EETimes.com – Top 25 predictions for semis in 2010
(01/03/2010 10:04 $� EST)
| Happy New Year! 2010 is just beginning to unfold in the electronics industry and there is already uncertainty in the air.Looking into my crystal ball, I have released my own chip forecasts–and other predictions–for 2010. These are my top 25 predictions, which are strictly my opinions.
1. IC forecast: Funny money demand?
It’s time for my annual chip forecast. Drum roll, please! Most forecasters see a big double-digit growth year in 2010. Unfortunately, I don’t. My IC forecast for 2010: Plus 5 percent.
I see a small recovery, but I’m not as bullish as some. First, the worldwide economy still feels weak to me. It’s better than last year. The economy is resilient in some nations and weak in others. I’m afraid the governments in some nations (i.e. China, Japan, U.S.) have propped up their respective economies with ”crazed money” or what I call funny money. Stimulus packages, bail outs, cash for product programs (i.e. appliances, auto clunkers) have certainly jumpstarted some sectors, but will they have a lasting effect?
In some respects, I believe the bail outs and ”cash for whatever” programs sends the wrong message to consumers. Take the ”cash for clunkers” programs in the U.S. or similar programs in China. Instead of buying a car when it makes sense, the government is providing false incentives–or bribes. Consumers may end up getting conditioned to buy — if and only if the government bribes us to do so.
I’m also worried about lackluster consumer demand, the housing woes and unemployment, especially in the U.S. Too bad. For once, there are some cool products in the market: iPhones and iPhone wannabes, cheap netbooks, e-book readers, snazzy LCD/LED TVs, etc.
2. Yawn. Another fab tool downturn
Same old story. Another bad year for equipment makers. My semiconductor equipment forecast for 2010: Minus 10 percent.
I can barely remember a good year in semiconductor equipment. The business was booming when I started in high-tech journalism in the mid-1980s. In those days, chip makers believed that ”real men have fabs.” Fabs were part of the equation in chip production. Equipment was also a valuable piece of the puzzle.
Those were the glory days in equipment. But those days are long gone. I also remember the fab tool boom during the ”dot.com” explosion. I also remember the fab tool bust after the ”dot.com” explosion and 2001 downturn.
Since then, it’s been a struggle for fab tool vendors. 2009 was bad. Towards the end of last year, the signs did indeed improve. Intel, Hynix, Nanya, Samsung, TSMC and a few others bought gear.
I’m afraid the party is over. In 2010, there are no new fabs on the drawing board, according to SEMI. Repeat: No new fabs are expected to be built in 2010. That’s just simply unbelievable. We will continue to see some technology and capacity buys, but without a new fab, the equipment industry may see another lousy and down year.
3. Solar hype–again?
2010 forecast for solar: Minus 5 percent. The solar industry suffered its first-ever downturn in 2009. The recession put a damper on credit, which impacted the procurement of solar cells for businesses and homes. I’m told credit is still tight, especially in the U.S. Solar still depends on attractive subsidies. That still concerns me.
But here’s the real problem: In my opinion, the solar industry has failed to deliver on its promises. Efficiencies remain low. I see little evidence that grid parity is on the horizon. We were sold a bill of goods by some solar vendors. That doesn’t mean solar is a flop. There are still opportunities for new and breakthrough solutions. I am still an optimist on solar, but let’s cut down on the hype.
4. DRAM blues
Look out for a rebound in demand, but here comes another round of consolidation. My surprise prediction is that South Korea’s Hynix Semiconductor Inc. will become U.S.-based company in 2010. Recently, Hynix’ shareholders put their stake on the block. The only bidder was a shaky Korean firm, which has since withdrawn its bid.
Hynix’ shareholders have put its stake up for sale again. I don’t see any bidders coming from Korea. So, Hynix could end up like MagnaChip Semiconductor Ltd., the logic spin-off of Hynix. Last year, MagnaChip fell into bankruptcy. Last year, a U.S.-based investment firm, Avenue Capital Management II L.P., acquired a majority stake in MagnaChip. All told, MagnaChip is a U.S. company now. I see a similar scenario with Hynix, that is, the company being acquired by a U.S. investment firm. Perhaps Avenue Capital could also buy Hynix.
