Semiconductor Materials: A Bright Spot in Tough Times
by Lara Chamness
SEMI Industry Research and Statistics
There has been a fair amount of discussion about the current state or downturn that our industry is currently in. However, this topic primarily pertains to the equipment sector, not the chip and materials segments. In fact it is expected that the semiconductor materials segment will be $12.6 billion larger than the semiconductor equipment market this year. Moreover, while a lot of attention is given to the equipment industry, the semiconductor materials market has been quietly posting record revenues since 2004 and is forecasted to dominate the equipment market over the next few years.
Comparison of Semiconductor Equipment and Semiconductor Materials Markets
Source: Rose Associates, SEMI Materials Market Data Subscription, August 2008, SEMI/SEAJ
The Semiconductor Industry Association anticipates that semiconductor revenues will approach $267 billion this year, marking the fifth consecutive revenue-breaking year for the industry. Not coincidentally, semiconductor materials have been recording record revenues and volumes over this same time. Growth was seen in both the wafer fabrication materials and packaging sectors, which are expected to reach $26.8 billion and $19.9 billion, respectively, this year.
Comparison of Semiconductor and Semiconductor Materials Markets
Source: SIA June 2008, SEMI Materials Market Data Subscription August 2008
Japan continues to dominate worldwide semiconductor materials consumption at 22% market share. In 2004 Taiwan surpassed North America as the second largest materials consuming region. North America now represents the fifth largest consumer of semiconductor materials by value after being surpassed by both Rest of World (ROW) and South Korea over the past couple of years. Rest of World includes Singapore, Malaysia, Thailand and other areas in Southeast Asia. Considerable levels of new fab capacity have been invested in these regions and each also has a more substantial package assembly base compared to North America.
Taiwan is expected to remain in the number two position for the immediate future. While both Japan and Taiwan have significant fab and packaging bases, the materials market in ROW is primarily due to packaging materials. The semiconductor materials market is expected to grow in all regions except Europe and North America this year. Not surprisingly, China is expected to experience the strongest growth of 24%. Below is the current regional market share for materials in 2008.
2008 Worldwide Semiconductor Materials Market by Region
SEMI Materials Market Data Subscription August 2008
Wafer Fabrication Materials
Fab materials currently account for about 60% of the total worldwide semiconductor materials market, with the majority of revenues coming from silicon wafer sales. Taken together, silicon and photomasks account for 62% of the wafer fabrication materials market. All wafer fab product categories experienced strong growth in 2007 except wet chemicals, photomasks, and sputter targets, resulting in growth of 16% for the entire segment. The growth picture in 2008 is expected to be more moderate, with overall growth of 7%. In 2009 and 2010, overall fab materials growth is expected to moderate to 9% and 6%, respectively
2008 Wafer Fab Capacity Compared to Wafer Fab Materials by Region
% Worldwide Fab Capacity
% Worldwide Fab Materials Market
Rest of World
SEMI Materials Market Data Subscription August 2008, SEMI World Fab Forecast August 2008
One of the most dramatic changes in semiconductor materials is the emergence of the packaging materials market as packaging becomes increasingly critical to the performance of the device. Packaging materials represented about 33% of the total semiconductor materials market by revenue in 1998 and are forecasted to represent 43% of the semiconductor materials market in 2008. This shift is due to an increased use of laminate substrates and advanced polymeric materials for ball grid array, chip scale and flip chip packaging. These materials are forecasted to experience stronger growth in the coming years as portability and functionality drive more demanding packaging requirements. Additionally, the price or gold has significantly increased, causing the wire bonding segment to experience growth of 36% in 2007. In response to the soaring price of gold, device manufacturers are turning to thinner diameter wires and are exploring copper wiring.
Much like wafer fabrication materials, semiconductor packaging materials are also expected to exhibit slower growth rates during the next three years within the range of 5% in both 2009 and 2010 to reach $20.9 billion and $22.0 billion, respectively. Excluding variabilities in gold pricing and assuming laminate substrates are removed from the forecast, the growth rate drops to 3% to 2% annually. Thus a good portion of the forecasted growth in packaging materials is due to advanced substrates.
Semiconductor materials market has long played a supporting role in relation to semiconductor equipment but with consistent year-over-year growth as the result of record volumes of chips produced, the materials market is set to leave the shadow of the flashy equipment market. Japan remains the largest consumer of semiconductor materials in terms of revenue; however the Taiwan, ROW, and South Korea regions have emerged as significant players over the past few years as the materials market is mirroring the device manufacturing market in terms of geographic distribution. Growth has been seen in both the wafer fab and packaging materials markets – a trend that is expected to moderate, yet continue for the duration of this forecast.
All of the materials information in this article was derived from the Materials Market Data Subscription, produced by SEMI. In developing this report, supplier data is collected from semiconductor materials providers throughout the world. Fab Capacity data were sourced from SEMI’s World Fab Forecast, August Edition. These reports are ideal tools for real-life market indicators and forecasts, because they are updated quarterly and provide both a top-down (supplier) and a bottoms-up (fab-level) analysis.
1 Semiconductor Industry Association, June 2008 Forecast.