S E M I C O N D U C T O R C A P I A L
E Q U I P M E N T R E S E A R C H
July 6, 2000
SEMICONDUCTOR EQUIPMENT
INDUSTRY UPDATE
Chip Equipment Capacity Remains Tight, in our Opinion; Much Too
Early To Anticipate Downturn in the Sector, in our View
Sue Billat (650) 289-7226
Suresh Balaraman (650) 289-7228
Heidi Poon (650) 289-7229
Key Points:
· The capacity in the semiconductor equipment sector is still highly constrained, in our
view. Given the tight equipment supply, we believe, chip companies are not in a
position to overbuild.
· Lead time for lithography tools is between 9 and 12 months mostly as a result of tight
lens supply. The lens assemblies (an integral part of a lithography tool), and by
extension the lithography tools can be ramped only slowly, as lens material takes
months to produce and the process cannot be hurried. It is difficult for the chip
industry to ramp capacity without proportionate increase in lithography tools, in our
opinion.
· We believe that the conversion to 300 mm is not likely to lead to overcapacity in the
near term. We expect 7 pilot 300 mm plants to go up in CY00. The move to 300 mm
is purely economic. For a 30 – 40% cost premium per equivalent 200 mm tool, we
estimate 2.5 times as many chips can be produced per wafer.
· The conversion to 300 mm, however, requires an entirely new tool set. While in our
experience it takes about a year to ramp a 200 mm fab to full production, chipmakers
tell us that it is likely to take 2 years to ramp the first 300 mm fabs.
· As a result, we believe overbuilding will be constrained as chipmakers try to avoid
over-investment in 200 mm fabs.
· This upcycle stands in contrast to the last capacity driven upcycle in 1994 – 1996. In
1994, 37 fabs had been announced by May and the total rose to 97 by year end. In
2000, by contrast, we have only seen 20 new fab announcements despite the fact that
the chip industry is substantially larger.
· Our forecast for front end equipment industry growth projection is 51% in 2000 and
45% in 2001. By our estimates, this corresponds to front end equipment industry
revenues of $34.1 billion in 2000 and $49.4 billion in 2001.
· For the back end, we are projecting 45% growth estimate in 2000 and 42% in 2001.
By our estimates, this corresponds to back end equipment industry revenues of $15.2
billion in 2000 and $21.6 billion in 2001. |
