2002 Semiconductor EquipmentMarket Share Analysis (ExecutiveSummary)

Executive Summary

Publication Date: 2 May 2003

Authors Mark StrombergKlaus RinnenJim WalkerRobert JohnsonDean FreemanTakashi OgawaMasao Kuniba

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2002 Semiconductor Equipment Market Share Analysis(Executive Summary)

2002 Market Share OverviewSemiconductor manufacturing equipment sales experienced a second year ofsteep decline of over 30 percent in 2002. Gartner Dataquest's final marketshare estimates for the year show that growth for manufacturing equipment(excluding test equipment) stands at negative 30.4 percent. The dire outcomefor 2002 was the result of a slower-than-anticipated end-user demand and anincreasing level of macroeconomic uncertainty that hit semiconductor vendorsrapidly in the second half of 2002. Consequently, spending plans were adjusteddownward, projects were delayed or shelved and equipment orders wereeither pushed out or canceled. At the end, sales in 2002 were at a level that is54 percent below the peak in 2000. Total market size was $18.5 billion, usingSAB 101 accounting (revenue recognition policy for companies publicly tradedin the United States) as the basis for revenue in 2002. Equipment purchaseswere focused on upgrades at facilities and bringing R&D capability for0.13 micron or 300 mm, or both, into first production capacity.

In 2002, the regional rate of decline was influenced by steep cuts in sales intoJapan and Europe, compared with, relatively speaking, spending "strength" inAsia/Pacific, partly affected by increased sales into China. Consequently, in2002, Asia/Pacific became the largest region for equipment consumption,overtaking the Americas, which slipped into second position in 2002. Japanand Europe followed. Taiwanese sales, after tumbling in 2001, actuallyoutperformed the overall market by nearly 20 points. As for the Rest of Asia/Pacific, sales decreased less dramatically than worldwide sales, as increases inChina offset declines in other parts of the region. While Japan saw the smallestdecline of only 19 percent in 2001 compared with the 33 percent declineworldwide that year, sales into Japan during 2002 dropped by nearly43 percent. Japanese companies were late to join the "spending party" from1999 through 2000, and they also were slower in curtailing spending. But giventhe severe business conditions in 2002, Japanese companies cut back sharplybecause a restructuring of the industry was in full swing.

The Ranking ShuffleThe top players and their market share positions are listed in Table 1. The2002 market was kinder to companies in "hot" technology segments, such aslithography, photomask, copper interconnect, factory automation, contactprobe, flip chip and interconnect bonding. On the other hand, companies moredependent on capacity buys and greenfield (new facilities) activity were morenegatively affected. The relative weakness of Japan's equipment consumptionwas a negative for Japanese vendors in 2002, just as the relative strength ofJapan in 2001 was a plus for these vendors. Milder declines in the packagingand assembly segment, compared with the wafer fab equipment segment,allowed players in the former to regain some ground lost in 2001. Despite amilder reduction, only one pure-play packaging and assembly companyranked in the top 20 in 2002. Tokyo Seimitsu moved into the No. 14 positionin 2002 from No. 20 in 2001 through a combination of a slight increase in itspackaging and assembly sales as well as a strong expansion of its wafer fabequipment business in 2002.

2 2002 Semiconductor Equipment Market Share Analysis (Executive Summary)

©2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 2 May 2003

Table 1Top 20 Semiconductor Manufacturing Equipment Vendors by Revenue in 2002(Millions of Dollars)

2002Rank

2001Rank

2002Revenue

2001Revenue

Change(%)

