The first, and possibly of more interest to Fudzilla readers than the others, is that when it comes to semiconductors he really knows his stuff. We've known Malcolm Penn for many years now and his predictions about the future of the chip industry are pretty well spot on. The second is that he was the drummer in the 60s group Georgie Fame and the Blue Flames. Yeah yeah. And the third is he's a genuinely top notch guy and no we don't do his PR for him.
He unveiled his latest predictions at a conference in London earlier this week. Penn said that the chip biz has over 30 years of historic growth and the outlook is still good. While 2018 growth amounted to 9.8 percent, he reckons that, long term, the industry will continue to enjoy 10 percent growth, but maybe not this year.
He said there are two basic rules about fab capacity. The first is that it takes a year to build a new shell so the next four quarters' capacity is “cast in stone”. Because many more masks are need at each successive node, process lead times affect the volume ramp.
And there's no spare or redundant capacity any more, while capacity itself is demand and process driven. He also believes that the blockchain bubble has burst and we're still waiting for the next AI “killer” project.
He notes that advance capacity is now in the hands of a very few players in the market. Semiconductor sales and wafer fab capacity are now “joined at the hip” which isn't surprising given industry consolidation.
Memory semiconductors were performing badly and when the memory recovery came it was “deliberate and engineered”, said Penn. The cyclical nature of the chip industry still rules, with fab capacities still “tightly stage managed”. Average selling prices are up and growing overall.
Last year he said the semi market would be ishow double digit growth, barring an economic collapse and the recovery is still underway.
However, for the future, the smartphone era has run its course, and there's more uncertainty because of the economic outlook. He believes the market will show low single digit growth in 2019.
Moore's Law may be dead for microprocessors but that's not true for DRAM with this sector producing ever denser ICs, the use of quad patterning, and shrinking of the capacitor. But, Penn thinks DRAM wafers now undergo about 14 immersion mask steps, making wafer production costs higher. And Moore's Law is not dead in 3D NAND flash either.
The US government, said Penn, wants to keep logic foundries in the USA but being stuck at 14 nanometers while the Russians can access seven nanometers is a big problem. However, although Intel does supply ICs for military purposes, it's never applied to be in the Department of Defense trusted foundry programme. And TSMC being in Taiwan is not the best bet for the DoD, presumably given its location and renewed sabre rattling by mainland China.
TSMC, he said has caught up with and passed Intel with a R&D budget of only $2.65 billion and while the seven nanometer process is in full production for the Apple A12 and Qualcomm's Snapdragon 855, the Taiwanese outfit doesn't have enough EUV machines yet to handle these huge volumes of wafers.