From January 14 to 16, 2020 SEMI welcomed about 300 high-level executives to the Industry Strategy Symposium (ISS 2020) at the Ritz-Carlton in Half Moon Bay. Dave Anderson, President, SEMI Americas welcomed everybody and announced that SEMI will celebrate 50 years of service to the semiconductor industry at SEMICON West in July. Market forecasters conveyed good news for semiconductor vendors, Wall Street analysts voiced concerns about too much optimism at this time, and company executives outlined how their teams manage the rapidly changing market demands as well as new supply chain requirements. Several speakers presented how the explosion of BIG DATA (a.k.a. “The New Oil”) is driving innovation in their fields.
I’m Living in a Little Data World, but I Have a Big Problem
As a strong believer in the synergy between software developers and hardware manufacturers, Richard Gottscho’s keynote presentation was – for me – clearly the highlight of the entire conference. As EVP and CTO of Lam Research, Gottscho was instrumental in acquiring Coventor, a software company focused on eliminating trial and error engineering. Their software tools simplify manufacturing process recipe development by simulating the impact of recipe changes on the yield and capabilities of integrated circuits and micro-electromechanical systems (MEMS).
During his presentation, Gottscho, who is a physical chemist, explained how Lam can reduce the number of experiments with Coventor tools and reduce development cost for etching high aspect vias as well as time to profit. Figure 1 shows how many experiments traditionally were needed to develop advanced etching process steps, how a data scientist with weak domain knowledge and Coventor software can already reduce the number of experiments by simply “turning nobs” and how Coventor tools empowers a domain expert to further reduce the number of trial and error loops, saving even more time and money by turning the right nobs in the right way.
Just in case you are not familiar with the importance of highly optimized etching recipes, here is an application example: 3D NAND Flash memories can increase the number of bits a memory IC can store by orders of magnitude because Lam equipment allows high-volume manufacturing of very high aspect ratio vias to connect 96 and more memory layers vertically, reducing memories foot-print, power dissipation, and cost. These ICs make manufacturing of large solid-state disks (SSDs) economical and enable faster, smaller, lighter, and shock-proof laptop computers. SSDs also extend a laptop’s battery life, compared to using a traditional hard disk as a mass storage device.
Economic Trends and Forecasting
Clark Fuhs, Lam’s director of corporate marketing and member of the ISS committee, introduced the session 1 speakers.
Dan Niles, Founding Partner, Alpha One Capital, confirmed our industry’s 13% revenue decline in 2019 and projected mid-single-digit growth going forward. He opened with a summary of key assessments (Figure 2) then presented many trend graphs, detailing economic data and substantiating the following statements:
- By July of 2019, the US economic expansion was the longest ever, at 121 months.
- If you are an optimist, Australia has seen economic growth since 1991.
- Unemployment is at multi-decade lows in the US and inflation is still MIA
- Global central banks are back/still doing QE and fiscal policy is accommodative
- The US housing market is healthy, but the US ISM manufacturing index fell to 47.8% – the lowest in 10 years
- Risks: China/Trade, Brexit outcome, Hong Kong protests, Saudi attacks, Iran retaliation
- EU growth is not stellar, and Brexit won’t help
- Japan’s sales tax of 8-10% went into effect on October 1st and could drive consumer slowdown
- 100+ Chinese stimulus measures and Phase 1 trade deal positive for future global growth
- US elections in 2020 increase desire for a strong US economy
- The US and global economy are slowing, and recession risk is rising, though still not likely in 2020
Michael Schallehn, Partner at Bain & Company, described several important global/economic trends and their impact on semiconductors. He expects that free global trade will end because strong trading blocks are building. While commodities will continue to be traded globally, the flow of electronics, rare earth, and other high-value products will only be within the emerging trading blocks and will encourage their governments to be more controlling. Also, as the era of plentiful skilled labor is ending, deployment of artificial intelligence (AI) and robots will expand and will displace 20 to 25% of the current workforce in the next 10 to 20 years.
Schallehn expects that the Internet of Things (IoT), sensors, AI, and high-performance computing, as well as the vast amounts of data to be captured, processed and stored assure the semiconductor industry’s growth. He also pointed out that Chinese companies are very well funded, however, there will be no or very weak data privacy laws in this trading block.
Kevin Anderson from IHS Markit expects 5G, IoT, AI, and autonomous driving to accelerate semiconductor revenue growth. Reliability, safety, and security requirements in the automotive segment will trigger many changes in our industry. Likewise, the need for ultra-low power, small form factors, and AI in edge nodes will demand innovative solutions. Anderson also highlighted that small, specialized and well-funded semiconductor vendors are reemerging and confirmed China’s commitment to expanding and improving the capabilities of their domestic semiconductor vendors.
