The SEMI Industry Strategy Symposium (ISS) opened yesterday with the theme Data Driven Innovation and Growth. The annual three-day conference of C-level executives gives the year’s first comprehensive outlook of the global electronics manufacturing industry.
For the nearly 300 attendees at ISS 2020, opening day highlighted market and technology opportunities and a reflection on the significant pricing and international trade challenges the semiconductor manufacturing supply chain faced in 2019. Deep discussions on technology disruptions, the future of mobility and 5G, and perspectives on the semiconductor industry in Asia will mark today, Day 2. Day 3 will feature presentations on advanced computing’s impact on the semiconductor industry and convene an expert panel titled Stock Wars: The Rise of SemiCaps to culminate the annual SEMI kick-off event for business leaders.
Opening keynote speaker Richard Gottscho, Executive Vice President and Chief Technology Officer at Lam Research, sees computational advances as one key to the semiconductor industry evolving from a little data world, marked by engineering teams taking several months to solve wafer etching problems, to one where big data is used to quickly and efficiently address issues. With etch recipes for wafers growing far more complex, the semiconductor industry needs a breakthrough in metrology technology to continue its virtuous cycle of positive, exponential feedback that has led to the increasingly faster pace of technology evolution. Gottscho compared data gathering by wearables to make general predictions on health to the potential use of metrology tools in collecting wafer data to predict fab health and avoid unscheduled downtime. Cost and time constraints still challenge the industry, yet Gottscho is optimistic that computational advances have brought the big metrology problem in a little data world close to resolution.
In the Economic Trends session, presenters took on macroeconomic trends and detailed industry-specific forecasts.
Daniel Niles, AlphaOne Capital, expects the semiconductor industry to resume growth in 2020 after five to six difficult quarters as semiconductor pricing stabilizes. However, he urged cautioned amid signs of economic risk, particularly how central banks worldwide are taking on debt, and a possible election-year surprise in the U.S. Industry tailwinds include an anticipated uptick in data center capital expenditures, improving inventory levels, progress in U.S.-Sino trade relations despite slow economic growth in China, and bullish secular trends in 5G, AI, IoT, AR, cloud, electric vehicles, autonomous driving and smart homes.
Michael Schallehn, Bain & Company, noted that the era of plentiful labor is nearing an end, posing a major challenge for economies worldwide as companies struggle to fill open positions. Robotics and automation could fill the employment gap to sustain economic growth as the cost of robotics falls and adoption of AI for customer service applications continues to rise. Workforce shortages offer a compelling business case for replacing human workers with robots, which can cut labor costs by 10 percent to 15 percent while boosting productivity as much as 30 percent. Over the next 10 to 20 years, Schallehn expects 20 percent to 25 percent of the global labor force to be displaced by robots, another significant challenge.
Kevin Anderson, IHS Markit, observed that the 2020 semiconductor revenue rebound will be led by memory, with growth exceeding 10 percent. Among 2020 industry growth drivers, 5G is the most promising, though its rollout will be phased. With development slower than forecast, autonomous driving will start to fulfill its promise after 2025. Mainstream AI applications were few in 2019 and the technology will only make a meaningful contribution to chip industry revenue once high-volume applications emerge. In its forecast for 2020, IHS Markit sees 5.5 percent annual growth for the global semiconductor industry with memory expanding at a 3.9 percent rate.
Bob Johnson, Gartner, pointed to TSMC’s outsize influence in the Gartner forecast for 5 percent CAGR in foundry revenue through 2023. Advanced nodes and rising demand for 5G 7nm chips will drive an increase in foundry capital expenditures over this period. In the equipment market, CapEx was down 6.9 percent year-over-year (YOY) in 2019 and is expected to improve slightly in 2020 with a 3.6 percent YOY decline. Johnson reported that more than 220 million 5G smartphones are expected to ship this year, but cautioned that the technology is at the peak of its hype cycle. Commercial applications are not yet available, most 5G phones will be using expanded 4G networks, and 5G usage in Korea recently underwhelmed – all signs that 5G is not ready for robust adoption, though the technology’s future is bright.
John West, VLSI Research Europe, highlighted the challenge to semiconductor equipment companies of navigating 5 percent CAGR in critical subsystem and component costs. Equipment makers must reduce costs without increasing risk. Their options include squeezing the profit margins of critical subsystem suppliers and turning to new models such as renting equipment, but he encouraged the manufacturers to analyze the segment before cutting costs. Pointing to a need for a risk heat map for the supply chain, West advised equipment manufacturers to consider several factors in evaluating critical subsystem supplier risk such as location given potential geopolitical instability, ability to deliver, financial strength, and current versus planned production capacity.
The afternoon session focused on Market Perspectives, on topics including intelligent surgery, biomedical 3D printing, and technology innovation.
Shawn DuBravac, Avrio Institute, highlighting CES 2020 product introductions, discussed how AI is driving down the cost of predictive applications and, along with cameras and sensors, has spawned a broad range of innovations. Examples include autonomous positioning and temperature regulation for beds to keep people asleep longer and reduce snoring, refrigerators that select recipe options based on available food, digital exoskeletons that make users 20 times stronger, self-driving wheelchairs, and robots for last-mile deliveries. He also pointed to a new age of virtual reality immersion that includes devices such as suits that provide tactile feedback to help train outdoor workers to perform tasks in a virtual weather environment of wind and rain.
Jonathan Sorger, Intuitive Surgical, focused on the many benefits of robotic surgical tools that follow a surgeon’s movements to extend innately human capabilities, reduce variability in surgical skills, help surgeons refine their skills through simulation, and provide surgeons with performance data for other improvements. For patients, robotic devices decrease wound infection and blood loss while requiring fewer incisions and open surgeries, accelerating recovery.
Severine Valdant Zygmont, Oxford Performance Materials, noted how data-driven processes have improved medical applications. One example is 3D printing of bone reconstructions using PEKK polymers to enable bone implants that are better personalized for patients. Concerns include how the medical industry will manage the newfound wealth of available data while protecting patient information.
Bradley Horowitz, Google, explored how companies can remain innovative as they grow, age and become susceptible because of complacency to rapid, disruptive innovation that can threaten their businesses. He highlighted four pillars of Jeff Bezos’ business philosophy: stay focused on customers, concentrate on results not process, look outside the company, and make decisions quickly. He also pointed to Google’s work as a startup incubator to enable innovation not otherwise possible and keys to success including mentorship, access to capital, and a sense of community.
Days 2 and 3 at ISS will delve deeper into the industry with presentations by Western Digital,ASML, JCET Group, Ford Motor Company, Bosch, Lyft, ASE, Qualcomm, Qorvo, Ericsson, International Business Strategies (IBS), Stratfor, Cabot Microelectronics, Arm, Entegris, Intel and Headgate Partners.
The SEMI Industry Strategy Symposium (ISS) examines global economic, technology, market, business and geo-political developments influencing the global electronics manufacturing industry along with their implications for your strategic business decisions. For more than 35 years, ISS has been the premier semiconductor conference for senior executives to acquire the latest trend data, technology highlights and industry perspective to support business decisions, customer strategies and the pursuit of greater profitability.
