Semiconductor equipment market is booming
Latest update time：2022-04-04
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Recently, SEMI estimated that the total global front-end wafer fab equipment spending this year will increase by 18% over last year, breaking the $100 billion mark for the first time, reaching $107 billion, a record high.
Sanjay Malhotra, vice president of marketing and industry research at SEMI, analyzed that steady growth is expected to continue in 2023, global wafer fab equipment spending will remain at a high level of more than US$100 billion, and the growth curve of global semiconductor production capacity will also rise steadily this year and in 2023.
From the perspective of the global market, Taiwan is the locomotive of wafer fab equipment spending this year, with the total amount increasing by 56% over last year to US$35 billion; South Korea ranks second with a 9% increase and a total of US$26 billion; mainland China's spending is estimated to be US$17.5 billion, down 30% from last year's peak.
Europe and the Middle East are expected to set a new record this year with spending reaching $9.6 billion. SEMI said that although the total amount is less than the top three regions, the annual growth rate is 248%.
SEMI expects equipment investment in Taiwan, South Korea and Southeast Asia to hit new highs this year.
From the perspective of wafer fab capacity, SEMI predicts that the global wafer equipment industry capacity will increase year by year, increasing by 7% in 2021, and is expected to continue to grow by 8% this year, and there will be a 6% increase in 2023. This year, the capacity increase of 150 wafer fabs and production lines accounts for more than 83% of all equipment expenditures, but as the other 122 known wafer fabs and production lines continue to increase their capacity, it is estimated that the relevant proportion will drop to 81% next year.
Hot international market
Since 2020, the global chip market has been in short supply. Affected by the epidemic, the supply chain and the explosion of various demands such as consumer electronics and new energy, as well as the increase in "silicon content", there has been no significant relief so far. According to Future Electronics data, as of the first quarter of 2022, the delivery time of semiconductor products such as analog chips, MCUs, and power devices generally lasts for more than half a year (26 weeks), and some products last as long as 52 weeks, continuing the trend of extended delivery in 2021.
In this context, global wafer fabs continue to expand production, and the demand for various semiconductor equipment has increased significantly. The shortage of chips is also spreading to the upstream semiconductor equipment and materials fields. According to statistics from The Elec, the delivery time of mainstream international semiconductor equipment manufacturers in 2021 has reached more than one year, and the delivery time of some equipment is as long as two years, which is significantly longer than the level of about 4-6 months in 2019. According to the industry chain survey of institutions, it is learned that the delivery time of equipment is still continuing to extend recently.
In response to this situation, ASML CEO Wernick said that this year's semiconductor equipment shipments will be more than last year, and next year's shipments will be more than this year. However, it is not enough to just look at the demand curve. We do need to significantly increase production capacity by more than 50%, and expansion takes time. It is expected that there will be shortages next year and the year after.
Intel CEO Kisinger said that equipment shortages posed a challenge to the factory expansion plan, and he had discussed directly with ASML CEO Wernicke and sent his own manufacturing experts to ASML to speed up production.
Judging from the semiconductor wafer fab expansion plan, most of them will start mass production from the second half of 2023. ASML said it is evaluating the expansion plan with suppliers. Whether major semiconductor factories can obtain production equipment will be the key to getting ahead of other peers and mass production as scheduled.
In this wave of shortages, Japan, as the world's second largest semiconductor equipment supply market, has broken sales records again. According to statistics from the Semiconductor Equipment Association of Japan (SEAJ), in January 2022, Japan's semiconductor equipment sales (3-month moving average) soared by nearly 70% (69.4%) from the same month last year to 306.321 billion yen, showing growth for the 13th consecutive month, and the increase has reached double digits (more than 10%) for the 11th consecutive month. The monthly sales exceeded 305.4 billion yen in May 2021, setting a new record since 2005 when data was available for comparison.
Tokyo Electron announced on February 10 that after evaluating its clients' latest investment and performance trends, it will revise its consolidated revenue target for 2022 (April 2021-March 2022) from the original estimate of 1.9 trillion yen to 1.95 trillion yen (a year-on-year increase of 39.4%), and annual revenue will set a new record high; the consolidated operating profit target will be revised up from 551 billion yen to 570 billion yen (a year-on-year increase of 77.7%).
Advantest announced that the demand for chips and related markets is promising both in the short and medium term, so it revised its order target for 2022 (April 2021-March 2022) from the original estimate of 565 billion yen to 650 billion yen, and its consolidated revenue target from 400 billion yen to 410 billion yen.
Screen announced that due to the unexpected willingness of semiconductor manufacturers to invest in equipment and record-breaking orders for semiconductor equipment, the consolidated revenue target for 2022 (April 2021-March 2022) has been revised up from the original estimate of 391.5 billion yen to 409 billion yen. Screen President Hiroe Toshiaki said at the financial report briefing held on October 27 last year that based on recent trends, the demand for semiconductors is not expected to decline by 2023.
SEAJ said that after 2022, investment is expected to increase further, centered on wafer foundries, so the sales of semiconductor equipment in Japan in 2022 will be revised up from the previous estimate of 3.4295 trillion yen to 3.55 trillion yen (an increase of 5.8% year-on-year), and in 2023, it will also be revised up from 3.5975 trillion yen to 3.7 trillion yen (an increase of 4.2% year-on-year). The compound annual growth rate (CAGR) for the period 2021-2023 is estimated to be 15.8%.
