC) supply chain. However, China fabless companies are better positioned (more activities observed in CPU, GPU, ASIC and RF space)
• On the other hand, China’s own “entity list” could restrict business (sales, investment, procurement and funding) with blacklisted foreign companies.
• China is now determined to set up its own semiconductor ecosystem and supply chain. Fundraising of National IC fund phase 2 is underway
• The trade tension could also affirm the Made in China 2025 policy goals
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Summary
• Semiconductor Industry Outlook• Headwind continues into 2H19, rebound expected in 2020• Weakness is memory and trade tensions impacting near term• Longer term prospects are positive as technology innovation advances
• Fab Investment & Equipment Market• Memory weakness continues into 2H 2019 • Foundry and Logic spending robust in 2019/2020 driven by strong
10nm/7nm/5nm build-up• Rebound in 2020 may be smaller than anticipated; though memory
segment and China investment shall recover some
• Materials Market• Wafer pricing under pressure in 2H19 as demand weakens• Fab materials market flat to slightly decline in 2019, +4% in 2020
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Thank you!
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