China Market Updates Semiconductor, FPD, and PV

Mark Ding 丁辉文Mark Ding 丁辉文President, SEMI ChinaVi P id t SEMIVice President, SEMIJuly 19, 2008

CASPA/GSA July 19 Symposium

2008-8-1

China Market Updates

• Semiconductor: Next wave is coming• FPD: confused market• FPD: confused market• Photovoltaic: It is Green but very hot• Conclusion

2008-8-12

Semiconductor: Next wave is coming

2008-8-13

The Food ChainThe Food Chain …

Estimate2007

Forecast2009

15%

SemiconductorsSemiconductors

Electronic End EquipmentElectronic End Equipment $1,817B

$

$1,580B

$288B3%

X 6+

SemiconductorEquipment

SemiconductorsSemiconductors

$42B

$256B

$46B

$288B

12%X 3+

Materials

Equipment

$42B

$42B

$48B

$46B

17%X 1

2008-8-14

Source: SIA, SEMI and Henderson Ventures June 2007

Semiconductor Cycles

256268283

308

248$

$300

$350

75%

100%

ue U

S $B

raph

)

144132137126150

204

139141166

228248

213

$150

$200

$250

25%

50%

ctor

Rev

enu

grap

h)

wth

% (l

ine

gr

33 4549 51 55 60

77102

132 126

$50

$100

$150

-25%

0%

Sem

icon

duc

(bar

Ann

ual G

row

$0

$

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

F20

09 F

2010

F

-50%

Glo

bal A

2008-8-15

Semiconductor Revenue Annual Growth

Source: SIA/WSTS historical year end reports, WSTS May 2008 Forecast

2008 Semiconductor Revenue Forecasts

4.0%

3.4%

iSuppli (Apr 08)

Gartner (Mar 08)

4.9%

4.7%

4.3%

Henderson Ventures (Feb 08)

WSTS (May 08)

SIA (Jun 08)

9.0%

6.0%

4.9%

IC Insights (Jan 08)

VLSI Research (Mar 08)

Henderson Ventures (Feb 08)

10.0%

12.0%

0% 4% 8% 12% 16%

Future Horizons (Dec 07)

Semico Research (Mar 08)

2008-8-16

Source: SEMI

0% 4% 8% 12% 16%

Unit Trends-On-going Demand for Devices

Semiconductor and Silicon Unit Shipments

10000.00

1000.00

100.00

9% to 10% CAGR

10.00

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008-8-17

Source: SEMI, SIA/WSTS

Semiconductor Units (B) Silicon Shipments (MSI)

Collaboration or Consolidation

2008-8-18

Strong Demand in ChinaStrong Demand in ChinaSince 2005, China is the biggest IC

k tWorldwide IC Market Size by Regional Breakdown300.0

350.0

ns)

China 628%增长速度 (00-07)

market.

200.0

250.0

( USD Billio China 628%S. Korea 209%TW Reg. 139%SE Asia 111%

50.0

100.0

150.0

C Market Size SE Asia 111%

Japan 27%Europe 18%US 17%

0.0

IC

Rest of Asia-Pacific 33.0 16.2 16.5 17.0 32.2 42.0 44.2 36.5 50.0 49.0 46.0

Japan 38.0 26.5 26.0 30.0 35.0 33.0 35.7 36.6 41.0 40.5 42.0

Europe 37.0 25.8 25.5 27.0 33.0 33.2 33.6 34.0 39.0 38.0 39.0

2000 2001 2002 2003 2004 2005 2006(E) 2007(F) 2008(F) 2009(F) 2010(F)

2008-8-19

China (Mainland) North America Europe Japan Rest of Asia-Pacific

North America 58.0 32.0 31.0 32.0 36.0 37.2 41.2 43.5 48.0 47.0 47.8

China (Mainland) 11.0 17.0 22.0 34.4 42.9 48.0 56.5 75.3 90.5 100.0 124.0

Source: March 2007 WSTS, IC Insight, CCID, SEMI, iSuppli, Gartner

China Wafer Fab Equipment MarketChina Wafer Fab Equipment Market – New and Used Tools

