Semiconductor Equipment - Berenberg Bank

Semiconductor Equipment
Technology Hardware
How much are chip-makers spending?
Semiconductor equipment vendors supply equipment used in the chipmanufacturing
process. Historically, semiconductor equipment industry revenues
are closely correlated to semiconductor capex levels, which are determined by the
capital intensity of the semiconductor industry (see Figure 6).
Figure 6: Semi equipment revenue versus semi capex
USD mn
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
-
35%
30%
25%
20%
15%
10%
5%
0%
Semi capex $mn Semi equipment revenue $mn Semi capex/semi revenue %
Source: Gartner data, Berenberg estimates
As shown in Figure 7, foundry and logic, memory and integrated device
manufacturer (IDM) players are the three main groups of capex spenders within
the sector, although the capex mix varies over time. IDMs were the main spenders
in the early 2000s, replaced by memory chip manufacturers in 2004/2005 following
the high memory demand from Apple (for its Nano/Shuffle products), Microsoft
(Vista), Sony (PS3) and mobile handset manufacturers. Foundry and logic chipmakers
became the biggest spenders in 2011 due to the ramp-up of fabless players
and greater outsourcing from IDMs. Over the next few years, we expect semi
capex to comprise: 1) strong foundry and logic spending driven by consumer
electronics growth; 2) a normalisation in memory spending; and 3) shrinking IDM
spending as increased capital requirements push IDMs to use more foundry
services instead of in-house manufacturing.
Figure 7: Three main semi capex spenders
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E
Foundry+logic IDM Memory (NAND+DRAM)
Source: Gartner data, Berenberg estimates
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