SEMICONDUCTOR EQUIPMENT MARKET ANALYSIS

Semiconductor Equipment Market Size and Trends

Global semiconductor equipment market is estimated to be valued at US$ 96.17 Bn in 2024 and is expected to reach US$ 179.63 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 9.3% from 2024 to 2031.

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The market is expected to witness positive growth over the forecast period. Significant investments by major players for advanced technologies such as IoT, AI, and 5G boosts demand for semiconductor equipment. Rising penetration of smartphones and electronic vehicles is propelling the need for semiconductors. Development of semiconductor fabrication units in countries such as India also provide new growth opportunities. Furthermore, increasing consumption of semiconductors in personal computers and servers augurs well for the equipment suppliers. However, uncertainties due to geopolitical issues may impede the growth of the market to some extent.

Global Semiconductor Equipment Market- Drivers

Chip Manufacturing Technologies Advancement

The demand for more powerful and efficient chips is continuously pushing the boundaries of semiconductor manufacturing technologies. The size of features on chips has decreased significantly over the years due to the introduction of new process nodes, from 180 nanometers to 7 nanometers currently. Transitioning to smaller nodes allows packing of billions of transistors in a small die area which increases performance and lowers power consumption of chips. This boosts their application in various devices from smartphones to data centers.

Moving to smaller geometries requires revolutionary changes in lithography, deposition, etching and other fabrication steps. Traditional optical lithography is reaching its limitations at advanced nodes below 7nm. Chipmakers are heavily investing in next generation lithography technologies like EUV, multi-beam e-beam and direct imprint to tackle resolution issues. Mass implementation of these technologies requires development of high throughput equipment supporting large wafer sizes. Several companies are working on 450mm and even 500mm wafer tools to maximize chip output per batch.

Demand for wafer uniformity, overlay and defect control are also increasing exponentially at each new node. Advanced process control solutions leveraging artificial intelligence and big data analytics are being integrated into process tools. Metrology systems are evolving to inspect wafers at angstrom level resolution. Innovative deposition and etch solutions from semiconductor equipment makers are required for 3D transistor architectures like FinFETs and gate-all-around FETs.

Market Concentration and Competitive Landscape

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Advancements in artificial intelligence, 5G networks, augmented reality, autonomous vehicles and other frontier technologies boosts demand for specialized high-performance chips. Production of AI inference chips, network processors, self-driving SoCs and other application-specific ICs requires dedicated semiconductor manufacturing processes. Setting up these specialized fabs from scratch demands substantial investment in tailored semiconductor machinery and equipment.

Even general purpose computing and mobile device chips are growing multilayered with integration of different components like CPU, GPU, NPU, modem, and otherson the same die. Manufacturing such system-on-chips with multiple lithography steps and 3D interconnects needs equipment customized for each function and interface. Edge applications relying on IoT and mobile also demand lower power chips suitable for miniaturized form factors. This changes the needs for semiconductor equipment to focus more on supporting 3D shapes, new materials, and integrating different devices seamlessly.

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Global semiconductor equipment market faces several challenges. Due to increasing geopolitical tensions, the global supply chain has become more fragmented and uncertain. Trade restrictions have made it difficult for many firms to access key materials and technologies. Additionally, development periods for the latest chip generations have extended, driving up costs. Demand fluctuations stress manufacturers' ability to respond flexibly.

Semiconductor Equipment Market Opportunities:

However, the market also presents opportunities. 5G implementation and new technologies like artificial intelligence, augmented reality, and autonomous vehicles boosts demand for more powerful, specialized chips. This drives the need for more advanced production equipment able to develop smaller, more energy-efficient chips. Growing sectors such as foundry and outsourced semiconductor assembly and test services are expected to drive higher investment in equipment. The adoption of new materials and extreme ultraviolet lithography could enable the development of more nodes, allowing Moore's Law to progress further.

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In terms of Product Type, semiconductor front-end equipment segment is estimated to contribute the highest share of 63% in 2024 of the market owing to continuous technological advancements in wafer fabrication processes. Front-end equipment such as wafer fabrication tools, mask tools and wafer manufacturing equipment are integral to wafer production. Constant demand for higher performance and more powerful semiconductors has accelerated the need for front-end equipment compatible with smaller nanometer process technologies.

