2011 Forecast and SEMICON Japan

It is always a pleasure and honor to be in Japan making one of our key industry announcements, the SEMI Consensus Forecast. This year’s press conference included Tadahiro Suhara, president of Dainippon Screen and president/CEO of Sokudo, and Chairman of the SEMICON Japan Advisory Committee, and Takashi Yoda, Senior Manager of Toshiba’s Process Development Center, and Chairman of the SEMI Technology Symposium. Suhara-san gave an overview of this year’s SEMICON Japan and Yoda-san summarized the program highlights of the Technology Symposium. Also on the podium this year was Hidemi Ishiuchi, Chief Technology Executive at Toshiba and Chairman of the Semiconductor Technology Roadmap Committee of Japan who highlighted the ITRS Public Conference held this year at SEMICON Japan.

It was good to see a healthy a press community in Japan with about 20 journalists in attendance.

We announced the projected forecast for equipment spending in 2011 to reach $38.95 billion and materials spending to pass this year’s all-time high and reach $$44.7 billion. This year SEMI projects 2010 semiconductor equipment sales to reach $37.54 billion, up 136% following a 46 percent market decline in 2009.

Wafer processing equipment, the largest product segment by dollar value, is expected to increase 137 percent in 2010 to $28.11 billion. The forecast predicts that the market for assembly and packaging equipment will grow by 155 percent to $3.59 billion in 2010. The market for semiconductor test equipment is also forecasted to grow by 155 percent to reach $3.96 billion this year.

Growth is forecasted for all regions in 2010, with Taiwan being the largest market for equipment followed by South Korea. North America will be the third largest market for overall spending on semiconductor equipment. China, Korea, Rest of World, Europe, and Taiwan regions will experience growth rates over 100 percent.

I think the Consensus Forecast is especially well-timed this year. While the leading analysts project chip revenue to grow between 4.5 (Gartner) and 11% (IC Insights) in 2011, there’s been varying opinions about what the industry could sustain in capital spending after this year’s crazy growth. The latest Book-to-Bill numbers fell below one for the first time in 2 years and there has been lingering general economic malaise in the US and Western Europe that has caused some speculation on the negative side. The projected 4% equipment spending growth for next year seems modest after last year’s impressive gain, but includes a decline in spending for test and assembly equipment that really spiked in 2010. We project that wafer processing equipment will actually grow 7.4% to over $30 billion.

One of the most interesting developments in the global IC industry—of most concern here in Tokyo—has been relative decline in Japanese equipment spending. Not only will Taiwan and Korea spend significantly more than Japan on equipment (9.0 and 8.28 billion to 4.9 billion respectively), but the US will also spend over $1 billion more than Japan next year.