In Taiwan, the island’s DRAM vendors are still hanging on. That’s a miracle in itself. But in 2010, I predict Powerchip Semiconductor Inc. will fold. Look for Elpida Memory Inc. to buy them. Speaking of Elpida, the Japanese DRAM house is in danger of becoming the next Qimonda. In other words, it could go under–if we see another bad year in DRAMs. Elpida has skipped a node to play catch-up with its rivals. Its diversification strategy, including moves into the foundry and LCD driver market, is still in question.
Back to Taiwan. Taiwan’s ProMOS Technologies Inc. will continue to limp along. ProMOS is already looking for niche DRAM markets. Nanya Technology Corp. appears to be a contender, thanks to help from its technology partner, Micron Technology Inc.
5. Micron’s fate
Speaking of Micron, this is a make or break year for CEO Steve Appleton. Micron recently reported its first profit in three years. Its performance has not been stellar to say the least. And one quarter does not make it a success.
So if Micron falls back into the red, look for Micron to merge with Numonyx BV. At one time, rumors swirled that Micron and Numonyx were set to merge. The chatter has quieted. Perhaps a deal was once put on the table. Then, Micron resisted.
In 2010, I see Intel putting pressure on Micron to merge with Numonyx — if Micron goes back into the red. A backroom hostile merger? Intel has been known to engineer such moves. Micron and Numonyx have plenty in common with Intel. Micron has a joint NAND venture with Intel. Numonyx was formed from the former flash groups from Intel and STMicroelectronics Inc.
6. Intel and NAND
In case you missed this prediction, here’s a repeat of what I said last month: Intel will bail out of NAND production. Intel will continue to sell solid-state drives (SSDs), but it will slowly exit from the commodity NAND business.
In the NAND rankings in Q3 2009, Samsung was first, Toshiba was second, Hynix was third, followed by Micron, Intel and Numonyx, according to iSuppli.
Intel and Micron have a joint NAND venture, dubbed IM Flash Technologies LLC. Intel continues to lag in the rankings. That doesn’t make sense for the chip giant to be No. 6. As I said earlier, I see Intel brokering a merger between Micron and Numonyx. Micron and Numonyx will control IM Flash–with backing from Intel.
7. Samsung to turn upside down
Here’s the most obvious prediction of 2010: Samsung Electronics Co. Ltd. will continue to dominant in memories. Here’s the least obvious prediction in 2010: Samsung will start to divest its poor performing units, including its PC business, foundry unit and pieces of its logic IC group.
Late last year, Samsung tipped its hand. It announced a major restructuring for the second time in 11 months, appointing a new CEO and changing its reporting structure to give business units greater autonomy. As a result, the poor performing units will be under pressure. Samsung has rolled out some interesting netbooks, but overall, the company has never succeeded in the PC business. I don’t see that changing.
The other unit on the hot seat is Samsung’s semiconductor unit. The memory groups are safe. But besides a big application processor design win at Apple Computer Inc., Samsung has seen mixed results for its logic unit.
Samsung’s foundry efforts have bore little or no fruit thus far. The future of Samsung could rest in the hands of Jay Y. Lee, the new chief operating officer. In 2010, Lee will become CEO of Samsung Electronics. Lee is the only son of Lee Kun Hee, the former Samsung chairman who was found guilty of a breach of trust over fraudulent bond deals in 2008. Lee Kun Hee was recently pardoned by the South Korean government.
8. Toshiba exits foundry biz
Samsung is not the only company struggling in the foundry business. Toshiba Corp. appears to be falling behind the curve. First, one of its key foundry customers–Xilinx Inc.–switched to Samsung. Last year, there were also reports that Toshiba would outsource leading-edge chip production to GlobalFoundries Inc. In other words, over time, Toshiba will back away from the leading-edge foundry business and focus on NAND flash and logic.