3000

300 mm 2nd tools300 mm 2nd tools

2000

2500300 mm 2nd tools300 mm 2nd tools

1000

1500

0

500

2008-8-110 Source: SEMI Industry Research and Statistics, Oct. 2007

2000 2001 2002 2003 2004 2005 2006 2007(F) 2008(F) 2009(F) 2010(F)

New wafer process equipment Total wafer proces equipment

It Might Also Happen4000

3500

2009 factors:Hynix face 3: $2.5BS h $2B

It Might Also Happen

2500

3000

3500 Suzhou: $2BSMIC?

2010 factors:

1500

2000

Intel face 2: $3BSuzhou: $3BTaiwan: $2BH h ?

1000

1500 Huahong ?

0

500

2000 2001 2002 2003 2004 2005 2006 2007(F) 2008(F) 2009(F) 2010(F)

2008-8-111 Source: SEMI Industry Research and Statistics, Oct. 2007

New wafer process equipment Total wafer proces equipment

T t l R i l M t i l M k tTotal Regional Materials Markets

2007E 2008F %$B $B Change

China 3.24 4.10 27%

RegionChina8%

Europe9%

Southeast Asia16%

Europe 3.65 3.94 8%

Japan 9.25 10.05 9%Taiwan

Korea 6.05 6.56 8%

Americas 5.63 6.07 8%

Taiwan 7 68 8 64 13%

Japan22%

18%

Taiwan 7.68 8.64 13%

Southeast Asia 6.71 7.52 12%

Total Regions 42.21 46.88 11%2007=$42 2 Billion

Korea14%

Americas13%

2008-8-112

Totals may not add due to rounding

2007=$42.2 Billion

Source: SEMI Materials Market Data Subscription November 2007

Materials 2008 Forecast By SegmentMaterials 2008 Forecast By Segment

Fab Packaging

$40

$50

Fab Packaging

$42.12

$45.66$48.56 $51.28

$30

$40

Bill

ions $28.81 $30.94

$37.25

$10

$20

US$

$0

Packaging 11.95 12.77 15.54 16.92 18.44 19.47 20.60

2004 2005 2006 2007 2008 F 2009 F 2010F

2008-8-113

g gFab 16.86 18.17 21.70 25.20 27.22 29.09 30.69

Totals may not add due to rounding.

Source: SEMI Materials Market Data Subscription May 2008, Global Semiconductor Packaging Materials Outlook-2007/2008 Edition

R i l F b M t i l M k t2007E 2008F %Region

Regional Fab Materials Markets

$B $B Change

China 1.27 1.71 35%

RegionChina

5% Europe12%

SoutheastAsia7%

Europe 3.01 3.27 9%

Japan 6.14 6.79 11%

Taiwan16%

Korea 4.07 4.49 10%

North America 5.05 5.47 8%Japan24%North

AmericaTaiwan 4.05 4.60 14%

Southeast Asia 1.71 2.09 22%Korea16%

America20%

2008-8-114

Total Regions 25.30 28.42 12%2007E = $25.3 BillionTotals may not add due to rounding

Source: SEMI Materials Market Data Subscription November 2007

Gl b l Sili W f Di t T dGlobal Silicon Wafer Diameter Trends

6 000

5,000

6,000

nche

s

300 mm

3,000

4,000

of S

quar

e In

100 mm150 mm

125 mm

200 mm

1,000

2,000

Mill

ions

o

75 mm125 mm

0

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

F20

08 F

2009

F20

10 F

2008-8-115 Source: Rose Associates 1978 to 1995; SEMI SMG 1995 to 2006; SEMI SMG consensus forecast 2007 to 2010

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

China Silicon Wafer Market ReviewChina Silicon Wafer Market Review

1400

)

Silicon Wafer Market in China (2001-2010)

CAGR(2005-2010)

800

1000

1200

es (USD Million) CAGR(2005 2010)

300mm Wafer Sales 64.74%200mm Wafer Sales 24.87%150mm Wafer Sales 17.59%

400

600

800

00 mm wafer sale

Totals 35.10%

0

200

2001 2002 2003 2004 2005 2006(E) 2007(F) 2008(F) 2009(F) 2010(F)

