Six years ago, the outlook for U.S. semiconductor manufacturing was dim and dimmer. At the time, Intel was building their Dalian fab, AMD was ramping up their Dresden facilities, TI was transitioning to a fab-lite model, and the U.S.-based fabless giants were growing their business through foundries based in Asia. It was common for people to see semiconductors like other manufactured goods, inevitably moving to Asia, just another example of merciless globalization.
Today, the outlook for U.S. semiconductor manufacturing couldn’t be more promising.
The United States has rebounded to become once again one of the largest and fastest growing regions of the world for semiconductor manufacturing. In 2007, the percentage of equipment spending for chip manufacturing in the U.S. had dropped to 15 percent, an all-time low. Today, the U.S. market represents over 20 percent of world equipment spending with promising expectations for continued growth. U.S. fabs and their supply chains are now seen as leading a high-tech manufacturing renaissance, and no less than the President of the United States has taken notice. Earlier this month, President Barack Obama visited Applied Materials in Austin, saying, “We’ve got to do everything we can to help the kind of high-tech manufacturing that you’re doing right here at Applied.”
Leading this rebound are chip giants Intel and Globalfoundries, but robust equipment and material spending will also occur at Micron, TI, Samsung, and Maxim. This year, Intel will spend up to $3.5 billion, primarily at its Fab 42 in Arizona and Dx1 Fab in Oregon; and Globalfoundries will invest $1.2-$1.8 billion on equipment at its new fab in upstate New York. Samsung will spend $1.8-$2.5 billion to increase capacity at its Austin facility by 60 percent. In addition, Micron, CNSE (NanofabX for G450C), IBM, and Maxim may collectively spend up to $1.5 billion in equipment this year. Over $8 billion will be spent in equipment in the U.S. in 2013, nearly as much as South Korea and well over double the spending in China, Europe or Japan. Spending will further increase in 2014.
In materials, we project that spending will increase 3 percent in North America to $4.85 billion. This number is overwhelmingly dominated by front-end materials, as back-end operations are mostly located in Asia. In photomask materials, for example, the U.S. represents approximately 20 percent of the world’s demand.
The renaissance in semiconductor manufacturing is good for the industry, SEMI members and the U.S. economy. According to the latest Bureau of Labor Statistics data, the semiconductor industry has added jobs three times faster than the rest of the U.S. economy in 2011. The semiconductor industry’s manufacturing workforce grew by 3.7 percent over the previous year, while jobs throughout the broader U.S. economy increased by 1.2 percent over the same time period. And semiconductor industry jobs have an enormous ripple effect on the broader U.S. economy. As reported by the SIA, the semiconductor industry’s employment multiplier figure (number of jobs beyond direct industry employment) is higher than that of the construction industry (1.90), the communications industry (2.52), and the automobile industry (4.64), among many others.
Karen, while the future may look bright for the few massive captive fabs in the US, the rest of the semiconductor industry is heading into a dark future. The engine for innovation in semiconductors has been the fabless sector, and its growth was enabled through venture capital. The concentration of semiconductor VC into late-stage and mezzanines has left the cupboard increasingly bare in the early-to-midstage sector. We are now watching the big public companies snap up what's left in the private sector - and at fire sale prices.
More H1-Bs may help staff new fabs at Intel, but all the H1-Bs in the world won't balance the lack of early-to-midstage investment capital. What happens to product-level innovation in the semiconductor industry when there aren't any startups?
Good point on the increasing difficulty of raising investment capital for early-stage companies. To address this very real problem, SEMI has organized the Silicon Innovation Forum to bring together leading corporate investors (Intel, Applied, Samsung, Micron, Dow) with VCs and other investors at SEMICON West on July 9. About 25 early-stage companies will directly participate. More information at http://www.semiconwest.org/sif
Join our online Radio Show on Friday 11th July starting at 2:00pm Eastern, when EETimes editor of all things fun and interesting, Max Maxfield, and embedded systems expert, Jack Ganssle, will debate as to just what is, and is not, and embedded system.