Semiconductor Equipment - Berenberg Bank

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Semiconductor Equipment Technology Hardware We believe the lithography, process control, and wafer level packaging markets have the biggest growth potential, driven by node shrinkage and 3D packaging demand, hence ASML, KLA and SUSS are likely to outperform other equipment suppliers. We do not like the etching, deposition and die level packaging markets because their growth potential is limited as a result of technology migration. Figure 24: Capex on fabrication steps/total semiconductor capex 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2009 2010 2011 2012 2016E Deposition Photoresist Processing Lithography Etch, Clean and Planarization Doping Automation Process Control Wafer-Level Packaging Die-Level Packaging Test Equipment Source: Gartner data Figure 24 shows that deposition, lithography and etching and cleaning are the only three process categories that individually account for more than 10% of total semiconductor capex. The combined capex for these three categories was 34% of total semiconductor capex in 2012. We expect the combined share of capex to expand to 38% in 2016, driven mainly by lithography growth. Wafer level packaging, due to its small base, has since 2003 seen the fastest growth at c10% per annum, compared with c2.6% for total semiconductor capex. Lithography – expanding market and ASML as monopolist During the past decade, the lithography market has grown by c1.7% per year, while total semiconductor capex has grown by 2.6% annually. Looking ahead to 2016, we estimate that the lithography market will grow at c20%, four times faster than total semiconductor capex. At a result, we estimate that lithography’s share of semiconductor capex will expand to 20% in 2016 from 12% today. As the chip-makers shrink from the 28nm mainstream node today to sub-10nm over the next three to four years, the demand for lithography is likely to increase significantly. According to TSMC, Intel and Samsung’s roadmaps, we believe 20nm will be the mainstream node for logic and foundry in 2013/2014, which is likely to be manufactured using the double patterning (DB) process. As a result, demand for the most advanced argon-fluoride (ArFi) tools will double, and methodology tools will also be needed to maintain an acceptable yield rate. Beyond 20nm, chip-makers may adopt EUV or triple/quadruple patterning using ArFi tools, but in both cases the lithography cost will increase significantly. The reason for this is that EUV may cost €100m each versus ArFi costs of €40m, and triple/quadruple patterning may need three to four times as many ArFi tools compared with single-patterning, which is currently used in 28nm. 22
Semiconductor Equipment Technology Hardware Figure 25: Lithography market share Nikon 15% ASML 74% NuFlare Technology 7% Canon 3% JEOL 1% Source: Gartner data The market has a limited number of players because of the complexity of lithography technology and the investment required to develop leading-edge equipment (see Figure 25). We believe ASML’s market share will expand after the EUV ramp-up. Nikon will lose market share to ASML because Intel, Nikon’s biggest customer, has committed to ASML’s EUV technology by joining the customer investment programme. We believe Nikon will not be a threat to ASML in the future because the specification of its tools lags ASML’s, and it does not have a credible EUV roadmap yet. Deposition – flat growth, DP and EUV impact limited, benefit from 3D NAND During the past decade, the deposition market has declined by c1.7% compared with the c2.6% growth in total semiconductor capex. Its share of total semiconductor capex fell from 12% in 2004 to 10% in 2012. We expect the deposition market to grow by c4% from 2012 to 2016, which is on par with total semiconductor capex growth, and remains at 10-11% of total semiconductor capex. Unlike etching, we do not expect the demand for deposition to rise with the adoption of double patterning and FinFET designs. It may benefit from the rampup of 3D NAND in 2015/2016. Among the different deposition solutions, plasma-enhanced chemical vapour deposition (PE CVD), ALD and epitaxy are likely to outgrow the deposition market due to the increasing number of interconnecting layers within advanced chips, HKMG adoption, and the ramp-up of 3D designs. At the same time, low pressure chemical vapour deposition (LP CVD) and physical vapour deposition PVD) are likely to underperform the deposition market (see Figure 26). 23
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