2011: A Look Back at the Semiconductor Equipment and Materials Market and Outlook
by Lara Chamness, senior market analyst, SEMI
Semiconductor Market Trends
2011 was a record year for the semiconductor industry in many regards. First and foremost, semiconductor revenues approached the long elusive $300 billion mark. Secondly, semiconductor materials passed the record high set in 2010 to reach $47.9 billion. And finally, semiconductor equipment sales grew 9 percent, off of a record growth year in 2010, recording its second highest level of $43.5 billion. Taken together, the semiconductor equipment and materials market reached its highest level ever.
Worldwide sales of semiconductor manufacturing equipment totaled $43.5 billion in 2011, representing a year-over-year increase of 9 percent. Equipment spending in 2011 posted sales $4.2 billion shy of the high of $47.7 billion reached in 2000 and represents the second highest level recorded for semiconductor equipment manufacturers. Considering the phenomenal growth of over 150 percent experienced in 2010, the “soft landing” experienced in 2011 was a welcome relief. If you look at equipment sales by major equipment category, 2011 set an all-time high for new front-end equipment sales at $34.6 billion. Front-end equipment includes Wafer Processing Equipment, Fab Facilities, Mask/Reticle, and Wafer Manufacturing equipment.
Due to aggressive spending by Intel and Samsung North America, North America claimed the top spot ($9.1 billion) in equipment spending for the first time in nine years. The Korea market claimed the second place for the second year in a row with $8.7 billion in sales. Knocked off the #1 spot, Taiwan fell to the third position with a regional decrease of 24 percent. Japan remained in the #4 spot, with $5.8 billion in equipment sales. Spurred by GlobalFoundries, equipment sales to Europe increased 81 percent in 2011. China and Rest of World both pulled back on their spending in 2011, with each accounting for 8 percent of the total new equipment market. Rest of World region aggregates Singapore, Malaysia, Philippines, other areas of Southeast Asia and smaller global markets.
If equipment spending trends in 2000 to 2011 are compared, South Korea represents a larger share (up 12 percent) of the total market in 2011 versus 2000, while North America and Japan saw market shares decline 6 percent. Europe accounts for about 4 percent less in 2011 than it did in 2000, while the share in Taiwan remained flat in 2011 compared to 2000. The ROW region, including China, now accounts for 16 percent of the market compared to 12 percent in 2000.
The global semiconductor materials market grew 7 percent in 2011 reaching $47.9 billion — resulting in the second consecutive record breaking year for the semiconductor materials market. This total includes both fab and packaging materials.
Historically, Japan had been the largest “semiconductor materials”-consuming region but Taiwan surpassed Japan in 2011 due to strong foundry investments and the significant presence of packaging companies that assemble advanced packages in the region. Japan still has an extensive installed fab base, thus driving the materials market in the region. The Rest of World, primarily Southeast Asia, represents the third largest market for materials given the dominance of packaging in the region.
Initial data for this year are promising with equipment bookings showing some improvement in recent months, although device shipments have shown some seasonal softening. Most analysts have predicted low- to mid- single digit growth for the semiconductor market for the year. Initially it was expected that the new equipment would contract about 11 percent this year, but given recent capital expenditure announcements by Intel, Samsung, TSMC, and Hynix, the total equipment market will likely experience a single-digit decline. The outlook for materials is more positive, with materials expected to trend with device revenues at about 4 percent for this year.
2011 was a remarkable year for many segments in the semiconductor industry with record revenues for devices, front-end equipment, and materials. While the growth outlook for 2012 is mixed, the industry as a whole is expected to fare much better than many were expecting about six months ago.
Portions of this article were derived from the SEMI Worldwide Semiconductor Equipment Market Statistics (WWSEMS) and the Material Market Data Subscription (MMDS). These reports are essential business tools for any company keeping track of the semiconductor equipment and material market. Additional information regarding this report and other market research reports is available at www.semi.org/marketinfo