Leading chipmakers continually invest in research & development to achieve scale and power efficiency improvements. The shift to newer nodes such as 5nm and 3nm drives replacement of existing front-end tools. The need for specialized equipment to make chips using advanced materials such as gallium nitride, silicon carbide, and graphene is also boosting the purchase of front-end equipment. Cost pressures on foundries to improve wafer throughput and yield has further spurred technology upgrades.

The integration of different domains such as photonics, MEMS and electronics into smaller footprint System-in-Package designs will create opportunities for new categories of front-end tools. Frontier areas involving heterogeneous and 3D chip architectures require novel fabrication techniques, benefitting front-end equipment vendors. Meanwhile, government incentives and availability of customized tooling/process solutions continue enhancing regional semiconductor self-sufficiency goals.

Insights, By Application- Proliferation of integrated circuits drives fab capacity additions

In terms of application, integrated circuits segment is estimated to contribute highest share of 39% in 2024 of the market,  owing to sustained proliferation across sectors. Growing digitization and burgeoning connected devices market has increased integrated circuits content in automotive systems, industrial automation equipment, mobile devices and servers. Most modern electronics are now powered by advanced SoCs (System on Chips) with higher transistor densities.

Escalating integrated circuits demand puts pressure on foundries to boost and continually modernize manufacturing capacity. This stimulates procurement of new semiconductor fabrication tools and equipment across different process technologies. Moreover, fabless chip design houses outsource more sophisticated IC wafer production to specialized foundries worldwide, driving additional CapEx.

Recent supply chain disruptions have also accelerated onshoring initiatives. Firms now strive for geographical capacity diversification and localized supply sources. This benefits the installation of new semiconductor fabs and equipment aimed at bolstering domestic/regional self-reliance. Emerging applications centered around Artificial Intelligence, 5G/6G networks and Edge Computing will further augment Integrated Circuits usage over the long term.

Insights, By Equipment- Focus on miniaturization boosts demand for wafer processing equipment

In terms of Equipment, wafer processing segment is estimated to contribute highest share of 47% in 2024 of the market owing to miniaturization imperatives. Advancing to higher nodes necessitates sophisticated wafer processing tools with precision capabilities at the nano-scale. Lithography systems, CMP machinery, deposition and etch tools form the core of modern foundry fabs. Continuous lithography upgrade cycles from optical to EUV lithography have encouraged new system procurements. Tighter process control and multilaayer film deposition/removal requirements stimulate CMP and etch tool replacements. Moreover, 3D architectures like FinFETs, GAAFETs and heterogeneous chips involve complex Wafer Processing steps beyond traditional planar technologies.

Wafer manufacturers accordingly source advanced equipment to enable 3D/multi-patterning flows. Applications in emerging domains like IoT, autonomous vehicles and quantum computing too require specialized wafer fabs, benefiting process tool vendors. Additionally, dedicated foundry capacities for compound semiconductors underline new greenfield fab tool stocking. Investments in next-gen lithography, deposition techniques and nanofabrication hold potential to further increase wafer tool demand.

Insights By, End-use Industry- Mobile Handsets segments contributes the highest share of the market owing to relentless consumer demand

By End-use Industry, mobile handsets segment is estimated to contribute highest share of 43% in 2024 of the market due to strong and consistent consumer appetite. The mobile devices sector has seen phenomenal growth over the past decade as smartphones have become ubiquitous.

Rapid innovation and new product launches coupled with falling prices have enabled smartphone penetration rates to rise dramatically across both developing and developed markets. Major brands release multiple new flagship models each year with incremental upgrades, keeping consumers in a perpetual cycle of wanting the latest offerings. This drives huge and regular volumes of semiconductor purchases by handset manufacturers to power and enable advanced functionality in their devices.

Untethered connectivity has also become integral to daily life for both work and personal use, cementing people's reliance on their mobile handsets. Users now expect high performance mobile computing experiences and rely on features like powerful multipurpose apps, multimedia functions, location services and more. This rising tide of functionality demands ever more advanced chips, promoting greater semiconductor content in smartphones.

Consumer electronics upgrades happen at an accelerating pace, leading users to replace existing phones before warranty expiry in many cases. Handset makers cultivate this through aggressive marketing of new releases that prominently emphasize innovative features. This deliberate strategy of planned obsolescence ensures a steady stream of new phone releases every year and keeps semiconductor manufacturers occupied as they cater to this significant market segment. This ongoing cycle plays a vital role in driving the dominance of the mobile handset segment in the end-use market.