9. Foundry fools
Speaking of the foundry business, we are entering into a new era of delays and setbacks. I see more delays in the 45-/40-nm node. And look for foundries to delay their 28-nm processes in 2010.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) has already had yield issues with its 40-nm technology. The problems are supposed to be fixed in early 2010. Don’t bet on it. Rival United Microelectronics Corp. (UMC) claims that it has been shipping 40-nm technology — without any yield problems. Yet I’m told one of its main 40-nm foundry customers, Xilinx, is not shipping in mass volumes.
GlobalFoundries and Chartered Semiconductor Manufacturing Pte. Ltd. will also see 40-nm delays.
What does this mean? 40-nm will be a work in progress throughout 2010. And the next foundry node, 32- and 28-nm, will get pushed out to 2011.
I0. China’s foundry industry flops
I see a major collapse within China’s foundry industry. Once upon a time, China was supposed to take over the world. So far, they can barely keep their heads above water. The struggling Chinese foundries are losing money and remain in limbo.
Consolidation is in the air. Shanghai Hua Hong NEC Electronics Co. Ltd. (HHNEC) and Grace Semiconductor Manufacturing Corp. (GSMC) will finally merge in 2010. Another firm, Advanced Semiconductor Manufacturing Corp., also might get swallowed up, possibly by HHNEC. TowerJazz may buy them as well.
The big question is what will happen to Semiconductor International Manufacturing Corp. (SMIC). As reported, SMIC lost a major suit against TSMC. As a result, TSMC garnered a small stake in SMIC. Over time, TSMC will gain control over SMIC.
11. x86 wars
On the processor front, I concur with one prediction made by analyst Doug Freedman of Broadpoint AmTech: Nvidia Corp. will enter the x86-based processor market. I myself see Nvidia entering the x86-based netbook processor market, not the mainstream processor fray. Nvidia already has an ARM-based solution, so why not an x86-based device? It’s a big gamble, however. Many have tried and failed to compete against Intel.
12. Advanced Middle East Devices rolls
It will be another tough year for Advanced Micro Devices Inc. I see more investments made by the Abu Dhabi government, giving the Middle East entity control over the processor maker.
13. Legal bill blues
Intel will lose the FTC suit. Other suits will follow against the chip giant. It’s a moot point. The chip giant will continue to own 90 percent of processor market. Intel will also gain control of the netbook processor market, prompting suits from ARM Holding plc.
14. National goes national
Now that Brian Halla is no longer in charge at National Semiconductor Corp., I get the feeling that the analog house is a takeover target. I see Texas Instruments Inc. making a bid. TI would also like to acquire Atmel Corp. in an effort to expand its microcontroller efforts.
15. Let’s Free Scale!
16. NXP sells itself this time
What will happen to poor NXP Inc.? The company continues to sell off divisions. I see STMicroelectronics gobbling up NXP itself.
17. Microcontroller mess
2010 will be a tough year for the merger of Renesas Technology Corp. and NEC Electronics Inc. The companies are set to merge soon, but there is a lot of work to do. Look for mass layoffs and plant shutdowns.
18. 450-mm on ice
More delays for 450-mm. Intel, Samsung and TSMC are pushing for 450-mm prototype fabs by 2012. Fab tool vendors are not biting. So, the new target date for 450-mm prototype fabs is 2015.
19. EUV does not see the light
There is good and bad news for extreme ultraviolet (EUV) lithography. Samsung will put EUV into R&D for DRAM prototyping in 2010. Intel will move into EUV R&D. IMEC and Sematech will get new pre-production EUV machines from ASML this year. But the new, full-blown production tools are now pushed out to 2018.
20. Immersion is not wet
193-nm immersion sees a new breakthrough. A new resist from JSR Corp. enables 193-nm to extend to 22-nm with fewer double-patterning steps. 16-nm is feasible. EUV gets pushed out again.
21. New packages
A new wave of consolidation hits the IC-packaging and test world. Taiwan’s Advanced Semiconductor Engineering Inc. (ASE) buys Asat Holdings and ChipMOS. Singapore’s STATS ChipPac buys Unisem Berhad of Malaysia. Perhaps the biggest news is that Amkor Technology Inc. and Siliconware will form a joint venture to take on ASE.
