excerpt taken from "Foundry Challenges in 2018" - December 27th, 2017 - By: Mark LaPedus

Full article here: https://semiengineering.com/foundry-challenges-in-2018/

.......

Moore’s Law is still viable, but it’s evolving. At each node, process cost and complexity are skyrocketing, so now the cadence for a fully scaled node has extended from 18 months to 2.5 years or longer. In addition, fewer foundry customers can afford to move to advanced nodes. In total, the average IC design cost for a 16nm/14nm chip is about $80 million, compared to $30 million for a 28nm planar device, according to Gartner. In comparison, it will cost $271 million to design a 7nm chip, according to the firm.

As before, though, the mobile phone represents the biggest market for chips. Cellphone IC sales, which account for about 25% of the IC market’s total revenues, are expected to reach $97.3 billion in 2018, up 8% from 2017, according to IC Insights. PC-related chips, the second largest market for ICs, are projected to grow 5% to $72.6 billion in 2018, the firm said.

Other markets are growing faster. For example, automotive IC sales are forecast to increase 16% in 2018 to $32.4 billion; meanwhile, IoT-related IC sales will rise 16% to about $16.8 billion in 2018, according to the firm.

“More and more customers are redefining their product portfolios to accommodate the IoT and/or automotive markets,” said Walter Ng, vice president of U.S. sales at UMC. “For the automotive segment, progress in infotainment, data security and advanced operational features are increasing the demand for MCUs integrated with embedded nonvolatile memory, RF components and MEMS sensors.

“In the IoT space, we see many different types of devices, but a predominant focus seems to be ICs that integrate MCUs with multi-protocol communications, including Wi-Fi, Bluetooth and sometimes even Zigbee. We are also seeing significant interest in home automation,” Ng said.

With those growth drivers in mind, foundry vendors must develop more and different processes to meet the growing requirements from customers. “The concept that one technology platform can service everything optimally from high-end IBM z System (mainframes) all the way to battery-powered IoT devices is unrealistic,” said Gary Patton, CTO at GlobalFoundries.

To meet these demands, foundries must increase their capital spending and R&D expenditures each year. But only a few foundries have the resources to develop a multitude of technologies. The smaller players are viable, but they must focus on a few select markets.

Besides the R&D dollar equation, here are some of the other challenges for foundries:

• Economic and political issues can impact the electronics sector.
• Lackluster demand and inventory issues tend to crop up in the first quarter, which could linger in subsequent quarters.
• There is an ongoing wave of merger and acquisition activity in the IC business. The consolidation translates into a dwindling customer base for foundry vendors.
• Silicon wafer availability is a concern. After years of oversupply, silicon wafer vendors see renewed demand. But vendors have not invested in new plants, and many have raised their prices.
• The packaging supply chain is another concern for foundries. Rising demand for chips is causing shortages of select manufacturing capacity, various package types and even some equipment.