The Semiconductor Metrology/Inspection Market Dominated By Just 5 Companies

Feb. 28, 2018 8:17 AM ETAMAT, KLAC, ONTO, RTEC4 Comments

Summary

  • Five companies dominate the $6 billion Semiconductor Metrology/Inspection market - KLA-Tencor, Applied Materials, Hitachi High Tech, Nanometrics, and Rudolph Technologies.
  • These companies had a combined share of 87.0% in 2017, up from 75.3% in 2002, as the market has consolidated from 37 companies to 20.
  • Equipment purchases by Chinese semiconductor and memory manufacturers drove the market in 2017 and will continue in 2018.

Consolidation in the semiconductor metrology/inspection market has reduced the number of competitors from 37 in 2002 to 20 in 2017. In these past 15 years, this consolidation has moved just five companies to market dominance.

According to The Information Network's report "Metrology, Inspection, and Process Control in VLSI Manufacturing" (www.theinformationnet.com), the top five metrology/inspection suppliers were KLA-Tencor (KLAC), Applied Materials (AMAT), Hitachi High Tech, Nanometrics (NANO), and Rudolph Technologies (RTEC). These five companies increased their collective share of the overall global market to 87.0% in 2017, up from 82.4% in 2016. In 2002, the top five companies held a 75.3% share among 37 companies.

The report, which covers 27 different sectors and subsectors, reports that

  1. KLA-Tencor, a pure-play metrology/inspection company, led most of the sectors and subsectors.
  2. Applied Materials, a diversified company selling equipment to numerous other semiconductor equipment sectors as well as display, led the Defect Review Sector.
  3. Hitachi High Tech, which also sells semiconductor etch equipment, led the CD Inspection Sector
  4. Nanometrics, a pure-play metrology/inspection company, held a large share of the Thin Film Metrology Sector
  5. Rudolph Technology, which also sells advanced packaging lithography, display lithography, and fab automation software, led the Back-End Inspection market.

Note that in the chart above, I've eliminated revenue from other sectors and include only metrology/inspection equipment. Also, I've eliminated service and spare parts revenues.

Driving Forces for Future Growth

China and memory (DRAM and 3D NAND) are currently driving demand for the global wafer fab equipment market.

Rick Wallace, president and CEO of KLAC, reported at the company's Q2 2018 earnings call, that:

"Orders for KLA-Tencor equipment from native Chinese customers nearly tripled in 2017 and this strong momentum is expected to continue into 2018.

Memory was 71% of shipments. Demand was roughly evenly split between DRAM and NAND."

Michael

This article was written by

Robert Castellano profile picture
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Dr. Robert N. Castellano, is president of The Information Network www.theinformationnet.com. Most of the data, as well as tables and charts I use in my articles, come from my market research reports. If you need additional information about any article, please go to my website.

I will soon be initiating an investor newsletter. Information to register will be online on my website.

I received a Ph.D. degree in chemistry from Oxford University (England) under Dr. John Goodenough, inventor of the lithium ion battery and 2019 Nobel Prize winner in Chemistry. I've had ten years experience in the field of wafer fabrication at AT&T Bell Laboratories and Stanford University.

I have been Editor-in-Chief of the peer-reviewed Journal of Active and Passive Electronic Devices since 2000. I authored the book "Technology Trends in VLSI Manufacturing" (Gordon and Breach), "Solar Panel Processing" (Old City Publishing), "Alternative Energy Technology" (Old City Publishing). Also in the solar area, I am CEO of SolarPA, which uses a proprietary nanomaterial to coat solar cells, increasing the efficiency by up to 10%. I recently published a fictional novel Blessed, available on Amazon and other sites.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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