Analyst: Photomask growth slowing, marketshare gap narrowing

September 14, 2006 – Toppan Photomasks is seeing its lead shrink in the semiconductor photomask this year, as the overall segment adjusts to smaller growth due to design activity and a shift in capex from memory firms, according to a new report from The Information Network.

Boosted by its acquisition of DuPont Photomask, Toppan led the worldwide merchant market with a 40.1% share in 2005, surpassing No. 2 Dai Nippon Printing with a 31.8% share. But DNP could retake the top spot this year, leveraging its technology and alliances with major chipmakers, accoding to Robert Castellano, president of the New Tripoli, PA-based market research firm. In recent years, DNP has actively pursued alliances with many major semiconductor manufacturers, including a JDP with Intel (1998), Hitachi Ltd.’s photomask division (acquired in 1999), alliances with Toshiba, Fujitsu, and UMC (2000), Xilinx (2001), and STMicroelectronics (2002). “The technology achieved from these arrangements and the investment needed to foster them [has] propelled DNP,” he told WaferNEWS, adding that DNP’s most recent alliance with ProMOS Technologies (in mid-2004), should help to expand its share of the photomask market even further.

Most analysts expect the semiconductor market to grow ~10% in 2006, but that doesn’t necessarily translate to an increase in photomask sales, noted Castellano. Demand for photomasks is a direct function of design activity, not sales volume from products using photomasks, he said, projecting the photomask market will grow only 4.3% this year to $3.2 billion, a significant slowdown from 9.7% growth in 2005, and 18.7% growth in 2004.

Castellano noted that more than 50% of the largest capex spenders this year are directing investments at memory production expansions, led by first- and second-tier memory vendors aggressively expanding capacity. More capex investments from memory firms means a change in the type and quantity of photomasks utilized — e.g. DRAM masks are sued for a relatively large number of wafers, meaning fewer photomasks will be used, he stated.

“Companies make million of memory devices from the same mask set, only changing masks when they do a die shrink. So, the same mask set could be used for up to six months,” he explained. On the other hand, logic device makers or foundries make fewer chips from the same mask set, changing mask sets more frequently because of device evolution or new customers, he said.


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