Increasing device integration is the most fundamental of the megatrends (see Moore’s Law). This gives tremendous benefits in terms of increased chip speed, lower power dissipation, greater functionality per chip, lower system cost and physically smaller products. “Increasing costs and complexity of design, increased system content and greater flexibility means fewer vendors will have the capability to supply chips in the future“, said VP Jim Tully during the company’s Semiconductor Industry Summit in San Francisco. “The number of semiconductor vendors has risen steadily from about 120 vendors in the mid-1980s, to roughly 550 in 2003. Within 10 years, the industry will experience significant consolidation“.
The second megatrend concerns increasing costs and scale of semiconductor manufacturing. Fabrication plants are becoming extremely expensive, and next-generation fabs will inevitably become too expensive for most existing companies. This requires achieving significant economies of scale, such as high-volume production, preferably standard chips that can be produced in a standardized environment with large batch sizes. These standard chips can then be customized for specific applications. “This will result in fewer chip manufacturers in the future, but it won’t result in higher prices because the capital-intensive industry is highly competitive“.
The third megatrend relates to the growing importance of consumer markets. By 2013, more than 50% of chip sales will be for consumer-product markets. But the challenge for vendors is that those markets can be unpredictable in their tendency, and it can be hard to identify what these users will want. These markets have normally high volumes, but margins are low. Also, the falling number of chips per application (result of ongoing integration) is dampening the growth in these applications.
Until now, many semiconductor products were stand-alone; however, the industry must prepare for the increasing role of service providers. Practically all equipment is being interconnected in LANs or over the internet, respectively. This drives companies/machine vendors to offer upgrades, content and other services. “These services can generate more revenue than equipment sales“, Jim Tully foresees. Therefore, service providers are likely to assume an important and dominant role. In many cases, these providers are likely to brand the products and to control the design and manufacturing of them. As we know, innovative technologies have driven the semiconductor industry from the beginning, and will continue to drive. Most of these have been incremental developments. However, disruptive technologies will probably have significant and unpredictable effects. Examples of those technologies include inkjet process, light-emitting polymers, carbon nano-tubes, molecular transistors, protein-DNA logic, etc.
EPP EUROPE 408