2002 MarketShare (%)

1 1 Applied Materials 3,672.4 4,918.8 -25.3 19.5

2 2 Tokyo Electron 1,795.3 2,752.1 -34.8 9.5

3 5 ASML 1,596.3 1,273.3 25.4 8.5

4 3 KLA-Tencor 1,209.0 1,886.7 -35.9 6.4

5 4 Nikon 801.4 1,525.4 -47.5 4.2

6 7 Novellus Systems 796.9 1,138.0 -30.0 4.2

7 8 Lam Research 588.9 1,131.0 -47.9 3.1

8 10 Hitachi 529.2 633.0 -16.4 2.8

9 6 Canon 515.6 1,195.9 -56.9 2.7

10 9 Dainippon Screen 397.5 775.8 -48.8 2.1

11 11 Brooks Automation 371.6 372.6 -0.3 2.0

12 12 Axcelis Technology/SEN 290.6 352.1 -17.5 1.5

13 16 Asyst Technologies 268.4 234.0 14.7 1.4

14 20 Tokyo Seimitsu 222.7 193.5 15.0 1.2

15 14 ASM International 218.6 256.4 -14.7 1.2

16 13 Varian 201.4 320.3 -37.1 1.1

17 31 ASM Pacific 172.2 135.2 27.4 0.9

18 15 Ebara 167.4 238.3 -29.7 0.9

19 18 Mattson Technology 166.0 214.2 -22.5 0.9

20 25 HP 163.7 174.1 -5.9 0.9

North American companies 9,017.0 12,860.4 -29.9 47.8

Japanese companies 6,084.1 9,892.4 -38.5 32.2

European companies 2,601.0 2,541.4 2.3 13.8

Asia/Pacific companies 185.6 192.8 -3.7 1.0

Joint-venture companies 92.6 113.9 -18.7 0.5

Identified companies 17,980.3 25,600.9 -29.8 95.3

Other companies 891.7 1,546.2 -42.3 4.7

All companies 18,872.0 27,147.2 -30.5 100.0

OEM elimination 325.0 498.0 - -

Net Total 18,547.0 26,649.2 -30.4 -

Notes: All data exclude testing equipment.2001 rankings changed because of the inclusion of original equipment manufacturer (OEM) sales.Table 1 includes revenue from acquisitions in 2002 for the entire year; 2001 data are prior to acquisitions; growth isorganic as well as through acquisitions.OEM elimination is the deduction of sales to original equipment makers.Source: Gartner Dataquest (April 2003)

2002 Semiconductor Equipment Market Share Analysis (Executive Summary) 3

©2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 2 May 2003

Gartner Dataquest Perspective2002 saw a further decline in capital equipment spending. After steep dropsover the past two years, spending shrunk 54 percent from the peak in 2000.With the decline of 2002, spending has dropped below 1999 levels but remainsabove 1998 levels. A short spending bubble in mid-2002 brought some firstsequential quarterly sales improvements but was only short-lived, giving in toa second contraction in equipment, which will last into the first half of 2003.Differences in regional and individual spending preferences led to somechanges in the rankings among top vendors.

For 2003, we expect the return of positive growth to capital equipment. Whilethe economic holding pattern in the first quarter has reduced the growthpotential for the semiconductor industry in 2003, a resolution of some issuesappears to be under way, lowering the degree of uncertainty and making roomfor strengthening economic growth. When we fold in improvements in supplyfundamentals during 2002, we hold some level of optimism in our forecasts.Consequently, we anticipate a most likely revenue growth of 10 percent forsemiconductor equipment in 2003.

For the full reports on semiconductor equipment, see the Gartner DataquestMarket Statistics "2002 Semiconductor Equipment Market Share Analysis"(SCEM-WW-MS-0149), "2002 Deposition Equipment Market Share Analysis"(SCEM-WW-MS-0151), "2002 Semiconductor Lithography EquipmentMarket Share Analysis" (SCEM-WW-MS-0152), "2002 Etch and CleanEquipment Market Share Analysis" (SCEM-WW-MS-0153), "2002 IonImplantation Equipment Market Share Analysis" (SCEM-WW-MS-0154), "2002Diffusion/Oxidation and RTP Equipment Market Share Analysis" (SCEM-WW-MS-0155), "2002 Packaging and Assembly Equipment Market ShareAnalysis" (SCEM-WW-MS-0156), "2002 Manufacturing Automation EquipmentMarket Share Analysis" (SCEM-WW-MS-0157), and "2002 Process ControlEquipment Market Share Analysis (SCEM-WW-MS-0158).