Semiconductor Manufacturing Spurs Asian Cleanroom Market
With semiconductors and data storage manufacturing peaking, Asia is the place to be if you want a big piece of the contamination control market pie.
By Robert McIlvaine
With more than half the world`s population living in Asia, it`s no surprise that capital and resources flow into its marketplace at amazing rates. One billion additional people are expected to migrate into Asian cities within the next 30 years–a 4 percent per year increase in the urban population.
With the tremendous influx of labor, manufacturers of electronics, medical devices and pharmaceuticals are building more plants in Asia than in either of the Americas, Europe, the Commonwealth of Independent States (CIS; the former Soviet Union), or African regions. The McIlvaine Co. (Northbrook, IL) has projected production rates in key industries for each Asian country. As shown in Figure 1, 56.9 percent of world semiconductor production will take place within 3,000 miles of Singapore by the year 2000. About 24 percent of the world`s gross domestic product (GDP) will emanate from within 2,000 miles of Singapore. Contrast this with San Jose, CA, where only 8 percent of the world`s GDP will be produced within 2,000 miles of the city in the year 2000. By the turn of the century, 22.4 percent of the world`s pharmaceutical production will be located within 2,000 miles of Japan.
The cleanroom market will grow even faster than the industries using them. The disparity between the Asian market and the rest of the world lies not only in the higher demand for products manufactured in cleanrooms, but also in the fact that the region is a net exporter of products manufactured in cleanrooms. Orders for new rooms in the year 2000 in Asia will exceed $2.1 billion (Figure 2)–substantially greater than in the Americas and Europe/Africa, the other two regions pictured. Purchases of disposables will also exceed purchases elsewhere.
The structure of the Asian contamination control market is considerably different than that of the United States, Europe, CIS, or Africa in that its market is built around electronics. The pharmaceutical and food processing segments are relatively small compared to the rest of the world (Figure 3).
China
With Japan leading the way, Asia has become the largest purchaser of semiconductor cleanroom hardware and disposables. Despite Japan`s predominance, other Asian countries–such as China–are becoming significant purchasers. In fact, within 10 to 15 years, the largest semiconductor market could be China. Currently, it has a rapidly growing personal computer market but can meet only 20 percent of its own semiconductor chip needs. Aware of this market potential, manufacturers are scrambling to build production facilities within the country.
Indonesia, South Korea, Taiwan
Low wages and the development of special export zones have made Indonesia an attractive location for a number of semiconductor manufacturers who are considering building plants in this part of Asia.
In the near future, Hyundai, Samsung and Goldstar Electron Co. together could “out-invest” Japan`s top five semiconductor manufacturers. For example, South Korean firms have a number of natural advantages over the Japanese, starting with lower labor costs. Korean manufacturers also benefit from the strong yen which makes Japanese exports more expensive overseas. In addition, Korean chip companies have not faced the kind of capital spending constraints Japan faces as a result of a weak stock market.
The Taiwanese market is expanding rapidly, due to continued investment in new plant construction, expansion and renovation of existing facilities and technology upgrades. Taiwan Semiconductor Manufacturing Corporation (TSMC), the island`s largest integrated circuit firm, will spend over $1.13 billion to build its second 8-in. wafer fabrication plant, which will have a monthly production capacity of 25,000 wafers.
Other semiconductor companies proposing to invest in the development and production of 8-in. wafers are UMC, TI-Acer, Mosel-Vitelic, Winbond, Macronix, and Holtek. Three new entrants–Hualon Group, Nanya and Powerchip–will also develop 8-in. wafer production facilities. It is estimated that more than eleven 8-in. wafer fabrication plants will be built between 1995 and 1998 at a total capital investment of about $10 billion.
The flat-panel display industry has the potential to be as big as the semiconductor industry in terms of cleanroom requirements, especially in Asia. The amount of cleanroom space devoted to flat panel production will be as large in the year 2002 as it was for semiconductor production in 1990. Presently, Asia dominates this marketplace and will continue to be the leader throughout the next decade.
