China to build two fabs per year, but challenges exist, says Applied VP
By Mark LaPedus
Semiconductor Business News
(03/22/02 08:59 a.m. EST)
siliconstrategies.com
SANTA CLARA, Calif. -- Applied Materials Inc. is expecting China's aggressive chip makers to build at least two new wafer fabs per year in the near term this decade and the semiconductor equipment giant is aiming to push its China revenues to $1 billion by 2005, an executive told analysts during a briefing here.
China has emerged as one of the hottest markets for Applied Materials and other tool makers. Applied's semiconductor equipment sales in China are expected to jump tenfold, from $100 million in 2000, to $1 billion by 2005, said David Wang, executive vice president of Applied of Santa Clara.
But in comparison, he said, Applied's business in China will not grow as fast as compared to Taiwan from a historical basis. The company's sales in Taiwan were $100 million in 1994, but jumped twenty times to $2 billion in 2002, Wang said, during an analyst meeting on Thursday.
And, there are challenges facing the fab buildup. China lags in terms of overall technology, Wang noted. While Taiwan and other Asian regions are embracing new, expensive 300-mm wafer fabs, China is still moving full-speed more mature 200-mm plants, he pointed out.
And while leading silicon foundries in Taiwan have caught up to Intel Corp. in terms of developing cutting-edge process technologies, China is "three-to-four generations behind Intel," he said.
But still, China is the hottest overall market for fab equipment suppliers. The nation's chip makers are "still buying a lot of 200-mm equipment," he said. "We like that," he added, hinting that some of those tool sales can carry higher profit margins than some of the more expensive 300-mm systems.
On the other side, the used equipment market is thriving in China, which potentially takes a bite out of profit margins. China's chip makers are using a "combination of new and used equipment," Wang said. Some 20-30% of the chip-equipment sold in China is used equipment, he said.
But still, down the road, China is expected to build "two fabs per year" over the next several years, prompting Applied and other tool makers to beef up their resources in that nation, he said.
With no question, Applied sees China as its fastest growing markets for wafer fab tools and services. Last year, for example, Applied announced new orders for chip-processing tools and services totaling more than $200 million from silicon-foundry startup Grace Semiconductor Manufacturing Corp. in Shanghai. Applied said it expects to ship the equipment to the Chinese foundry company sometime in 2002 (see Oct. 18 story).
Recently, DuPont Photomasks Inc. announced plans to become the first merchant supplier of lithography reticles to install a production line for 180-nm (0.18-micron) masks in China with a major expansion of its facility in Shanghai. Round Rock, Tex.-based DuPont Photomasks said it will "anchor" the new photomask line with an Etec Systems Alta 3700 laser pattern generator, which will be supplied by Applied (see Feb. 7 story).
But Applied and other U.S. tool makers face some challenges in China. Many argue that current export controls and regulations on U.S. chip equipment and technologies are outdated and putting the country's suppliers at a disadvantage (see Feb. 21 story). |
