2010-2013 Semiconductor Market Forecast Seizing the economic & political momentum in Europe for Key Enabling Technologies

2010-2013 Semiconductor Market Forecast Seizing the economic & political momentum in Europe for Key Enabling TechnologiesBrussels June 8th, 2010ESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.1Semiconductors: so what?Economic momentumLatest WSTS market forecast – hot off the press – a very good year and a positive outlook in front of us.Will Europe be able to capitalise on these market opportunities?Why care? => S/c bellwether / key enabling technology: if you get it right here, then there are good chances of getting it right elsewherePolitical momentumRenewal of industrial/innovation policy also in Europe Unique new political constellationKey Enabling Technologies (KETs) initiative as test cases – from words to deedsIn back up: about ESIA and WSTSunit growth forecastdistribution of European s/c market by application & EU Member StateList of KETs EC High Level Group membersESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.21Development World Semiconductor Market Amounts in US$MYear on Year Growth in %CAGRSpring 20102009201020112012200920102011201209/'12Americas38.52048.12550.40152.0881,724,94,73,310,6Europe29.86538.18340.10341.805-21,927,95,04,211,9Japan38.30044.75647.27749.187-21,016,95,64,08,7Asia Pacific119.628 159.887 169.606 177.081-3,533,76,14,414,0Total World - $M226.313 290.951 307.388 320.161-9,028,65,64,212,3Discrete Sem iconductors14.17518.42919.24220.275-16,330,04,45,412,7Optoelectronics17.04321.97024.67927.491-4,828,912,311,417,3Sensors4.7536.5526.9967.363-7,037,86,85,215,7Integrated Circuits190.342 244.001 256.471 265.031-8,828,25,13,311,7Analog32.00142.50244.83346.736-10,232,85,54,213,5Micro48.33059.30264.44568.844-9,122,78,76,812,5Logic65.21576.98681.49484.673-11,318,05,93,99,1Memory44.79765.21165.69964.777-3,345,60,7-1,413,1Total Products - $M226.313 290.951 307.388 320.161-9,028,65,64,212,3Source: WSTS, ESIAESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.3Development World Semiconductor Market Sales Development from 1995 to 201240%300CAGR 6%Final Sales 2009 (01/2010)& Autumn 2009 Forecast2009$226B-9%20%250)2010$267B18%tears2011$292B9% Rllao2012$313B7%thw Dnro0%200illioSpring-Forecast (05/2010)l Gau (Bs2010$291B29%nnle2011$307B6%AaS2012$320B4%-20%150-32%-40%1001995200020052010Source: WSTS, ESIAESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.42Development European Semiconductor MarketSales Development from 1995 to 20124540%CAGR 2%Final Sales 2009 (01/2010)& Autumn 2009 Forecast39)2009$30B-22%tersalla2010$36B19% R 20%o2011$39B9%th Dwn2012$41B7%ro33illiol Ga (BusSpring-Forecast (05/2010)n0%nlea2010$38B28%AS2011$40B5%272012$42B4%-20%-29%211995200020052010Source: WSTS, ESIAESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.5Development World Semiconductor Market Sales Development by Application per Regionn2009tioricarneIndustrialuotiveputemsumstrial10% tomuomomonuAutomotive ( $ 23B) CCCAInd7% ($16B)Americas43%20%17%7%13%ComputerJapan28%19%31%10%12%Consumer42% ($95B)19% ($42B))Asia/Pacific49%24%18%3%6%Europe33%21%9%20%17%Communication22% American and Asian market is mainly driven by computing. ($50B)Consumer plays a minor role and the rest is negligible.Japanese and European market is more diversified. Computer is also important, but In Japan consumer is the main marketIn Europe communication and automotive are main markets, industrial is also importantSource: WSTS, ESIAESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.63Development European Semiconductor MarketSales by Country in EMEA1) 1999 to 2009 14r1999 2003 2007 2009 ae12r Ye p10rslla8of D6 osn4illioB2 yefeet an &dnclyicprnpsaKnt oaItardsrotefricUlaoesro ErmrauuIreNa AeFREEle. Ed&GidWM1) EMEA = Europe (incl. Russia), Middle East & AfricaSource: WSTS, ESIAESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.7Development World Semiconductor Market Regional Change of Sales (consumption of chips)60%Till 1993 Japan sales region #1, then Asia/Pacific(incl. China)replaced by the AmericasAt that time the shift to Asia started50%Since 2001 Asia/Pacific – and here slemainly China, Taiwan and Korea –Japanabecame the #1 region, due to shift of 40%f Selectronic equipment production. oAmericasreShare of Europe till 2002 more or less ahconstant, then gradual loss of market 30%l Sshare in Europe.anThe Chinese semiconductor market ioEuropeghas passed the American and 20%eREuropean in 2008 and the Japanese in 2009. Today about one quarter of the total world wide microelectronic 