This year’s semiconductor industry gathering, Semicon 2010 is over. And it was a good show with a lot of technical content targeted at the ongoing effort to achieve ever higher density parts. The forecast for 2010 and 2011 is for the highest growth levels in a decade. Certainly, at $295 Billion in projected sales for calendar year 2010, the semiconductor industry is the largest economic activity in the world. And it is just as certainly a more significant economic activity in the US economy than the automotive industry.
Which is saying a lot.
Some of that economic activity is the obvious stuff. Jobs. Making things that are important to the industry. Like all the silicon ingot, water treatment, chip encapsulation compounds, chemical solvents, and gases that are needed. And all of those feedstocks require people in their respective industries.
There is also the capital equipment market. Companies that make machines that make chips. Machines that grow silicon ingots, machines that slice silicon into thin wafers. Polishing machines that make the surface smooth enough to create the nanometer sized features that become semiconductors. Wafer probing machines that do functional testing, dicing machines that slice the wafer into the single chips, wire bonding the bare die into lead frames to we can attach the circuits. Encapsulation, labeling, testing and packaging the final products.
The Semiconductor Industry Machinery business is estimated to be an $11B activity separate from the sale of chips. The semiconductor equipment market is still the largest target market for motion control products and mechatronics of any market I know of. At a close second place would be the electronic assembly machinery market with it’s pick and place, adhesive dispensers and inspection machinery.
Interestingly, the semiconductor industry also provides trickle down technology. Hard disk drive spindle motors require the exact same 3 phase brushless drive and control as industrial servo motors. The difference is that the spindle motor is manufactured in quantities of tens of millions of units. This allows disk drive manufacturers to explore the ultimate boundaries of cost reducing the technology and introducing new techniques to improve performance. Much of this technology has migrated to the motion control industry in the way of integrated motor control chips.
The semiconductor industry is now made up of two major markets. Chips and Solar Cells. The solar cell market is counted separately and does not overlap with traditional semiconductor business. Many of the companies that make semiconductor machinery have extended their capabilities to the solar industry as a way of diversifying into new markets and making up the lost ground that was experienced in the machinery business.
While Solar is still an emerging industry to some extent, it will continue to drive large segments of the economy. Solar photovoltaics and solar hot water drive a lot of jobs in manufacturing and installation of systems.
What we need in the public policy sector is better understanding of the business needs that these industries require. Generating enough electricity for these industries to thrive is one requirement. And most states in the US have failed to bring any new capacity on line over the last 30 years. States that recognize these needs and are willing to meet them are going to be the States that prosper with low unemployment and thriving economies. And that’s where we all want to be.