150-30

2008-8-116

300mm Wafer Sales 200mm Wafer Sales 150mm Wafer Sales Sub Totals

Source: SEMI Industry Research and Statistics, Oct. 2007

Regional Semiconductor Packaging M t i l M k tMaterials Markets

2007E 2008F %RegionChina$B $B Change

China 1.98 2.39 21%

Europe 0.64 0.67 5%

RegionSoutheast

Asia29%

Europe4%

China12%

Europe 0.64 0.67 5%

Japan 3.11 3.25 5%

Korea 1.97 2.07 5%

Japan18%

Americas 0.58 0.60 3%

Taiwan 3.64 4.03 11%Taiwan22% Americas

Korea12%

2007 Estimate

Southeast Asia 5.00 5.43 9%

Total Regions 16.92 18.44 9%

Americas3%

2008-8-117

= $16.9 Billion Totals may not add due to rounding

Source: SEMI Materials Market Data Subscription October 2007, Global Semiconductor Packaging Materials Outlook-2007/2008 Edition

Future of Semiconductor Industry

• For IC Manufacturing: – ASP Profit Cut Cost

• For Equipment:• For Equipment:– R&D Complexity Higher Cost

• PV industry competes in human resources and capital f difunding

• Positive factors– China government will give more support to semiconductor g g pp

industry– New leader in Taiwan– Japan-China relationship is warming up

2008-8-118

– China is a stable country

Domestic Fab Equipment Supplier ProfileDomestic Fab Equipment Supplier Profile-- Differentiation between Two Types of Supplier

Differentiation Traditional Supplier New Supplier

Company Size ~1000 people ~200 people

Talent Master & PhD=Master /High labor costg

Capital & Revenue Self-Sufficiency Funding/VC/LoanTarget Market Mainland-China Global Market

Technology 100-200mm/>=0.25um200-300mm/

Domestic Fab Equipment SuppliersDomestic Fab Equipment Suppliers Overview

Products Segment Company

Exposure & Write Equipment SMEE CECT 45 CECT 48

Photoresist Processing Equipment SevenStar SIAYUAN

Etch Equipment AMEC NMC Sevenstar CETC 48Etch Equipment AMEC NMC Sevenstar CETC 48

Surface Conditioning Equipment SevenStar CETC 45 SIAYUAN

Thermal Process Equipment SevenStar CETC 48

Ion Implant Equipment ZKX CETC 48

Thin Film Deposition Equipment AMEC NMC Hiway SKY

(CVD/Sputter/Electroplating/electro deposition)

Inspection & Measurement Equipment 2 Start-up

CMP EquipmentCMP Equipment CETC 48 CETC 45 ACM

Other Wafer Processing (OWP)

Wafer Manufacturing LZR XAUT JYT JingYi

2008-8-120 Source: “China Domestic Fab Equipment Suppliers” 2008 June, SEMI

China Leading Domestic Supplers g ppSales Break Down

2005 2006 2007 2008(E)

2008-8-121 Source: “China Domestic Fab Equipment Suppliers” 2008 June, SEMI

Semiconductor Equipment Growth Ratio 21% 38% 32% 1%

Solar Equipment Growth Ratio 9% 52% 75% 57%

Total Growth Ratio 16% 42% 40% 50%

FPD f d k tFPD: confused market

2008-8-122

Good Year for China FPD

BOE (G5)

Nanjing Xinhuari (G1) Tianma (G4.5)IVO (G5)IVO (G5)SVA-NEC (G5)SVA (G6) (Planning)

BOE Chengdu (G4 5)BOE Chengdu (G4.5)

Truly (G2.5)Shenzhen Innolux (G5)

2008-8-123

( )

