Chinese companies account for only 4% of global semiconductor revenue (according to IC-Insights), but the country is increasing investment in new factories and is expected to account for around 20% of global chipmaking capacity this year. Since it is not easy to procure new equipment these days, especially for companies like SMIC, China-based semiconductor companies are actively buying used tools, so their prices are skyrocketing. .
Demand for chips is at record highs these days, which is why virtually all semiconductor manufacturers, as well as chip testing and packaging companies, are aggressively ramping up production capacity. Manufacturers of semiconductor manufacturing tools, such as Applied Materials, ASML and KLA, cannot meet the demand for advanced equipment and relatively mature devices. Lead times for most new tools are now around a year or more. Second-hand tools, on the other hand, can be acquired within a month.
Brokers and leasing companies source these tools from major chipmakers who no longer use them and resell them to semiconductor manufacturers who use mature process technologies. As a result, the demand for these machines increases along with the prices. Nikkei reports that prices for used semiconductor equipment have doubled over the past two years.
“At the top end, there are items whose prices have increased fivefold,” said a sales representative at Mitsubishi HC Capital, a leasing company.
According to data compiled by SEMI, global chip production equipment sales in 2021 jumped 44% to an all-time high of $102.6 billion, from $71.2 billion in 2020. Chinese companies again led the market buying tools worth $29.62 billion, up from $18.72 in 2020. The country was followed by South Korea ($24.98 billion) and Taiwan ($24.94 billion), where Samsung, SK Hynix and TSMC are based. Meanwhile, U.S. companies bought just $7.61 billion worth of semiconductor production machinery, down from $6.53 billion in 2020.
As companies like Intel, TSMC, Samsung, and SK Hynix eagerly invest in cutting-edge tools like ASML’s Twinscan NXE extreme ultraviolet lithography (EUV) scanners required for edge nodes, demand for chips manufactured using mature manufacturing process increases. Almost every chip is required to have a power management integrated circuit (PMIC) and these units are manufactured using mature technologies, typically on 200mm wafers. In fact, PMICs are just one example, there are hundreds of chip categories that are fabricated on 200mm wafers and are in high demand.
Due to the high demand for 200mm capacity, companies supplying suitable tools are capitalizing on this demand. Last year, spending on 200mm equipment reached $5.3 billion, this year it is expected to total $4.9 billion and remain at at least $3 billion in 2023. Chipmakers in the worldwide are on track to increase 200mm manufacturing capacity by 1.2 million wafers, or 21%, from early 2020 through late 2024 to a record 6.9 million wafers per month, According to another recent report by SEMI. The number of 200mm fabs will also increase, the organization believes.
“Wiper makers will add 25 new 200mm lines over the five-year period to help meet growing demand for applications such as 5G, automotive and Internet of Things (IoT) devices that rely on devices such as analog, power management and display driver integrated circuits (ICs), MOSFETs, microcontroller units (MCUs) and sensors,” said Ajit Manocha, President and CEO of SEMI.