The payoff for pursuing non-chip markets? Less volatility (hopefully)


with Risto Puhakka
Click here to enlarge image

As president of VLSI Research Inc., Risto Puhakka has responsibility for subscription services, sales, marketing, and business development. He spoke at the SEMI Industry Strategy Symposium (ISS) in January, where he presented new research data on vertical markets that have unique requirements for thin-film equipment and materials, each requiring a different supply chain. He said these markets, combined with the semiconductor equipment market, represent a $600 billion market over the next five years.

Q: One of the bright spots at ISS was that you saw some growth potential in markets outside of semiconductors.

The basic idea I wanted to get across is that if you’re an equipment supplier and you’re playing on multiple markets, the probability is that you have a less volatile top-line and there’s a higher growth rate than being on semiconductors alone, while semiconductors is the largest.

Q: Some of the other areas that you’ve identified are hard disk, PV, and displays.

These are the largest. Hard disk, PV cells, and displays, and then semiconductors. We expect the hard disk market to grow 7.1% over the next five years, PV cells growing at 39.6%, then displays 9.7%, and semiconductors 7.5%. Let’s assume those growth rates hold; we’re talking a combined market of over $600 billion.

Q: Is the idea that today’s companies–equipment and materials suppliers that have been servicing the semiconductor industry–ought to be, if they’re not already, looking at these other markets?

Yes, and the payoff would be hopefully less volatility, although that’s not the case this year (laughter). It gives you a much larger total available market, assuming the forecasts are true. You are likely to see somewhat higher growth rates because these markets behave differently.

Q: How many are already doing that?

Quite a few actually. We track about 400 equipment companies and about 100 of them are doing more than one market.

Q: You’ve also broken it down into optical desk manufacturing, MEMS, and other markets.

The way I wanted to also highlight this is all of the different vertical markets because they have a different client base: optical disk, MEMS, data storage, PV cell, display manufacturing equipment, and then semiconductor equipment.

Q: Where does the nano part come in?

The naming of this whole thing is a little bit challenging. I’m using “nano manufacturing” but we know the PV cells are not in the nanometer levels. Neither is display. But that’s basically the term that’s been coined. The other term that people are using is “vertical device markets”–something along those lines. Your clients are different in the optical disks vs. MEMS vs. data storage. You basically have a completely different supply chain for all of these vertical silos.

VLSI Research expects growth in a variety of thin film vertical markets over the next five years. The three largest markets are photovoltaic manufacturing, displays and semiconductors.
Click here to enlarge image

Q: Do you see much difference in terms of the requirements, what bells and whistles are needed?

Yes! The only thing that’s common for these: they are all using thin films. But after that everything changes, from the substrate shape and size to critical dimensions. Optical disk, for example, doesn’t necessarily need lithography. There’s a huge difference. The common denominator is that they are all using thin films.

Q: Do you see a lot of new companies getting into these markets?

Yes. We recently did a survey of the top 10 PV equipment suppliers, and five out of those 10 are companies I never heard of. Established companies will have to fight with the new ones that are solely focused on that particular market.