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    On the Silicon Road Again

      Dec 1, 2021

    VLSIinsiders’ cloudside chat —December 1, 2021

    This week Dan Hutcheson and Risto Puhakka discuss what insiders were saying in Europe and Hawaii at SEMI’s ITPC and SEMICON Europa events as well as the MOVE conference on sustainable mobility. Also, Andrea Lati reviews how and why the semiconductor forecast is changing as 2021 comes to an end and we look into 2022.

    About VLSIinsiders: Every week our analysts have a cloudside* chat to discuss current events and key issues of concern while sharing what they’ve heard over the past week from the semiconductor industry insiders.

    * cloudside chat: A fireside chat without the fire and is across the clouds of the internet

    Other VLSIinsiders


    VLSIinsiders' Cloudside Chat — December 1, 2021

    Dan Hutcheson: Welcome to this week's VLSIinsiders. This is Dan Hutcheson.

    Andrea Lati: This is Andrea Lati.

    Risto Puhakka: And this is Risto Puhakka.

    Dan Hutcheson: So, we've been doing a lot of travels lately. So, we thought we would just kind of go through and travel report. I went to ITPC in the middle of the conference in London, and then Risto was off to SEMICON Europa and just got back. So, I'm going to kick off and kind of talk about some of the things I saw. People were pretty bullish at SEMIs like ITPC. I have to really commend SEMI for the boldness of pulling off a physical conference and getting, you know, senior executives, as well as all of the executives that were brave enough to come to Hawaii. The weather was beautiful, as it almost always is, but sometimes it can be way too hot. But the markets were hot, but the weather was kind of cool, which kind of reflected, you know, kind of cooling off we've been seeing in the marketplace, but people were still really bullish about next year. If there's any concerns, it's about 2023, which is what our forecast has been pretty much predicting. At the MOVE conference, it was kind of interesting. It was an automotive conference. It was for sustainable mobility, which just means electric cars, and scooters, and whatnot. And it was kind of, apparently, from what I'd heard the previous time, there were about 4X exhibitors, 4X the size of what was there, and was a lot smaller. Instead of having an international audience, unlike ITPC, where people literally did come from all over the world to be at ITPC. In fact, ITPC import Christoph from ASML, he was supposed to give a presentation, but because he didn't use a Hawaii authorised testing facility, they made him go back. So those are kind of the kinks that go along with this crazy thing and you get vaccinated everywhere you go. But the funny thing about the MOVE conference was it was almost all people from the UK. The other funny thing was, for everyone that remembers about five years ago, when you could go up to Sandhill Road and say I have an electric scooter, and they'd say you're funded, you know, and you can have the world's best AI system or whatever, and you couldn't get funded until you said it was an electric scooter company. That was the way it looked when I walked around the show floor, there were just tons and tons of electric scooter companies doing it well and just sort of electric, you know, small scale mobility. The most interesting thing I found out was the way that Keeley, the Chinese manufacturer, and Tesla are dealing with the chip shortage. They're simply shifting over using consumer-grade components. Apparently, they've been doing it all along as a way to maintain profitability, keep the costs down because automotive components with all of their really super rigid reliability requirements. In fact, they have the most rigid reliability count requirements next to space because they don't have to work in a vacuum. But so that's how they're actually dealing with this, and able to continue shipping cars and not really being hit by the shortage. So, but that was the most, you know, interesting thing I found. And then, because I was the token chip guy, everybody was beating me up about when they could get more chips. So, the auto companies are still seeing bonds being unable to get chips. When I said to them that they were the production was way out. The problem was is that it's single items of chips like we've been saying before, you know, like the supply chain head of Volkswagen had said to me that, you know, 60 cent part cost them $60,000 in revenues. So that's the problem they face.

    Risto Puhakka: Pretty interesting leverage. Yeah. So, or negative leverage.

    Dan Hutcheson: So, anyway, Risto, how did your travels go?

    Risto Puhakka: Well, basically SEMICON Europe was on, and you know, it was basically you know, given the COVID surge in Europe, it was like a day before you know, should we go, should we not go? And then continued because there were commitments at the show of namely presenting on the packaging conference there. But you know, SEMI put together very nice, you know, trade show, it was actually pretty well attended. I was surprised, seeing, you know, people in that in the show floor. It was not super crowded, but it was a reasonably busy tradeshow. So, people, even though there were some cancellations, people happily attended and...

    Dan Hutcheson: Hey, we’re semi people, we brave the jungles of Malayasia.

    Risto Puhakka: Yeah. That's true!

