Semiconductor Equipment - Berenberg Bank

Semiconductor Equipment
Technology Hardware
Snapshot on capex trends and vendor exposures
In our view, the capex level of the industry is likely to be flattish over the next two
years (5% up in 2014 and 3% up in 2015), and increase by 10% in 2016 due to
450mm migration, driven by strong foundry/logic and memory spending recovery.
Semiconductor equipment vendors’ growth potential differs from one vendor to
another, as they are each exposed to different fabrication processes. We believe
ASML and ASMI are likely to benefit from their sales addressable market (SAM)
expansion, while TEL is likely to suffer from its declining SAM.
Capex to remain flattish in 2014/2015
Memory – NAND capex to return to growth and accelerate in 2014/15
NAND capex is likely to return to growth in 2013 (up 6%) and accelerate in
2014/2015 (up 15% and 20% respectively), driven by the high capital requirements
of 20nm/below node, and 3D NAND.
We believe NAND vendors are unlikely to increase capex significantly in the near
future as they did historically in peak years (39-115% growth), as 1) the spending
pattern has become more conservative since the 2012 trough period, 2) Samsung’s
new NAND fab, Micron’s DRAM-NAND conversion, and Toshiba’s capacity
resumption may provide new capacity in next two years, and 3) the low-/mid-end
smartphone/tablet, which is likely to be the driver for the consumer devices
market, requires less NAND content than high-end products.
Memory – DRAM stable 5% growth in 2013/2014
DRAM capex growth is likely to be stable and grow at 5% in 2013 and 2014,
enabling a limited expansion of 30nm/20nm capacity.
We believe DRAM capex will not increase significantly as: 1) capacity expansion
demand is low (as per our conversations with industry sources, current capacity is
sufficient to support annual bit growth of about 30%); 2) mid-/low-end consumer
devices require less DRAM content per box; and 3) smartphone/tablet DRAM
demand is not sufficient to offset the decline in PC unit growth as the content per
box is less (0.6GB versus PCs at 4.2GB).
Foundry/logic players remain solid, contributing 60% of total capex
Foundry/logic players are heavily exposed to the consumer electronic markets, as
Samsung and Intel manufacture their own chips for their smartphones, tablets and
Ultrabooks, Apple contracts the Samsung foundry and TSMC for its chip
manufacturing requirements and fabless players such as Qualcomm, Mediatek and
Nvidia contract foundries like TSMC, Globalfoundries and UMC for their chip
manufacturing.
As a result of the increasing competition within the consumer electronics market,
the chip-makers/device vendors require the most advanced chips in order to
differentiate their end-products. The foundry/logic players are therefore under
pressure to maintain their technology leadership, and all the major players are
ramping up 20nm in 2013, to be followed by 16/14nm in 2014. We thus believe
foundry/logic spending will remain solid, and will contribute about 60% of
semiconductor capex.
Growth potential differs as market exposure differs
Semiconductor equipment vendors’ growth potential differs from one to another,
as each vendor is exposed to different fabrication processes.
We believe the lithography, ALD, epitaxy deposition, process control and 3D
packaging markets have considerable growth potential, driven by node shrinking
and 3D wafer stacking demand, hence ASML, ASMI, KLA and SUSS are likely to
outperform other equipment suppliers. We believe TEL will suffer from its high
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