April 6, 2007 – “Uneven” investment patterns between memory and foundry/IDM capacity shook up the final rankings of top semiconductor equipment vendors in 2006, according to Gartner Dataquest. Those outpacing the overall 23% industry growth rate included KLA-Tencor and Lam Research, as well as AMAT and ASML.
Total worldwide capital equipment spending totaled $41.95 billion, a 22.9% increase from 2005, in which the sector had seen an overall ~10% decline. Packaging and assembly equipment spending rose 18.2%, while automated test equipment (ATE) expanded 9.3%. Gartner’s initial estimates in Dec. 2006 estimated 24.9% growth in capital equipment sales to $42.38B, with WFE spending up 26.3% to $32.80B, packaging/assembly investments rising 15.2% to $4.83, and ATE spending up 25.8% to $4.75B.
All top 20 firms from the previous year made the list in 2006, though some positions were shuffled due to exposure to higher investments from memory firms, and for certain technology segments, according to Dean Freeman, research VP at Gartner Dataquest. Memory firms have been driving capital investments, and DRAM manufacturing uses several furnace steps requiring etch and deposition steps not found in logic or flash, he pointed out.
Applied Materials ($6.49 billion, 37%), TEL ($4.48B, +16.4%), and ASML ($4.00B, +46.5%) retained their usual 1-2-3 spots in Gartner’s final rankings, while No. 4 KLA-Tencor ($2.06B, +24.3%) and No. 5 Lam Research ($1.88B, +64.1%) climbed the ladder due to strengths in process control and etch deposition, respectively. Firms including Mattson and PSK also did well with their strip processes, Freeman pointed out to WaferNEWS, and “some Korean companies and TEL did well in the metal and high-k CVD for the capacitor.”
By region, Japan and Europe were weaker than the overall market, except with some individual companies who had strong relationships with memory devicemakers.
While most chipmakers remained disciplined and invested carefully in their capacity during 2006, memory firms still dominated the capital spending landscape, with investments rising 36%, noted Klaus Rinnen, managing VP for Gartner’s semiconductor manufacturing research group, in a statement. That, paired with weakness in foundry spending — up only 9% in 2006, attributed to inventory changes and reduced customer order patterns starting as early as May 2006 — created an “uneven” spending behavior that helped individual companies like Lam, and also influenced regional investment patterns.
Which raises the multimillion-dollar question — how much longer can the memory spending bubble last? Freeman told WaferNEWS that memory capex is perfectly within reason given projections of demand drivers, but he thinks that some demand expectations are “a bit optimistic,” which will result in “significant pricing trouble before the year is out.” Still, he doesn’t believe firms will stop spending as long as there’s a whiff of profitability in the sector — “at this time we think most of the memory money for 2007 is committed,” he said. Capex may remain solid through this year, but “2008 should see a dip in memory spending,” he projected. “Whether this is a result of the industry slowing down or hitting the wall remains to be seen.”
Worldwide semiconductor manufacturing equipment vendors
(Revenue estimates* in US $M)
Company…………………….2005 revenues…..2006 revenues…..% growth…..2006 market share (%)
Company…………………..2005 revenue…..2006 revenue…..% growth…..2006 market share (%)
Applied Materials……………..4738.5……………..6493.1……………37.0……………15.2
Tokyo Electron………………….3851.7……………..4481.7……………16.4……………10.5
ASML……………………………….2732.6……………..4004.1…………….46.5……………..9.4
KLA-Tencor………………………1654.9……………..2056.3……………24.3……………..4.8
Lam Research………………….1147.0……………..1881.8……………64.1……………..4.4
Advantest…………………………2089.3……………..1794.0……………-14.1……………..4.2
Nikon……………………………….1507.8……………..1519.2………………0.8………………3.6
Novellus Systems…………….1130.1……………..1389.1…………….22.9……………..3.3
Dainippon Screen………………991.3……………….987.7……………..-0.4……………..2.3
Canon………………………………..836.8………………..924.3…………….10.5……………..2.2
Others……………………………13,999.2…………..17,106.3…………….22.2……………40.1
All companies……………….34,679.2…………..42,637.6…………….22.9………….100.0
OEM elimination…………………538.0……………….687.4…………….27.8……………..-…..
NET MARKET TOTAL……34,141.2…………41,950.2…………….22.9………………-…..
* Includes revenue from acquisitions which occurred in 2006 for the entire year. 2005 data is before 2006 acquisitions.
Source: Gartner Dataquest