22. Solar or bust
MEMC Electronic Materials Inc. spins out its silicon wafer unit into new and independent company. MEMC decides to focus on solar.
23. New lows for high-k
IBM’s Corp. ”fab club” delays high-k. Intel has a huge lead in high-k for gate stacks. IBM and AMD were looking at the 32-nm node for high-k. Now, it’s delayed to the 28- and 22-nm nodes.
24. Fab tool consolidation frenzy
Every year, I try to predict the mergers in the fab tool sector. I will try again here. Every year, we predict Novellus Systems Inc. and Lam Research Corp. will merge. Every year, we’re wrong. I’m not betting on that one for 2010.
Applied Materials Inc. will continue to go on a buying spree. Look for Applied to buy more solar gear firms. Amtech comes to mind. Another wild prediction: Applied will make another hostile bid to buy ASM International BV.
Another possibility: ASMI’s shareholders will once again force the company to break up the company. This time around, shareholders succeed. As a result, ASMI’s front- and back-end entities will become two separate companies.
Once upon a time, I predicted that ASML Holding NV would enter the nano-imprint market. I see them buying Obducat AB. ASML may also make a play for Micronic Laser Systems Inc., a struggling supplier of pattern generation equipment.
KLA-Tencor Corp. will continue to buy companies. I see the company making a play for Nanometrics Inc. In 2010, LTX-Credence will look for a buyer. All along, I’ve said that Verigy Inc. looks like the best suitor for the ATE company.
Other predictions: Canon Inc. will exit the high-end lithography market in 2010.
FSI International goes on the block. The bidders: Applied and Tokyo Electron Ltd. TEL will make a bid for Mattson.
25. Who’s on the hot seat?
In 2010, I see a lot of CEOs on the hot seat, based on the performances of their companies in recent times. These CEOs won’t necessarily lose their jobs, but they face an inordinate amount of challenges. Their performances will be watched like a hawk. Here’s my list:
*Steve Appleton, Micron’s chairman and CEO. A make or break year?
*Yasushi Akao, president of Renesas. He will become president of the combined Renesas-NEC Electronics entity, which faces some nightmarish integration issues.
*Peter Bauer, Infineon’s member of the management board and CEO. Can company recover from DRAM snafu?
*Rich Beyer, Freescale’s chairman and CEO. Has the company run out of time?
*Robert Bruggeworth, president and CEO of RF Micro. Can company recover from downturn?
*Geesung Choi, Samsung Electronics’ president and CEO. Looking over shoulder? (Jay Y. Lee is being groomed for the post. Lee is the only son of Lee Kun Hee, the former Samsung chairman.)
*Richard Clemmer, NXP’s president and CEO. What’s next?
*David Dutton, Mattson’s president and CEO. Tough times for fab tool firm.
*Chuck del Prado, ASMI’s president and CEO. Changes in the wind?
*Anthony Holbrook, MIPS’ interim president and CEO. Who will step in tough spot?
*Jen-Hsun Huang, Nvidia’s president and CEO. Has magic touch run out?
*J.K. Kim, Hynix’ president and CEO. Who will buy Korean company?
*John Kispert, Spansion’s CEO. Can company emerge from Chapter 11?
*Steven Laub, Atmel’s president and CEO. Is restructuring over?
*Dirk Meyer, AMD’s president and CEO. Can the losses continue?
*Haruo Matsuno, Advantest’s CEO. ATE giant losing ground.
*Paul Otellini, Intel’s president and CEO. Intel continues to dominate, but not on the legal front.
*Mary Puma, Axcelis’ president and CEO. Tough times for ion implanter supplier.
*Yukio Sakamoto, president and CEO of Elpida. Can he keep the ship afloat?
*Shih-Wei Sun, United Microelectronics Corp.’s CEO. UMC is in danger of falling behind.
*David N.K. Wang, SMIC’s president and CEO. Can he turn the losing tide?