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Viewpoint Index

January 3, 2017

VIEWPOINT 2017: Denny McGuirk, President and CEO, SEMI
VIEWPOINT 2017: Denny McGuirk, President and CEO, SEMI
Denny McGuirk, President and CEO, SEMI
2016 brought a number of surprises to the world stage, as well as to our industry. Few would have predicted the Dow nudging nearing the 20,000 level, Brexit, a Trump presidency, and the impeachment of South Korea's President Park Geun-hye. In our industry, few would have predicted Lam Research and KLA-Tencor calling off their planned merger on antitrust concerns, the strength of semiconductor capital equipment investment in the second half of 2016, and the mega M&A semiconductor deal announcements of 2016: Qualcomm acquiring NXP Semiconductors for $47B, SoftBank acquiring ARM Holdings for $32B, and Analog Devices acquiring Linear Technology for $14B, among others.

While 2016 was a wild ride, it was a strong year for semiconductor equipment investment -- and 2017 looks to be similarly optimistic. SEMI's forecasts for 2016 and 2017 are both for approximately 9% year-over-year growth. The first half of 2016 was slow, but NAND investment and new China projects drove a strong second half. For semiconductor equipment, SEMI's forecast indicates 2015 was $36.5B, 2016 will come in at $39.7B, and 2017 is projected to be $43.4B. NAND is a significant driver with SEMI estimating NAND equipment investment in 2015 at less than $10B, in 2016 jumping to an estimated $14B, and in 2017 growing to over $16B. Also fueling this growth are 20 fab projects in China starting in 2016 and beyond.

In 2017, China investment is projected to continue as a major driver, likely consuming over 16% of the total global equipment investment (second only to South Korea in 2017). The China investment will be distributed throughout China including: Beijing/Tianjin, Shanghai/Ningbo, Nanjing, Jiangsu, Xian, Hefei, Xiamen/Shenzhen, Wuhan, Shenyang, and Chongqing/Chengdu. Investments will come from both multinationals such as TSMC, Samsung, GLOBALFOUNDRIES, UMC, and others as well as China-based companies such as SMIC, Silex, Yangtze River Storage, and others.

NAND will continue to be a major driver with 3D NAND investment growing by an estimated 240% and 2D NAND actually declining by 73% (2015 to 2017). Packaging's leading edge will continue to accelerate Silicon in Package (SiP) and heterogeneous integration solutions. Materials innovations will be relied upon to solve front-end and packaging challenges while standard materials will be the focus of increased efficiencies and cost reduction. 200mm fab capacity will grow and stimulate new 200mm investment with upside driven by power devices and MEMS segments. Investment in foundry MEMS is expected to grow by an estimated 285% (2015 to 2017).

As more electronics devices contain ICs, MEMS, sensors, and flexible printed substrates, SEMI's members are increasingly collaborating across these segments (especially in packaging) -- and along a longer span of the electronics manufacturing supply chain. As part of SEMI's 2020 plan, SEMI is focused on increasing the growth and prosperity of its members and has developed new collaborative platforms for its members. This includes bringing on FlexTech (for flexible hybrid electronics) as a SEMI Strategic Association Partner in 2016 and MSIG, the MEMS and Sensors Industry Group, as a SEMI Strategic Association Partner starting January 1, 2017. By bringing these communities within SEMI's global umbrella, the broader SEMI membership benefits from scale and collective action, while maintaining each segment's defined and autonomous community activities. Stay tuned to new regional collaborative platforms to interact with more of the electronics manufacturing supply chain.

As a reminder, SEMI gathers the industry across the globe with SEMICON expositions in the Americas, Europe, China, Japan, Korea, Malaysia, and Taiwan. SEMI offers market research and data on semiconductor equipment, materials, fabs/foundries, packaging, HB LEDs, and more. The SEMI International Standards program has more than 4,500 volunteer experts with 1,800+ companies represented. SEMI members have access to a "Members Only" website and many webinars and presentations files are available. For more information on SEMI, please visit http://www.semi.org.

Denny McGuirk, President and CEO