Semiconductor Photomask Market: DNP and Photronics Catching Up to Toppan

Includes: OMG, PLAB
by: Robert Castellano

The semiconductor photomask market extended its losing streak by dropping 12% in 2008 after a 2% drop in 2007, according to the report: Mask Making, Inspection, and Repair: Market Analysis and Strategic Issues, recently published by The Information Network, a New Tripoli, PA-based market research company.

The merchant semiconductor photomask market dropped 12% in 2008 to sales of $1.8 billion. The market will drop another 11% in 2009, with the high-end photomask market (less than 90 nanometers) dropping 18% while the low-end market will be flat. We see new field programmable gate array (FPGA) product designs as a core driver of photomask industry growth in this challenging market environment.

For 2008, state-of-the-art production of 45 nanometer masks for semiconductor masks ramped up production and 65 nanometer masks moved into volume production. A 65 nanometer mask set is comprised of 40 photomasks, five of which are critical (45 nm design rule) and 15 subcritical (90 nm design rule). A 65 nanometer mask set can 1.8 times that of a 90 nanometer set, while a 45 nanometer mask set can cost 2.2 times that of a 65 nanometer set.

In 2008, Toppan led the worldwide merchant market with a 35% share down from a 39% share in 2007. DNP followed with a 34% share, up from a 32% share in 2007.

U.S.-based Photronics (Nasdaq: PLAB) gained 1 share point.

Once this economic downturn is over and mergers and acquisitions in the industry resume, we will most likely witness further consolidation in the mask market with the acquisition of Photronics, leaving Compugraphics, a subsidiary of OM Group (NYSE:OMG), as the only U.S.-based photomask supplier.

Disclosure: long PLAB