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VLSI Research has revealed its annual Top 10 semiconductor equipment suppliers for 2008, noting the collapse in demand for equipment in the second half of 2008, which resulted in the vast majority of major suppliers experiencing revenue declines in 2008 compared to the previous year. One exception was Teradyne, which experienced revenue growth of 5.5% in 2008.

According to the market research firm, revenues in 2008 for the Top 10 IC equipment suppliers were totalled US$24.5B, a 25.8% decline from 2007. The decline was slightly more than the whole sector, which suffered a drop in revenue of 25.1%, VLSI Research said.

On the rankings front, the Top 5 suppliers remained entrenched in their positions for the third year in a row. Applied Materials continued to dominate the market, though second placed ASML significantly closed the gap on Applied, something that has not seen before.

ASML benefited from high ASPs of leading-edge lithography tools that were in high demand in the first-half of the year, which played a part in closing the gap considerably. Canon, the often regarded ‘also ran’ of the lithography market climbed several places to be ranked 7th, one position below Nikon. Canon would seem to have benefited from LCD sales that were very strong at the beginning of 2008, with revenue decline less than its Japanese rival Nikon, which has less exposure to the LCD market.

Dainippon Screen moved up a position to 8th, while Advantest fell from 7th to 13th on rapidly declining sales, highlighting the IC test specialist’s ongoing troubles as it depends on the memory market for much of its business. 

VLSI Research noted that the Top 15 suppliers continued to dominate sales, accounting for nearly 70% of the total IC manufacturing equipment market. Broken down by sector, 11 of the 15 suppliers are wafer processing suppliers, two supply test equipment, and one supplies both wafer processing and assembly equipment.

On a regional basis, European suppliers gained market share slightly, the impact of ASML holding revenue declines to only 15%. North American and Japan based suppliers lost 1% of share. According to the market research firm U.S. based suppliers held 45.7% of the market. Japanese suppliers held 35.6% and European suppliers held 18.7% share.

With capital equipment sales expected to continue to fall heavily in 2009, perhaps by as much as 50% over 2008 levels, companies with greater exposure to the memory markets could experience relatively higher revenue declines than those with less exposure, creating conditions for a potential shake-out in the rankings.