10%production is shipped to China. China(as part of Asia/Pacific)0%198619901995200020052010Source: WSTS, ESIAESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.84Development World Semiconductor Market Regional Share of Production (Sales in USD, w/o Foundries)2004USA semiconductor companies USA2009produced still nearly half of world wide salesJapanJapan’s share now below one quarter– slight increase again since 2004South KoreaWith the EU counted as one country, just five countries in the world are controlling the microelectronic market.European UnionChinese companies produce <1%TaiwanMore then half of the Taiwanese production comes from foundry 0%10%20%30%40%business (not included here)ShareShare of production by country of origin (sales in US-Dollars):99% of semiconductor sales belongs to companies from 5 countries in the worldSource: ZVEI, ESIAESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.9Development World Semiconductor Market Regional Share of Production (Waferstarts, incl. Foundries)Highest loss of share for USA and EU, Japantogether -9%Japan still #1 in wafer production capacityTaiwanStrongest growth of fab capacity in Taiwan, China & Singapore, mainly driven by pure South Koreaplay foundries2004Korean companies are producing nearly USA2009only memory productsChina’s share is with 9.9% significantly Chinadriven by foreign companies (indigenous <1%), up from nearly zeroEuropean UnionEuropean Union ranks #6 with 9.6% shareSingaporeShare 0%5%10%15%20%25%Share of production by country of Wafer Fab (Wafer Starts, Area of Silicon):97% of semiconductor production is located in 7 countries in the worldSource: ZVEI, ESIAESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.105Seizing the economic momentum Development World Semiconductor MarketReal GDP vs. Chip Market[year-on-year growth rates]Global real GDP5%70%[left y-axis]60%4%50%3%40%2%30%20%1%10%0%0%-10%-1%19992000200120022003200420052006200720082009 '10 -20%-2%-30%-3%-40%Semiconductors about one-50%Global Semiconductor Market-4%quarter ahead of GDP-60%[right y-axis]-5%-70%ESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.11Seizing the economic momentum (2009 figures)Semiconductors are a key enabling industry- Internet Services - BroadcastService ProvidersProviders- TelecomWW$6300B / Europe $1600B- GamesOperatorsAutomotive / Industrial / DefenseMedical / SpaceSemiconductors provide the knowledge & technologies that generate some 10% of global GDP.ElectronicsWW$1100B / 2009 World GDP=69800BUS$ (ppp based)Europe $150B2009 European Union GDP=14800BUS$ (ppp based)Semiconductors$226B / EquipmentMaterialsEuropeWW$25B / WW$38B / $30BEurope $3BEurope $4BSource: IMF, ESIA, WSTS, IC InsightsESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.126Seizing the economic momentum Semiconductors are a key enabling industryCommunications –Consumer - entertainment, radio, wired and wireless, TV, VCR, personal or home appliance, mobile, RF connectivity cameras, games, etc.solutions (Bluetooth, GPRS..), telecommunications, traditional telecom equipment, home networking equipmentAutomotive –powertrain, safety management, body and convenience, engine controls Industrial & entertainment... Instrument -lab, test, control and measurementsSemiconductors are for the Information Society what grain was for the agrarian, and iron & steel were for the Computer & Office -industrial society…mainframe, peripheral office equipment and personal computersShanghai Museum of Urban Development, 2004Source WSTSESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.13Seizing the political momentumApril 2010 - Industrial policy: no longer a tabooPresident Barroso (II): reinforced EU economic governanceVP Tajani: new integrated strategy, as head of Competitiveness group of Commissioners Monti: A new recalibrated EU industrial competitiveness policy Münchau: ideal conditions for new decision making - new Commission, new EP, new treaty⇒whatever term is used, there is a new proactive interest in a mixture of industrial and innovation policy in and for Europe ⇒ … and guess what…⇒This is something ESIA welcomes and has been promoting for a long time. We already have an bottom-up approach that combines industrial and innovation policiesESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.147Seizing the political momentum - 2005: Alternative scenarios based on assessment of selected competitiveness factorsGlobal Strength of R&D SpendingEuropean End-User R&D & innovation policies, Industryresearch investment targetsPre-competitive Co-operation / Global industry