Photovoltaic: It is Green but very hot

2008-8-124

China VS. Worldwide Solar Cell Production

2004 2005 2006 2007

2008-8-125

CN Production (MW) 53 145 420 1050

CN of WW Production (MW) 5% 9% 20% 26%

Source: SEMI, Solarbuzz

10 Companies IPO in two years

Company Stock Market Raise Money (M$)Suntech NY 400

YinLi NY 390YinLi NY 390Trina NY 98

Renesolar LD 50China Sunergy Nasdaq 93.5

Solarfun Nasdaq 150CSI N d 110CSI Nasdaq 110LDK NY 400

Jetion LD 60

2008-8-126

Jing'ao Nasdaq 225

China Solar Grade Silicon Demand & Supply

2008-8-127 Source: SEMI, Company Report, Solarbuzz

Linzhou Renesola JV 210T

Xining Asia Silicon 200T

Xuzhou Zhong

Luoyang China Silicon 900T

Shanghai Lengguang 45T

Yangzhou Shunda 150T

gNeng(GCL) 1500T

E`mei 350T

Leshan Xinguang 800TLeshan Yongxiang 250T

Wuxi Zhongcai 280T

Shanghai Lengguang 45T

Leshan Dongqi 50T

Chongqing Daco group 400T Xinyu LDK Solar 100T

Wuxi Zhongcai 280T

2008-8-128

Chongqing Daco group 400T

Yichang Nanbo(CSG) 100T

y

Source: SEMI

China IC Grade VS. Solar Grade Silicon Demand

2004 2005 2006(E) 2007(E) 2008(F) 2009(F) 2010(F)

2008-8-129

2004 2005 2006(E) 2007(E) 2008(F) 2009(F) 2010(F)

IC Grade Demand Growth Ratio 103% 34% 45% 74% 31% 18% 15%

Solar Grade Silicon Demand Growth Ratio 723% 251% 765% 192% 102% 10% -52%

Source: SEMI, Company Report

P l ili M k t R T dPolysilicon Market Revenue Trends$3,000 70%

$2,50050%

60%

ne)

$1,500

$2,000

nues

($M

)

20%

30%

40%

e G

row

th (R

ed L

i

$1,000

Rev

en

10%

0%

10%

Ann

ual R

even

ue

$0

$500

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007-30%

-20%

-10% A

2008-8-130

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007Revenues includes captive and merchant markets; solar and semiconductor applications.

Source: SEMI Silicon Manufacturers Group January 2008

Polysilicon CapacityE i ti S li N E t t

250,000

ar)

Existing Suppliers New Entrants

150,000

200,000

ric

tons

/yea

50,000

100,000

paci

ty (m

et

0

,

2005 2006 2007 2008* 2009* 2010* 2011*

Cap

2008-8-131Source: SEMI March 2008

* Announced capacity

Monocrystalline Consensus RoadmapMonocrystalline Consensus Roadmap

2008-8-13232

Source: LINX VORTEX CONSULTING- Advanced Chemicals For Photovoltaic Cells and Modules

Consideration for Sustainable Business

• Short term strategy– Quick return on investment in Polysilicon and

other material– Time to market is money

• Long term thinking– What if Polysilicon price reduces to $60, 40, and

25?25?– What if thin film mass production with efficiency

of 18%?

2008-8-133

of 18%?

Economies of ScaleEconomies of ScaleEconomies of scale in monolithic silicon cell manufacture

20 60 MW l t• 20 – 60 MW plants:– Limited automation, and batch based operations– High labor content with proportionally lower CAPEX– Optimized in low labor cost regions (China, Asia Pacific etc.)

• 300 – 400 MW plants:– Increased levels of automation– Multiple, parallel, in-line process lines– CAPEX heavy– Benefits of operations management, line balancing and strong supplier infrastructure

• 500 – 1,000 MW plants:500 ,000 p a ts– Close to 100% automation– Multiple, parallel, in-line process lines– CAPEX dominated– Sophisticated of operations management line balancing and strong supplier infrastructure

2008-8-134

– Sophisticated of operations management, line balancing and strong supplier infrastructure critical to operations

Source: LINX VORTEX CONSULTING- Advanced Chemicals For Photovoltaic Cells and Modules

Conclusion

Global Semiconductor is in single digit growth

China remains to be high potential market

Rapid growth of PV industry challenges semiconductor industry on funding and HRsemiconductor industry on funding and HR

Another wave of opportunity comes for

2008-8-135

pp yoverseas returned talent

Thank You!Thank You!

2008-8-136