semiconductor

Semiconductors

Industry Insight

Date August 2018

Synopsis

Current trends

  • During the past few years, the value of both 200mm and 300mm tools has risen sharply
  • Current projections for equipment market growth are in the low teens for 2018, which would place the equipment market above the last market high in 2011 but below the industry-high watermark set in 2000

 

Projected Values

 

Products and Services Segmentation

 

 

 

Semiconductor fabs require significant investment: A semiconductor fabrication plant (commonly called a fab) is where integrated circuits are manufactured. The manufacturing takes place in a cleanroom, which controls for particulate matter, temperature, and humidity and contains the tools used in the processing of silicon wafers. Semiconductor equipment is expensive to purchase, operate, and maintain, with new costs for the most sophisticated tools ranging up to $50 million each. Major processes include lithography, deposition, etch, diffusion, ion implant, and metrology. A typical fab may have several hundred tools.
 

Wafer sizes important: Fabs and tools are typically referenced in terms of the size of the wafers they handle, measure, and process. The current state-of-the-art wafer is 300mm, supplanting 200mm in the mid-2000s. Size is important, since the number of devices on a wafer increases geometrically with its diameter. Only the industry’s top chip manufacturers use 300mm tools, with 200mm tools still widely used across the industry; 200mm and 300mm tools are not compatible.
 

Equipment Valuable on Secondary Market: The secondary market for semiconductor tools is significant, estimated to be between $5 and $10 billion annually and comprising nearly 10 percent of the overall equipment market. Semiconductor tools are refurbished and sold through a highly fragmented supply chain. In addition to the original equipment manufacturers, semiconductor manufacturers, re-furbishers, dealers, and brokers buy and sell equipment. One piece of equipment can change hands several times before it is put back into a production or research facility.
 

Following are several key considerations for lenders to keep in mind:

  • A minimum of six months is recommended for the orderly liquidation of semiconductor equipment; more time may be needed in the case of a large tool set or complete facility
  • Liquidation expenses can be significant, as facilities and personnel must be maintained to protect the tools from contamination
  • Over the past few years, the value of 200mm tools has risen sharply as many objects in the Internet of Things (IOT) use 200mm wafers. Used equipment can be an inexpensive starting point to fulfill the demand
  • Some types of used equipment are in very short supply. The demand for 200mm wafers will continue into the foreseeable future for the fabrication of image sensors, analog products, microcontrollers, display drivers, and other legacy items associated with the IOT
  • Equipment is subject to both technological obsolescence and cycles of the industry
  • Technological obsolescence varies by tool type and technology