Bob Johnson, VP at Gartner, conveyed good news for semiconductors: Both NAND and DRAM will be in undersupply until the end of 2021, resulting in increased memory prices. The roll-out of 5G (sub 6 GHz) appears to be faster than expected. This will amplify the memory undersupply situation as well as drive 5 nm logic production volumes. Foundry revenues will increase from 62 Billion Dollars in 2019 to 80 Billion in 2023. While Capex will be down in 2020 (versus 2019) it will grow again in the following years.
John West, Managing Director at VLSI Research Europe, focused on the importance of subsystems and components for semiconductor manufacturing. He discussed risk management and cost control for these critical elements and detailed where semiconductor manufacturers spend the $20 Billion per year on these elements.
Yoshihiro Azuma, Managing Director at Jeffries in Asia, outlined trends in semiconductor materials for wafer manufacturing, but not for IC packaging (yet). I hope this currently still narrow focus on wafer materials will change soon and show the increasingly important role packaging materials – for underfill, substrate, molding, shielding, etc. – are playing in the ICs’ and sub-systems’ value creation. Azuma emphasized that China is a very important customer for materials suppliers. He outlined the Japan and Korea trading conflict and explained that rapidly increasing market demand for batteries accelerated development, resulting in rising energy densities of batteries, from 200 Watt-hours (Wh) per liter in 1991 to 600 Wh today.
Market Trends and Applications
Joe Cestari, President of Trinity Inspiration Management, also an ISS Committee member, introduced the Session 2 speakers. They outlined very interesting market trends and beneficial applications.
Shawn DuBravac, Futurist, Author, and CEO of Avrio Institute, referred to the recent Consumer Electronics Show (CES) 2020 and used exhibits there as examples for products to come. 5G wireless will roll out widely over the next 10 years. He predicted that many companies will deploy AI that will make washing machines, refrigerators, toothbrushes, eyeglasses, door openers, and many other products around the house and at companies easier to use and more capable to serve human needs. Sensors and AI will make road-bound and flying cars safe, secure, and easy to use. Exoskeletons will enable humans to lift 200 pounds and more easily and help moving heavy loads. Wearables will track a range of biomarkers and alert a doctor if something in your body is “out of spec”. Cameras (with or without face recognition) will track every move within their range. The captured data will be stored for later analysis and use.
Like with many other innovations, we humans need to learn how to utilize these new devices and appreciate their help – or avoid the ones we don’t like (if possible!).
Jonathan Sorger, VP of Research at Intuitive Surgical, outlined the benefits of laparoscopic (= small incisions) surgery, using their “Da Vinci” robot. By avoiding large cuts in the abdominal wall and using a tiny scope to allow the surgeon to see and control the robot’s work inside a patient’s body, the recovery time is much shorter than with traditional methods. Sorger also explained their highly successful business model and listed a number of benefits this surgery robot offers patients, doctors and hospitals.
I “enjoyed” Da Vinci’s services in 2018, to have one of my kidneys removed. It’s clearly much less intrusive and easier to recover from than traditional surgeries – but it’s still no fun to get under these robotic knives.
Severine Valdant Zygmont, President Biomedical, Oxford Performance Materials, presented how they model, design and manufacture a wide range of implants n their OsteoFab®, customized for individual patients. They use Polyether ether ketone (PEEK) polymer as starting material and laser sintering to create bone-like parts. These products are tested in accordance with ISO 10993 and FDA approved for implantation in humans. With these patient-specific “spare parts” surgeons can restore cranial and facial features, replace broken bones, repair joints and cardiothoracic as well as other parts in a living body.
Bradley Horowitz, VP and Advisor at Google, titled his presentation “Moonshots and Flying Kites”. With “Flying Kites” he referred to projects that are not as daring as Moonshots. He also pointed out that kites remain tethered. He recommended reading “The Innovators Dilemma” by Clayton Christensen to appreciate the dangers and value of disruptive innovations. Christensen describes in this book how disruptive innovation destroyed established manufacturers of large disk drives. Horowitz mentioned that Google’s “Area 120” is their workshop for developing experimental products, emphasized that Google builds products for billions of users, not millions and repeated a famous quote from Steve Jobs: “It’s better to be a pirate than joining the Navy” to further encourage innovation. Horowitz admitted that innovative products need good operations management and flawless execution to become successful.
Day 1 at ISS, especially Google’s presentation and their many successes, has encouraged me to keep fighting for innovative products – like multi-die ICs.
ISS presenters on day 2 and 3 also conveyed very valuable and encouraging information. Find Part 2 of my ISS blog here, and shares what I have captured. Thanks for reading this very long blog! ~ Herb
