The Semiconductor Industry's Demographic Changes in 2016
In the previous part of the series, we saw that the semiconductor industry entered into a phase of slow growth that sparked consolidation. In 2016, the demand is expected to revive in the Americas but slacken in the Asia-Pacific region. This is changing the demographics ofthe semiconductor industry.
SEMI® 2015 Year-e nd Equipment Forecast by Market Region
The semiconductor supply chain
The semiconductor supply chain comprises semiconductor manufacturers, SME (semiconductor manufacturing equipment) suppliers, and consumers. The supply chain is spread worldwide, making countries interdependent.
While chip design and R&D (research and development) are concentrated in the Unite States and Europe, manufacturing is concentrated in Japan and South Korea, with semiconductor packaging and testing concentrated in Taiwan. The United States and Japan are leading SME suppliers, whereas China is the leading consumer of semiconductors and accounts for over 50% of the global semiconductor consumption.
The global scenario is changing as China decides to become self-sufficient in semiconductor manufacturing . Major fabrication facilities, or fabs, are being built or upgraded in China. lntel (INTC) is upgrading its Dalian facility in China, with production expected to begin in the second half of 2016. TSMC (TSM) is building a fab in China, with production expected to begin in the second half of 2017. Samsung (SSNLF) and Micron (MU) are building fabs in South Korea and Singapore, respectively.
Given the developments above, Taiwan, South Korea, China, Japan, and Singapore would be the top five SME export markets in 2016 according to the ITA (lnternational Trade Administration) .
According to the ITA, the United States and Japan are leading suppliers of SME, accounting for 44% and 32% market share, respectively.
SEMI (Semiconductor Equipment and Materials lnternational) forecasts global SME sales to rise 1.4% in 2016 after falling 0.6% in 2015. Taiwan, South Korea, and North America were the biggest consumers of SME in 2015. However, this could change in 2016 as GlobalFoundries, lnfineon, lntel, and STMicroelectronics (STM) raise their equipment spending in Europe (VGK).
The increasing production of electronics in the Asia-Pacific region could continue to drive semiconductor consumption. China and South Korea's consumer electronics and automobile sector, not to mention Germany's industrial sector, would drive semiconductor consumption .