    Dan Hutcheson: Worse environments, you know, we go into earthquake zones. You know!

    Risto Puhakka: That's. Yeah, they did it locally, and they did a great job. And, you know, they and all of that. But you know, they have the thing I have to say, this is the, you know, the value on those trade shows and conferences is time, one on one time with the executives having those over a cup of coffee, or beer, or wine ,or whatever it is, but having those conversations, just figuring out, comparing the notes, you know, what we see, what they see, and getting those little tidbits of insights, you know, that impacts on our data and our views of the world and it’s just invaluable and we've been missing it for a couple of years, almost. So...

    Dan Hutcheson: So, the funny thing was though, you got on a plane to the Netherlands just as it was being lock down so you went to the Netherlands to have a Zoom in the Netherlands, right?

    Risto Puhakka: Yeah, no, actually, I never went through Netherlands. I stayed in Munich, but we had, we had a great meeting on Teams, it was supposed to be face to face and that. After 2-3 hours, we were done and got everything done. And then we were like, “Oh, it would be nice to have a beer now.” But we had to move that out for whatever time, but we'll get there. So, we got that, we got the job done. But let's just say, you know, it'd be just a couple things, you know, the equipment suppliers, this equipment supply chain is extremely bullish and the projections for next year are pretty high, you know, they're much higher than our forecast is, but there are some supply chain issues because the equipment supply chain is still catching up with the surge in inventories, you know, component inventories are low. So, all those need to be replenished. So, I mean, I heard these high numbers as 50% up projections next year and, you know, our equipment forecast is in a 15% range right now. So, we're kind of looking at that number, you know, Andrea can fill it in, where what it would look like in all of that. So, those are the things, but there are also issues related to inventories in the supply chain components shortages, and all of that. So, know all those are impacting on that. But we are the mood is very, very positive for next year. Interestingly enough, there was some little blue in the material space, little cancellations, where the customers were, not cancellations, the orders just didn't materialise, and that, and they were blamed on pricing. But, of course, those expected orders were filled on other parts. So, there was no impact. But nevertheless, there are some movements in the background there. It's not big, but something to pay attention to down the line that it's not, you know, great and smooth and everything else. Things move around in the background. So, that's kind of the thing and just the final thing, I'm just happy that you, know, SEMI kept the tradeshow going and got a really nice tradeshow there, which kind of opened a little bit of the international side of the trade shows. So, that was really good to see from SEMI.

    Dan Hutcheson: We have information if there were the importance of SEMI training industry and keep it going. Yeah, physical meetings are just amazing. So yeah, so Andrea, I went to Hawaii for ITPC. You went to Hawaii. I didn't get sand in my shoes. You did.

    Andrea Lati: I had to do it for you, Dan! That’s why.

    Dan Hutcheson: All I saw was the conference rooms, and I could see the beach from afar. But, you've also spent most of your time doing, you know, scrolling through the data and trying to figure out was what you're seeing there—and also updating the forecast, for November forecast. So, what are you seeing, any big changes

    Andrea Lati: Actually, the data came in line with our expectations, especially for the equipment market and semiconductors. We're pretty much going to close the year at about 26% for ICs and at about 40% for equipment, which is arrangement we've had for a while now, actually. And again, this has been very good for both semiconductors and the semiconductor equipment. Just as a reference point that had seven consecutive quarters of increases, so too much versus now what we usually have with the models is now that this year has been just, you know, a great year all around. And again, next year is a little bit, you know, more difficult to forecast given what's happening. But again, we're still pretty positive. Right now, we're at about 15% for equipment and about 11% for semiconductors. And as Risto said, you know, we're hearing some numbers as high as 50. I don't see that happening yet. I mean, but anything is possible in this industry. But I think that the 15% seems, you know, a reasonable range, at least for the time being. And again, there is a lot of unmet demands for this year that's going to roll into 2022. And, again, the foundry and advanced logic segments are expected to be very strong next year as well, based on the announcements that we're getting from, you know, the foundries and also Intel and more lately also in the analogue space that is building you know, several times in Texas. So, you know, there is a lot of order activity out there and I believe that a lot that will turn into equipment sales next year.

    Dan Hutcheson: Yeah, okay. Well, great. Thanks for the update. Anything else guys? Okay, well, I think we're done. Thanks, everyone, for listening to the podcast. I hope you enjoyed it. And thank you, guys, and we'll see you next time.

    Risto Puhakka: Thank you, Dan.

    Andrea Lati: Thank you, Dan.