Who's winning the equipment business in Japan?
By Mark LaPedus
Silicon Strategies
04/07/2004, 11:40 AM ET
SAN JOSE, Calif.--Continuing on the comeback trail, Japan's semiconductor industry is projected to see another boom in IC capital spending this year--a trend that is expected to propel some but not all chip-equipment vendors.
In total, capital spending in Japan's semiconductor industry is expected to jump 25 percent in the current fiscal year, which runs from April of 2004 to March of 2005, said Scott Foster, senior research analyst with Lehman Brothers Japan in Tokyo. The industry is cooling to some degree, given that Japan's IC capital spending grew a staggering 60 percent in last year's fiscal period, according to Lehman Brothers, an investment banking firm.
Still, Foster projects another banner year for Japan's IC industry--and many semiconductor-equipment vendors that sell into that nation. "Japan is going bananas," Foster told Silicon Strategies. "The fabs are running at full capacity."
Both front- and back-end capital equipment spending will each grow about 30 percent in the current fiscal year in Japan, he said. Benefiting from the spending spree include a large percentage of Japanese equipment suppliers, such as Advantest, Canon, Dainippon, Hitachi, Nikon, and TEL, according to the chip-equipment analyst.
Non-Japanese equipment makers, including Applied Materials, KLA-Tencor, Lam, and others, are also racking up orders in Japan, he said.
Equipment companies are benefiting from Japan's resurgence in ICs and flat-panel displays, said Ray Morgan, strategic marketing manager for Japan's Canon Inc., a supplier of lithography tools. Indeed, Japan's chip makers are seeing huge demand for products such as camera phones, cellular phones, digital cameras, DVDs, LCD TVs, among others.
Another key is Japan's acceleration in developing new and advanced processes, Morgan said. "We're installing tools at the 65- and 45-nm nodes (in Japan)," he said in a recent interview with Silicon Strategies.
The fabulous fabs
Indeed, not long ago, Japan's IC makers were considered laggards. But fueled by the current IC recovery, coupled with a surge in consumer electronics, Japan's chip makers are back on the semiconductor map.
Many Japanese chip manufacturers are expanding their current fab capacities, building new 300-mm plants, and aggressively moving ahead with the latest 65- and 45-nm process technologies. So far, Fujitsu, Matsushita, NEC, Renesas, Sony, and Toshiba have recently announced plans to build new 300-mm fabs in Japan.
In fact, Japanese companies will spend more than any other region. The nation's chip makers will account for 25 percent of all capital spending this year, according to Strategic Marketing Associates, a market research firm in Santa Cruz, Calif.
U.S. chip companies will account for only 23 percent. In total, new fabs coming online this year, coupled with the continued ramp of existing plants, will drive worldwide capital spending up by 41 percent this year to $43 billion, according to SMA.
Meanwhile, the heating up of the chip market in Japan started in December, when Matsushita Electric Industrial Co. Ltd. said it would spend about $1.2 billion on a 300-mm wafer fab (see December 23, 2003 story).
In February, Toshiba Corp. said it had completed its 300-mm wafer fab in Oita, Kyushu, and added that it intends to lead the industry with fabrication of chips on a 65-nm process line in the first half of 2005. Part of the new fab's capacity will be allocated to the virtual joint venture fab with Sony Corp. Toshiba and Sony also agreed to extend their process development collaboration to the 45-nm node (see Feburary 20 story).
Last month, Fujitsu Ltd. said it would spend about $1.5 billion to add a 300-mm fab to its Mie semiconductor complex in central Japan. The facility will ramp up making logic circuits using 90-nm processes, before adding next generation 65-nm technology. The facility is set start operations in April 2005 and begin volume commercial shipments from September 2005 (see March 19 story).
This month, NEC Electronics Corp. said it plans to construct a second 300-mm wafer fab on the NEC Yamagata Ltd. campus. The factory would be adjacent to a 300-mm wafer fab currently under construction. Construction is scheduled to start in May 2004, with completion slated for December 2004 (see April 5 story).
Who's winning the business?
For the most part, Japan's expansion is benefiting Japanese fab-tool vendors. The book-to-bill ratio for Japanese equipment vendors was 1.15 in February, down from 1.38 in January, according to the Semiconductor Equipment Association of Japan (SEAJ). Orders for Japanese semiconductor equipment jumped 73.6 percent in February from a year earlier, according to the trade group.
In lithography, for example, Japan's Canon and Nikon Corp. continue to dominate the Japanese market. "Looks like Canon continues to take share in Japan," Foster said. "The only vendor that is not doing well in Japan is ASML."
ASML Holding NV of the Netherlands is reportedly working on a lithography order at Sony, but sources believe that Nikon is also fighting for the business.
Meanwhile, Canon is racking up lithography orders at Elpida, Fujitsu, and Matsushita; the Japanese equipment maker also has conquered Toshiba's flash-memory business, according to Foster. "Canon has more than half the litho at NEC Yamagata so far," he said.
Nikon has reportedly grabbed some 300-mm lithography business within Toshiba's 300-mm fab in Oita. Nikon's largest customer is Intel Corp., the world's largest equipment buyer, it was noted.
This is not to say that Japanese equipment makers are grabbing all of the business in Japan. "We've heard Applied's business has picked up in Japan," Foster said. "Lam Research has done stupendously well in Japan with record orders."
On the chemical vapor deposition side (CVD) side of the equation, Applied is reportedly gaining ground in Japan, especially in low-k dielectrics. Toshiba and others have endorsed Applied's Black Diamond line of CVD-based low-k dielectrics.
"Applied is a major supplier to Fujitsu's new fab," Foster said. "Lam Research is doing very well in Japan (in etch), primarily at the expense of Applied."
Tokyo Electron Ltd. and Dainippon Screen Manufacturing Co. Ltd. continue to dominate the track business in Japan and elsewhere. "TEL does better with NEC, but it probably has the track business at Fujitsu," he said. "TEL is also doing well in oxide etch."
Another standout is KLA-Tencor Inc. "KLA is doing well," he said. "But it also looks like Hitachi has become a credible second source to KLA in the inspection market."
With the exception of Applied and a few others, Japanese equipment makers dominate the flat-panel display tool business. Applied and Ulvac compete in the LCD-based CVD business. "Ninety percent of all LCD equipment makers are Japanese," he added. |
