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Gartner: major semiconductor equipment companies shuffle positions in 2008

14 April 2009 | By Mark Osborne | News > Fab Management

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The backdrop for semiconductor capital equipment companies sales wasn’t pretty in 2008, thanks to the DRAM capital spending collapse and economic meltdown, which saw market research firms scramble to negatively adjust market revenue projections in the second-half of the year. According to Gartner’s final figures for 2008, the worldwide semiconductor capital equipment spending dropped to US$30.7 billion in, a 31.7 percent decline from the previous year. However, the worst is expected this year with an expected decline in equipment sales of a further 45%, making it the worst year potentially for the equipment sector.

In the wafer fab equipment (WFE) sector, sales declined 32.8% to US$24.2 billion. Broken-down, Fab automation declined 27%; Photolithography tool sales declined 25%; Tracks 29%; Wet cleaning fell 64%, CMP declined 37%, PVD declined 30% and CVD fell 44%. No equipment sub-set saw sales grow in 2008.

"As losses mounted in the memory sectors, memory capital spending plummeted," said Klaus Rinnen, Managing Vice President for Gartner's semiconductor manufacturing research group. "The combination of an oversupply-driven downturn in memory, followed by a demand crash across the whole industry, will make 2008 one of the worst years in the history of the semiconductor capital equipment industry."

With such a drastic fall in the fortunes of the equipment suppliers, there was a noticeable shuffling in the rankings of major players, reported by Gartner.

A noticeable absentee from the overall Top10 was Novellus Systems Inc, which fell from 8th position in 2007 to 11th in 2008. Revenue declined 41.4% Year-on-Year and one of the largest declines amongst the major WFE suppliers. Novellus fell to 10th position in the WFE rankings, down from 7th position in 2007.

Another drop was seen with Advantest. The ATE supplier fell from 7th position to 9th, the largest sales decline in percentage terms (-51%), of the major suppliers. Rival Teradyne, went the opposite way – climbing 6 places to be ranked 8th overall on sales growing 16.7% in 2008, compared to the previous year – the only company in the Top10 to increase sales.

Applied Materials retained its number 1 position but sales declined 39.8%, the largest decline amongst the Top10.

Although sales declined 23.5%, ASML moved up a ranking position to take the number 2 slot from Toyko Electron, benefiting from high ASPs and overall demand stability for DUV lithography tools. Both Nikon and Canon held on to 6th and 13th positions respectively. ASML’s market share grew 1.2% in 2008.

Market share concentration remained static in 2008, according to Gartner. The top 20 suppliers accounted for 76% of total revenue in both 2007 and 2008. However, Gartner noted that this could increase in 2009 as smaller companies tend to suffer greater in prolonged downturns and come under financial constraints faster than their larger rivals.
Comparing growth rates over the last three years, only Advantest has seen sequential declines, even during the years of strong capital spending. Novellus is the only other supplier showing sequential declines over a two year period.

In a declining market, Gartner recommended that financially strong suppliers look for acquisitions to consolidate their market positions, while all suppliers should focus on RD&E to support an eventual market recovery.

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