Regional Insights

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Asia Pacific: The semiconductor equipment market in Asia Pacific continues to be the largest globally w 39% in 2024, driven by the strong presence and dominance of major players in the China and Taiwan. The region is home to some of the largest integrated device manufacturers, contract foundries and outsourced semiconductor assembly and test companies who have a significant presence across the value chain. Ongoing technology innovations and sizable investments in R&D have ensured Chinese and taiwan companies remain at the forefront, continuously driving the development of more advanced process nodes. Government funding and initiatives have also supported the growth and success of this industry. With a skilled talent pool and proximity to end-users, the regional market enjoys inherent advantages.

China: The semiconductor equipment market in China has emerged as the fastest growing in recent years. Considerable government focus and investments to develop domestic champions have strengthened the industry ecosystem. China's ambitious plans to build a digital economy and become more self-reliant have spurred both capacity expansions by local players as well as attracted global leaders to set up localized manufacturing and customer support centers. Rising wages have made Chinese foundries a cost-effective manufacturing source for many technology companies as well. While import dependence remains high currently, the country is moving up the value chain with growing indigenous design capabilities. Strategic partnerships are enabling technology transfers that aim to significantly reduce the technology gap in the long run.

Market Report Scope

Semiconductor Equipment Industry News

Key Developments:

• In April 2023, Applied Materials, Inc. is a global leader in providing materials engineering solutions for the semiconductor, display, and related industries. introduced VeritySEM 10, a new tool for measuring semiconductor features with high precision. It is designed to accurately gauge dimensions of device elements made using advanced lithography technologies like EUV and High-NA EUV.
• In March 2023, CREEN PE Solutions Co., Ltd., a subsidiary of SCREEN Holdings Co., Ltd., launched the Ledia 7F-L direct imaging system. This upgraded version is designed to meet the increasing demand for accurate pattern creation on large substrates and metal masks, mainly in telecommunications and IoT infrastructure sectors.
• In June 2022, Applied Materials Inc. acquired a Finland-based semiconductor equipment company named Picosun Oy. Picosun specializes in atomic layer deposition (ALD) technology, especially for special types of semiconductors. In May 2021, KLA Corporation acquired Anchor Semiconductor, Inc., a manufacturer of semiconductor inspection equipment, for US$ 67.5 million.
• In February 2022, Murata's pSemi Corporation, a company that is known for semiconductor integration, expanded its portfolio of 5G network infrastructure. It introduced new components compatible with various frequency bands (n257, n258, and n260) used in 5G, including three beamforming ICs and two up-down converters.

*Definition: The semiconductor equipment market includes machinery, tools, and other equipment used for manufacturing semiconductors such as integrated circuits (ICs) and microchips. This market provides the fabrication equipment needed for various steps in the semiconductor manufacturing process such as deposition, epitaxy, lithography, etching, and metrology. Major products sold in this market include wafer fabrication equipment, packaging and assembly equipment, and testing equipment. Leading countries in this market include Japan, the U.S., South Korea and several European nations.

Market Segmentation

• Product Type Insights (Revenue, US$ BN, 2019 - 2031)
  • Semiconductor Front-end Equipment
  • Semiconductor Back-end Equipment
•  Application Insights (Revenue, US$ BN, 2019 - 2031)
  • Discrete Semiconductor
  • Optoelectronic Device
  • Sensors
  • Integrated Circuits
•  Equipment Insights (Revenue, US$ BN, 2019 - 2031)
  • Wafer Processing
  • Assembly & Packaging
  • Testing Equipment
•  End-use Industry Insights (Revenue, US$ BN, 2019 - 2031)
  • PCs
  • Mobile Handsets
  • Televisions Assembly & Packaging
• Regional Insights (Revenue, US$ BN, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • South Africa
    • Rest of Middle East & Africa
• Key Players Insights
  • Applied Materials Inc.
  • ASML
  • Nordson Corporation
  • Cohu, Inc.
  • Lam Research Corporation
  • Tokyo Electron Limited
  • KLA-Tencor Corporation
  • Teradyne Inc.
  • ASM International N.V.
  • Nikon Corporation
  • Canon Inc.
  • BE Semiconductor Industries N.V. (Besi)
  • Veeco Instruments Inc.
  • Rudolph Technologies, Inc.
  • Onto Innovation Inc.
  • Ultratech, Inc.
  • Nova Measuring Instruments Ltd.
  • Mycronic AB
  • SPTS Technologies Ltd