leadership,Partnership EffectivenessElectronics value added drivenJoint research and design centres, framework programmes, technologyGlobally Effective EU Monetary PoliciesEducational System ReinforcementStability of exchange rates relative Curricula, industry-university research, to other currenciesexchange programmes, brain retentionStrength of European Internal Target Investment Support / MarketIncentives LevelsTax havens, access to capital,End-user / consumer demand inproperty incentivesEnlarged 25 EU Internal MarketEU Legislative EnvironmentFree & Fair Trade PolicyEnvironment, safety & health,Reciprocal world free tradeEuropean Labour Policies customs & security, IP rightsEnvironment, elimination of tariffsSectoral flexibility of working hours and employment conditionsESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.15Seizing the political momentumESIA & ‘KETs’ Recommendations & ActionsMastering InnovationDevelop a European industrial innovation policy -with nano- / microelectronics at its coreR&D Market PullManufacturingEducationGive priority to the Stimulate ‘market Launch a strategic Make micro- and European-wide pull’ across Europe European industry nanoelectronics in micro- / in chosen lead plan that aims at education an objective nanoelectronics marketsrevitalising sc for filling the European R&D eligibility (Health and wellness; manufacturing criteria, R&D in talent pipelinetransport and capabilities in Europe. framework Stimulate science and mobility; security and Upgrading /converting programmes, public-technology; awareness safety; energy and of existing fabs.of the micro-/nano-private partnerships environment; Developing technology electronics innovation (EUREKA, ETPs, JTIs),communication; capabilities for devices potential; foreign talent; national infotainment) in areas where Europe research infrastructure programmeshas strengths.as invention incubatorsShaping the Future ESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.168Seizing the political momentum - ESIA & KETsS/c industry is symptomatic of Europe’s challenges:Lack of global level playing field & EU framework conditions are leading to the potential loss of attractiveness of Europe for the s/c industry. Industrial/innovation policy applicable across many sectors, potentially delivering answers to:R&D recommendations - soaring R&D costs for European R&D intensive industries)Market pull - falling European market sharesManufacturing - falling European production levelsLack of a global playing fieldESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.17Seizing the political momentum - ESIA & KETsAs markets surge, semiconductors are a test case for a revived industrial / innovation policyNew Commission, New Parliament, new Treaty Commission Key Enabling Technology initiative & High Level GroupCross sectoral & enabling, ‘Crisis’ comes from the Greeks and means ‘choice’,Post-crisis is the opportunity to make that choiceESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.189Seizing the political momentum – key enabling technologiesImportance of KETsDefining KETsDriving force of the development of Knowledge intensive (high R&D and future goods and services capital expenditure) Being at the forefront of Associated with highly-skilled competitiveness, innovation,employmentknowledge-based economy.Multi-disciplinary, cutting across many Modernisation of the industrial basetechnology areas, convergingand in the further strengthening of the Create multiplier effectsresearch baseEnabling process, good and service Creating related eco-systems of SMEs.innovation and are of systemic relevance.Who are they?Nanotechnology, Micro/ nanoelectronics, Photonics, Advanced materials, BiotechnologyESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.19Conclusions / key messagesEconomic momentum:S/c industry is looking ahead again - WSTS forecasts a 29% growth ww & a 28% growth in Europe for 2010, followed by two further growth years.Will Europe continue to lose market share & production levels? Can the negative trend be reversed?As a bellwether and enabling sector for the economy, companies are forced to find solutions everywhere – Europe has it in its hands to capture trends in Europe for this and other key enabling technologiesWe all have to move fast– the time is now!Political momentum:New Commission, new EP, new EU Treaty New industrial innovation policy (at last)KETs & HLG as test case – let’s move from words to deeds in Europe!ESIA & WSTS European Chapter - June 8th, 2010© 2010 Copyright EECA-ESIA & WSTS. All rights Reserved.2010