The unexpected consequences of the pandemic are showing up in forecasts for production equipment and microprocessors...
Global pandemics are hell on public health, but this one has so far continued to fuel demand for the chips and related manufacturing gear that make possible our virtual connections.
A pair of IC technology forecasts this week underscore the unforeseen kick in the pants provided the insidious plague: one predicting a substantial increase in fab equipment spending through 2021; the other recording a bump in global microprocessor sales after a year of declines.
Most surprising is the upbeat forecast from SEMI, the IC gear tracker, which projects global fab equipment will increase a healthy 8 percent this year, followed by a projected 13 percent jump in 2021. It should be noted the rosy forecast comes after a 9 percent decline in fab equipment sales during the down-year of 2019.
Still, virtually no one foresaw a virus unleashed by horseshoe bats in China transforming the chip technology landscape.
SEMI admitted as much: “The bullish trend for overall fab equipment investments comes as the semiconductor industry recovers from a 9 percent decline in fab spending in 2019 and navigates a roller-coaster 2020 with actual and projected spending drops in the first and third quarters mixed with second- and fourth-quarter increases.”
The numbers can be parsed, the crystal ball can be consulted, but the unknown unknowns have a way of shaping the New Reality.
The projected $2.5 billion increase in fab spending through 2021, totaling an estimated $23.5 billion, reflects increased production of analog devices as well as spending on image sensor gear, SEMI reported this week.
The industry group also projects spending on MPU production will decline by 18 percent this year, then jump 9 percent next year to $6 billion.
That aligns with a forecast released by IC Insights that projects a modest increase in microprocessor sales this year — 1.4 percent — to more than $79 billion. Again, that increase comes after a 2019 decline of 2.4 percent, the first such MPU market shortfall in a decade.
Next year again looks strong for microprocessor sales: IC Insights reckons sales will jump a hefty 8.8 percent in 2021, driven by embedded applications and 5G-related deployments.
Again, the coronavirus is driving demand: “Sales of central processing units and traditional PCs, tablets, servers, supercomputers and all other types of computers are benefiting from increased Internet usage during the global Covid-19 virus health crisis,” the marker tracker reported.
About half of microprocessor sales are derived from x86 designs from market leader Intel and persistent challenger AMD. Those processors end up in servers, PCs and, increasingly, high-end computers used to train machine learning models.
The emerging MPU market is being driven by 5G wireless, where mobile phone application processors based on RISC cores and technology licenses from chip IP vendor Arm Ltd. are forecast to account for a healthy 26 percent of total microprocessor revenues this year.
Further, IC Insights projects that smartphone sales will jump in the fourth quarter of this year as demand for 5G handsets takes off.
As the pandemic persists, an increasing virtual human presence via chip technology seems a good bet.