China is a bust for IC equipment makers, says report
By Semiconductor Business News
Mar 11, 2003 (7:32 PM)
URL: siliconstrategies.com
NEW TRIPOLI, Penn. - While IC consumption in China is expected to be staggering, the nation is a major bust for semiconductor equipment manufacturers thus far, according to a report from The Information Network here.
The market for front-end IC equipment hit $2 billion in 2002--or roughly flat from 2001, according to the New Tripoli-based research firm.
Sources believe that fab-tool makers are losing money in China, as vendors are bombing the prices of their gear to get the business. Fab-tool makers are cutting the prices of their gear by up to 40% in China, according to sources.
“The equipment market in China is not what its cracked out to be”, said Robert Castellano, president of The Information Network, in a statement.
“We disagree with the recent statements by SEMI that China is a 'bright spot' in the equipment market,” Castellano said. “They collect data for the U.S. market, but their exposure to foreign markets is limited. The fact of the matter is that there was no growth in 2002.”
The researcher was referring to recent statements made by the Semiconductor Equipment and Materials International (SEMI) trade group at Semicon China, which said China was a “bright spot” for fab-tool makers (see March 11 story ).
There are several problems for fab-tool makers in China. “IC production is limited to 0.18-micron on 200-mm wafers. Much of the production equipment used in fab expansion will be tools transferred from older lines Japanese and eventually Taiwanese IC manufacturers,” he said.
“IC manufacturers in these regions will buy state-of-the-art, 0.10-micron tools for 300-mm production for their existing facilities and transfer outdated tools to China. In addition, the used equipment market will be huge. Second- and third-tier new equipment vendors will also benefit, as top-tier players have focused on the latest technology,” he added.
There is positive news for foreign chip makers. In 2002, China produced 8.2 billion chips, which accounted for just 19% of domestic demand, according to the report. Unit production will triple to nearly 19 billion units in 2005, but domestic production will grow to meet only 22% of domestic demand.
Most high-end products used in computers and mobile phones had to be imported. Domestic semiconductor companies also had to import designs from overseas companies. |