In Japan, flat-panel annual space additions are expected to increase to 900,000 ft2 by the year 2000. By that time, 3.4 million ft2 of flat panel cleanroom space will be in use in Japan. Order levels for flat panel display cleanrooms will be very substantial– reaching $200 million by the year 2000. Over 34,000 people will be engaged in manufacturing flat panel displays in Japan by the year 2000, while Japan`s market for flat panel cleanroom disposables will rise to $110 million per year by the year 2000.
South Korea will be a player in the flat panel market, but not nearly to the extent of their participation in the semiconductor industry. Flat-panel space additions in South Korea will range from 40,000 to 90,000 ft2 per year in the forecast period. The projection is for 235,000 ft2 of flat panel cleanrooms in South Korea by the year 2000–cleanrooms which will employ 2,350 people and require $7.5 million per year in garments, gloves and wipes.
Disk drive cleanrooms
In a large wafer fabrication facility in the United States, cleanroom suppliers are accustomed to outfitting 300-400 semiconductor cleanroom workers. Outfitting 9,000 cleanroom workers for a large Malaysian disk drive cleanroom presents an order of magnitude greater opportunity. Despite the fact that disk drives are designed in the U.S. and plants are owned by U.S. companies, the reality is that these plants operate mostly in Asia. Running three shifts with huge numbers of workers, disk drive fabs employ twice as many workers per ft2 as wafer fabrication facilities. A trend has developed toward cleaner operations including Class 10 cleanrooms, but is balanced by the increasing use of minienvironments.
Currently, the world`s largest disk drive manufacturers operate in Malaysia, Singapore and Thailand. They produce nearly 50 percent of the world`s disk drives. An example is Seagate, with a 833,000-ft2 share of the world`s cleanroom space.
Spectacular growth is projected for the disk drive industry as a result of more complex software, such as MicroSoft`s Windows, which requires more and more disk storage capacity. The industry is expected to increase shipments from 90 million units in 1995 to over 210 million units by the year 2000. To meet the increased demand, worldwide disk drive production capacity will have to expand at a rate of more than 20 percent per annum.
Malaysia will continue to be a major player in the disk drive market. Total investment in new disk drive cleanrooms there will rise from $53 million in 1996 to $110 million by the year 2000 (see Table 1), raising the number of employees in the Malaysian disk drive industry to a record 39,813 by 2000. Disposables for the industry, such as clothing and supplies, will increase from $65 million in 1996 to just under $135 million.
Pharmaceuticals
Japan is the second largest market for pharmaceuticals in the world and growing rapidly. Nevertheless, the Asian pharmaceutical cleanroom industry as a whole is smaller than that in the Americas, Europe and Africa. The growth rate in China will be substantial, but the base is relatively small. In India, the domestic market for pharmaceuticals is expected to grow at 20 percent per year over the next decade.
Medical devices
The Asian cleanroom market for medical devices is growing rapidly, even though it is relatively small compared to the rest of the world. For example, in China, the market for medical devices includes more than 60,000 hospitals and clients. The Peoples Liberation Army (PLA) alone operates 300 hospitals. By the year 2030, the percentage of China`s population between the ages of 40 and 70 is expected to rise by nearly 250 percent. The Taiwanese market for medical and dental equipment is rising at 5 to 10 percent per year. n
Robert McIlvaine is president of The McIlvaine Co. (Northbrook, IL), a market research firm that specializes in the contamination control industry.
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Figure 2. Orders for new cleanrooms in Asia will exceed $2.1 billion in the year 2000. Orders for cleanroom disposables in Asia will exceed $2 billion in the year 2000.
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Figure 1. By the year 2000, more than half the world`s semiconductor manufacturing will take place within 3,000 miles of Singapore. Each radii represents 500 miles, starting at Singapore and expanding outward. For example, at 1,000 miles away from Singapore, about 3.3 percent of the world`s semiconductor production occurs.
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Figure 3. In the year 2000, a little more than half of all cleanroom orders in Asia will be for the semiconductor industry, the disk drive and flat panel industries comprising about 30 percent of the market.