Scanning products and trends at this year's CES show to get a sense of where the industry's going, Barclays' CJ Muse thinks the emergence of tablets and smartphones not only helps NAND demand overcome DRAM softness, it could signal "a paradigm shift" in the relationship of semiconductor sales and worldwide GDP. And there's a Beta vs. VHS battle brewing in LCDs.
Moore's Law is alive and well. More people are using and embracing tablets, smartphones, and smart TVs, which change consumers' relationship and interaction with the PC. On the devicemaker side this means greater functionality, smaller formfactors, and reduced power consumption -- all of which mean more high-end silicon. As such devices continue to penetrate into emerging markets, "we could be seeing a paradigm shift in terms of semiconductors contribution to worldwide GDP," he writes. (His supplier picks, with most exposure to node-shrinks and new wafer capacity: ASML, LRCX, VSEA, AMAT.)
Memory split, but overall strong. Tablets continue to cannibalize netbooks and lower-end notebooks, but surging NAND consumption (likely doubling to 128GB in the next-gen iPad) is only partially offset by decreasing DRAM consumption, so look for higher demand for more memory wafer starts, Muse writes. And this doesn't even factor in the potential for solid-state devices. (His picks: Memory makers, and suppliers with most exposure to them: LRCX, VSEA, TER.)
Displays: A Beta-vs-VHS battle brewing? No big new splashes in displays at this year's CES, it's all "evolutionary" vs. "revolutionary," Muse says. 3D-TV continues to gain steam, but with weaker forecasts than before (3.5M units in 2010 vs. 5M+, by his count), and "slightly less than 20M units" in 2011.
And there's a "Beta vs. VHS battle" brewing in this space. LG Display wants to move from active shutter glasses to a passive technology aided by its fill-type patterned retarder (FPR) display, which lowers passive costs by up to 30% and enables use of lower-cost glasses ($1-$2 vs. $100+). Sony and Samsung are sticking (for now) with the active technology. And Toshiba is working on a third option (autostereoscopic) that is glasses-free. With more larger-size displays incorporating 3D technology, this is a battle to watch, Muse points out.
Muse also was surprised at a lack of OLED TVs at CES; LG had a 31" model (ready in the US later this year) and Sony had a 24.5" one, while Samsung pulled its offering from the floor. It's clear, Muse writes, that OLED's high production cost is limiting its penetration into larger panel sizes, and mass production is (for now) only viable for small-size displays (Gen 4 and 5.5). Samsung hopes to gain first-mover advantage this year with a massive AMOLED capex ramp, he notes.
For Internet-connected TVs, it's still unclear where the functionality will reside (the TV or set-top box), and also how TV panel/set makers will differentiate themselves.