Semiconductor Equipment - Berenberg Bank

Tokyo Electron Ltd
Technology Hardware
tools is likely to grow at a slower pace. Gartner forecasts the photoresist
processing market will grow by c1.4% between 2012 and 2017, versus growth in
semiconductor capex of c4.1%.
In 2015-16, when extreme ultraviolet lithography (EUV) starts to ship in volume,
we may potentially see a higher top-line growth rate. The photoresist used for
EUV is different from conventional lithography tools and requires a different type
of photoresist equipment which may carry a high ASP. However, there is little
visibility on revenue upside.
Etching
TEL generates 27% of its revenue from etching equipment, with a 29% market
share globally in 2012. Some 85% of TEL’s etching revenue comes from shipping
dielectric etching equipment, with the remainder from silicon etching equipment. It
holds a dominant 63% share in the dielectric etching market, and a 9% share in
silicon etching (LAM leads this market with a 59% share).
Etching market trends have moved against TEL over the past two years (see
Figure 6) as the total addressable market (TAM) for dielectric etching has fallen by
c20%, while the silicon etching TAM increased by c4% between 2010 and 2012.
Figure 6: Etching market solutions
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source: Gartner Data
2010 2011 2012
Bevel Edge removal Dielectric Etch
Metal Etch
Other
Silicon Etch (including TSV)
This trend should continue over the next few years, driven by new chip
manufacturing processes including double patterning (DP) and FinFET in
logic/foundry, and 3D NAND in memory. From a process point of view, DP uses
more silicon etching steps than single patterning (SP), as does FinFET. The
memory chip manufacturing process currently requires that 55% of etching steps
are carried out using silicon etching technology, and this percentage is expected to
rise to 60% for 3D NAND. As a result, TEL’s TAM may shrink at an accelerated
pace in the near future, unless it can offset this loss by gaining market share in
silicon etching.
TEL aims to increase its overall market share in etching from 29% currently to
35% by 2015, as well as gain silicon etching market share. We remain sceptical
about whether TEL can gain market share because the silicon etching market is
crowded and competitive. LAM, Hitachi and AMAT all hold a bigger market share
than TEL (Figure 7) and are currently shipping silicon etching tools to mainstream
logic/foundries, while TEL is mainly supplying dielectric tools to these chipmakers.
It would be hard for the latter to switch vendors due to process
reconfiguration costs.
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