April 7, 2005 - Driven by strong device unit demand and tight manufacturing capacity, worldwide semiconductor manufacturing equipment sales reached $37.6 billion in 2004, a 64.2% increase from 2003, according to Gartner Inc.'s report, Semiconductor Manufacturing Equipment Sales Exploded in 2004. The top 10 vendors had double-digit growth in 2004, however Gartner analysts attribute some of these large increases to slow sales in 2003.
"The 2004 market was marked by capacity buys with select technologies in especially high demand, such as memory and system-on-a-chip (SOC) test, flip-chip bonding, select deposition, etch and photoresist processing," said Klaus Rinnen, research VP for Gartner's semiconductor manufacturing and design research group. "The strength of Asia/Pacific, driven by foundry and memory investment and a cooling in growth in Japan, afforded Europe- and Americas-based equipment vendors an opportunity to regain market share against their Japanese rivals."
Applied Materials had revenue increased 96.6% in 2004, as its market share increased from 14% in 2003 to 16.5% in 2004. Canon experienced the largest growth rate, as its revenue increased 121.5% in 2004.
All equipment segments had strong growth. Wafer fab equipment, the largest sector, saw the strongest growth at 68.6%, following a weak performance in 2003. Packaging and assembly equipment expanded by 45.9%, while automated test equipment jumped 58.5%.
While the industry experienced significant revenue increases, Gartner analysts said equipment suppliers experienced mixed results as the year came to an end.
"The positive outcome for the industry in 2004 was the result of tight supply and demand fundamentals," Rinnen said. "The industry was severely underinvested heading into 2004, and the need for new capacity became urgent. However, the emergence of excess inventories in the second quarter and the subsequent cutbacks in manufacturing in the second half of 2004 heightened the sense of caution. This led to a premature opening of a supply and demand gap, and equipment orders declined in the latter half of the year."
Asia/Pacific was the fastest-growing region with spending increasing 108% in 2004. Asia/Pacific accounted for more than 50% of all equipment spending in 2004, a first in the history of the industry. "Strong spending by foundry, dynamic random-access memory, and semiconductor assembly and test services vendors afforded the rapid expansion," Rinnen said.
Japan's equipment purchases grew 48.4%, while European spending increased 22.8%. Gartner analysts said this slower growth was not from a lack of spending by European companies, but was caused by an export of investment money from Europe largely into the US and Asia. After three consecutive years of decline, equipment spending in the Americas grew 17.8%.