Historic Opportunities For China's Semiconductor Equipment Market Under The Boom Of Chip Factory Construction?

Recently, the world's leading semiconductor lithography equipment maker recently raised its full-year revenue outlook. Peter Wennink, president of ASML, said it expects revenue growth of 35 percent this year, up 5 percentage points from its previous forecast of 30 percent, as logic and memory chip makers ramp up capacity to support digital infrastructure and demand for the company's products is strong.

The boom in semiconductor equipment is largely based on the global market's desperate demand for chip capacity. The world Semiconductor Trade Statistics Association (WSTS) released a forecast report showing that due to the strong demand for memory, the global semiconductor sales are expected to increase 19.7% year on year to 527.223 billion US dollars, far higher than the December 2020 forecast of 469.404 billion US dollars (up 8.4% year on year). , which will see double-digit annual growth for the first time since 2018, and set a record for annual sales far exceeding 2018's $468.7 billion.

WSTS said it expects global semiconductor sales to grow 8.8 percent annually to $573.44 billion in 2022, continuing to set a new record, as the current strong demand for semiconductors looks hard to find for a sharp weakening.

Obviously, this is very good for the semiconductor equipment market,

1.Crystal garden factory construction in full swing

There is a shortage of chip capacity and a significant increase in the number of fabs, both IDM and Foundry, with strong demand for semiconductor equipment.

Global semiconductor manufacturers will start building 19 new fabs by the end of this year and another 10 in 2022, according to SEMI. Equipment spending at these 29 fabs is expected to exceed $140bn over the next few years.

In terms of regional distribution, China and Taiwan each have eight fabs, followed by the Americas with six, Europe and the Middle East with three, and Japan, Japan, and South Korea with two each. These new plants will be based on 12h wafers and will have a total of 22 plants, including 15 in 2021 and seven starting in 2022.

The other seven fabs operate at four, six, and eight hours

Of the 29 wafer plants, 15 are foundries with a capacity of 30,000-220,000 wafers per month (about 8 hours), and 4 memory plants with a capacity of 100,000-400,000 wafers per month (8 hours).

2. Drive semiconductor equipment market growth

The boom in the construction of fabs has directly driven the growth of the semiconductor equipment market. As mentioned earlier, at least 29 new fabs will be built over the next two years, with equipment spending expected to exceed $140 billion. New plants typically take at least two years to get to the installation stage, so most chipmakers that started building new plants this year won't start operations until as early as 2023, though some could start operations as early as the first half of 2022.

Semiconductor equipment investment is expected to remain above $3 billion through 2022, with foundry accounting for more than half of total spending, followed by discrete/power devices (21%), analog ics (15%), and MEMS and sensors (7%).

Preliminary statistics released by the Japan Semiconductor Manufacturing Devices Association (SEAJ) show that In June 2021, Japanese semiconductor equipment sales (3-month moving average surged nearly 40% (38.3%) from the same period last year, In addition, the monthly sales reached the third-highest level since 2005, when data are available for comparison (only 305.4 million yen in May 2021 and 282 million yen in April 2021). The sales volume of Semiconductor equipment in January-June 2021 was higher than that of the previous year It jumped 27.5 percent over the same period.

Japanese semiconductor equipment sales are expected to grow 22.5 percent year on year in 2021 (April 2021 to March 2022) due to active investment in logic/foundry plants and expected high level of overall memory investment, SEAJ said in its forecast released on July 1 To 2.920 trillion yen, far better than the 2.5 trillion yen forecast in January 2021 and set an all-time record for the second year in a row.

In the semiconductor equipment consumption market, Taiwan's demand is the most prosperous. As about 80% of TSMC's CAPEX, this year is on advanced processes, the supply chain of essential EUV equipment below 7nm will benefit, including EUV lithography machine maker ASML, EUV optical cover box suppliers jiadeng, EUV equipment module OEM Fan Xuan and Gongzhon, and the material supply chain jingding, Ruiyun, as well as vacuum service solution manufacturer Riyang can also enjoy business opportunities. In addition, about 10 percent of TSMC's 2021 CAPEX will be spent on advanced containment and optical masks, which amounts to about $3 billion. It is understood that TSMC zhunan new plant is expected to mass production from the end of this year to the first half of next year, automatic machinery and equipment vendors Wanrun, semiconductor wet process equipment factory Hongsu, Xin Yun will be divided into large orders.

In addition, UMC also negotiated a contract with other customers, including Mediatek, Lianyong, and Ruiyu, to contract the production capacity of 27,500 pieces per month of the Nanke plant for the next 6 years in the form of advance deposit. UMC will use this fund to purchase equipment needed for the expansion of the 28nm process of the Nanke P6 plant.