China's market has great potential
Mainland China has a strong consumption capacity for semiconductor equipment, so major semiconductor equipment manufacturers are keeping a close eye on this piece of cake. According to statistics, the total production capacity of domestic 12-inch wafer fabs in 2021 is about 1.15 million pieces/month. The expansion of domestic wafer fabs in 2022-2023 is still expected to be in a rapid climbing channel. In 2022, the annual new production capacity of key 12-inch wafer fab projects will exceed 200,000 pieces/month. In 2023, projects such as SMIC Beijing, SMIC Oriental, Huali Fab 8, Huahong Fab 9, Yangtze Memory Phase II, Changxin Phase II, and Silan Geek are expected to drive more capacity growth and further increase semiconductor equipment capital expenditures.
However, on the supply side, Chinese local equipment manufacturers have relatively little influence in the global market and it is difficult to put pressure on international giants. However, with the intensification of trade barriers, the tenacious growth of local equipment manufacturers, and the strong support of the government, local equipment manufacturers have more room for trial and error and growth, and the order volume has increased significantly in the past two years. Statistics show that many local semiconductor equipment companies have won large orders. In the fourth quarter of 2020, domestic equipment manufacturers won bids for 82 units, a year-on-year increase of 100%. The order cycle is 2-3 quarters, and revenue is recognized in 2021. The domestic market share of many equipment has increased significantly by more than 10%.
The revenue of domestic semiconductor equipment companies has exceeded the profit inflection point of 700-1 billion (for domestic and foreign equipment companies, the revenue of 700-1 billion is the profit inflection point range). If this momentum continues, the localization rate of China's semiconductor equipment is expected to continue to increase in 2021. It is expected to occupy a place in the fiercely competitive international semiconductor equipment market.
According to estimates, the overall localization rate of equipment in three typical wafer fabs is about 15% (based on the proportion of equipment units), among which Yangtze Memory, Huahong Wuxi, and Huali Integrated Circuit have localization rates of 16.3%, 15%, and 12.8%, respectively. Among them, Yangtze Memory is more active in the localization of equipment, partly because the autonomy of equipment selection in the IDM model is relatively higher than that of wafer foundries; Huahong Wuxi and Huali Integrated Circuit belong to the Huahong Group, and the localization rate of various types of equipment in Huahong Wuxi is mostly higher than that of Huali Integrated Circuit, which may be mainly because Huahong Wuxi's mature 90nm~55nm process is easier to promote equipment localization than Huali Integrated Circuit's relatively advanced 28~14nm process.
In the market segment, dielectric etcher is the semiconductor equipment with the greatest advantage in my country. At present, among the mainstream equipment in my country, the localization rate of degumming equipment, etching equipment, heat treatment equipment, cleaning equipment, etc. has reached more than 20%. Among them, the etching equipment has the largest market scale, represented by China Micro and North Huachuang.
According to Yin Zhiyao, founder of AMEC, the domestic production rate of etching equipment is expected to reach 50% in the future. This is because, among domestic core equipment (wafer processing), etching machines have the highest localization rate, and their proportion is increasing year by year.
SMIC has obvious advantages in the field of CCP etching. In terms of logic integrated circuit manufacturing, SMIC is the only domestic equipment manufacturer that has entered TSMC's advanced process production line. In 2017, SMIC's etching equipment entered TSMC's 7nm production line, and cooperation is underway on the 5nm process. At the same time, the company's etching equipment has entered domestic wafer manufacturers such as Yangtze Memory Technologies and Huahong Grace Semiconductor. In terms of 3D NAND chip manufacturing, SMIC's CCP equipment technology can be applied to the mass production of 64-layer chips. It is reported that the company is developing 96-layer and more advanced etching equipment and processes based on the needs of memory manufacturers.
In terms of physical thin film deposition (PVD), NAURA has the largest variety of thin film deposition equipment products. Its 28nm hard mask PVD has been put into mass production, and copper interconnect PVD, 14nm hard mask PVD, Al PVD, LPCVD, and ALD (atomic deposition) equipment have entered the production line verification stage. In April 2020, NAURA announced that its THEORISSN302D 12-inch silicon nitride deposition equipment entered the leading domestic integrated circuit manufacturing company. The delivery of this equipment means that domestic vertical LPCVD equipment has made significant progress in the application expansion of advanced integrated circuit manufacturing.
In terms of cleaning equipment, among China's single-wafer wet process equipment manufacturers, the spatial alternating phase shift (SAPS) megasonic cleaning equipment and timed cavitation oscillation control (TEBO) megasonic cleaning equipment exclusively developed by ACM Semiconductor have successfully entered the integrated circuit production lines in South Korea and China. The cleaning equipment of North Huachuang has also successfully entered the production line of SMIC. According to statistics from China International Bidding Network, among the more than 200 cleaning equipment purchased by Yangtze Memory, Huahong Wuxi, and Shanghai Huali Phase II projects, the suppliers are ranked by the number of winning bids, in order: Deans, ACM, Lam, TEL, and North Huachuang, with shares of 48%, 20.5%, 20%, 6%, and 1%, respectively.
In terms of CMP machines, China's major R&D units include Tianjin Huahai Qingke and China Electronics Technology Group Corporation 45th Institute. Among them, Huahai Qingke's polishing machine has been tried out on SMIC's production line.
Conclusion
In the past two years, global semiconductor equipment sales have continued to break records, increasingly demonstrating the importance of the upstream of the semiconductor industry chain. This is both a challenge and an opportunity for China's semiconductor industry. After this wave of shortages subsides, whether a new situation can be ushered in, especially in the field of semiconductor equipment, depends on the changes and developments in the past few years.
*Disclaimer: This article is originally written by the author. The content of the article is the author's personal opinion. Semiconductor Industry Observer reprints it only to convey a different point of view. It does not mean that Semiconductor Industry Observer agrees or supports this point of view. If you have any objections, please contact Semiconductor Industry Observer.
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