SEMI

Market Update

Outline

Semiconductor Industry Outlook• Semiconductor Forecast

• Equipment Forecast

• Material Forecast

Regional Highlights Europe

Japan

China

Southeast Asia (SEA)

Summary

Industry Outlook

Semiconductor Cycles

256 249226

298 300 292306

325336

351 359

Regional Equipment Markets-Fab, Packaging, Test, and Other Equipment

Totals may not add due to rounding

2014F 2015F %

$B $B Change

Europe 2.49 3.68 48%

China 4.98 5.06 2%

North America 7.15 7.33 3%

South Korea 6.94 7.98 15%

SEA 1.66 2.05 23%

Japan 3.65 4.22 16%

Taiwan 11.57 12.27 6%

Total Regions 38.44 42.59 11%

Region

Source: SEMI

Fab Equipment Spending-

Driven by Foundry and Memory

Global Silicon Wafer Diameter Trends

Source: Rose Associates 1978 to 1995; SEMI SMG 1995 to 2011; SEMI January 2014

Millio

ns

of

Sq

ua

re In

ch

es

75 mm

100 mm150 mm

125 mm

200 mm

300 mm

Includes polished and epi wafers. Excludes reclaim, non polished, and SOI.

Total Regional Materials Markets

Totals may not add due to rounding

2014F = $44.7 Billion

Source: SEMI Materials Market Data Subscription August 2014

Regional Highlights

Europe Market Summary

2015 Outlook

Installed Fab Capacity 1.8 million 200mm equiv./month

SEMI is tracking 200 front-end facilities in

Europe/MidEast Region

Packaging & Test >60 production facilities*; including focus

on wafer bumping, WLP, and 3D packaging

Semiconductor Materials ~$3.2 billion

Semiconductor Equipment Approaching $3.6 billion in 2015

Source: SEMI World Fab Forecast, WWSEMS, & MMDS; *- Yole Developpement

Europe Manufacturing

• Intel Ireland & Israel– Lexlip: upgrade and capacity expansion of Fab 24 for 14nm

– Kiryat Gat: conversion to 300mm; potential $1B+ Equipment spend in 2015

• ST Micro – Crolles 2: some 28/32nm production ramp, and start of 14nm FDSOI

• GlobalFoundries– 28nm upgrades to Fab 1 at Dresden.

• Infineon– 300mm power semiconductor investments at Villach and Dresden.

• IMEC

– 300mm fab extension

– Process modules with 450mm capability

Japan Market Summary

2015 Outlook

Installed Fab Capacity Restructuring is on-going, though…

~4.0 million 200mm equiv. wafers/month

~21% of global capacity

Packaging & Test Focus on advanced packaging

Semiconductor Materials ~$7.5 billion

Semiconductor Equipment $4.2 billion in 2015

Source: SEMI World Fab Forecast, WWSEMS, & MMDS

Japan Manufacturing

• Consolidation/fab-lite trend continues– Amkor increased ownership stake in J-Devices

– TowerJazz acquired three Panasonic fabs in Japan

– Fujitsu’s chip production JV with UMC.

• Fab activities– Flash Alliance (Toshiba/SanDisk) to further expand and upgrade

Fab 5; construction on Fab 6

– Micron-Elpida technology upgrade

– On-going SONY investments (300mm) in CMOS Image Sensors

• Japan headquartered material suppliers have >50% share of

global semiconductor market

• Equipment makers in Japan have estimated ~35% share of the

global market

China Market –Key Facts

2015 Outlook

Installed Fab Capacity ~2.5 million 200mm wafers/month

~13% of global capacity

Packaging & Test >$10 billion in revenues

Strong presence by overseas companies

SMIC/JCET announced JV for

12” wafer bumping

Semiconductor Materials ~$6.1 billion

Semiconductor Equipment $4 billion to $5 billion range

Source: SEMI World Fab Forecast, WWSEMS, & MMDS

China Manufacturing

• Overseas semiconductor companies– Samsung beginning capacity ramp of NAND fab in Xian; SK Hynix on-

going technology spending at Wuxi fab

• Domestic semiconductor companies– SMIC’s key project is the new Beijing fab; capex at >$700M

– Foundries adding 200mm capacity

• Packaging in China– Jiangsu Changjiang Electronics Technology (JCET) and SMIC

announced JV for 12” wafer bumping to strengthen China supply

chain for 12” and 28 nm technologies

• Domestic suppliers – Providing chemicals, CMP slurries, packaging substrates, bonding

wire, leadframes, and others. Equipment includes tools for wafer

bumping & TSV, test and assembly.

Southeast Asia Market –

Key Facts

2015 Outlook

Installed Fab Capacity ~1.3 million 200mm equiv. wafers/month

Packaging & Test Strong presence of subcon and

IDM facilities in the region

(including 20 assembly & test

operations in Singapore)

Semiconductor Materials ~$7.1 billion

Semiconductor Equipment ~$2.0 billion range

Source: SEMI World Fab Forecast, WWSEMS, & MMDS

Southeast Asia Manufacturers

• Foundries– Globalfoundries is converting Fab 6 to 300mm and some

expansion at Fab 7.

– UMC is expanding 40nm process capability at Fab 12i.

• Memories– The post Micron-Elpida merger integration has transformed

Singapore fabs into NAND flash-centric production site within

Micron. Expect to see 3D NAND investment in latter part of 2015.

• LED– Philips Lumileds and Osram are expanding chip and packaging

capacity.

• Packaging– Amkor acquired Toshiba Electronics Malaysia (packaging)

– UTAC to acquire Panasonic assembly plants in Southeast Asia

Summary

Overall Outlook- Mid to high single-digit revenue growth for semiconductors

for 2014 and into 2015

- Mobility, wireless, and connectivity remain the growth engines…especially for leading edge investments and advanced packaging.

Semiconductor Equipment & Materials Market- Expect a recovery in equipment spending this year and next

following two years of spending decline.

- Low single-digit growth for materials (downward pricing pressures abundant)