Continued growth in 2007 for cleanroom products and services
By Robert McIlvaine and Karen Vacura, The McIlvaine Company
The world market for cleanroom consum-ables in 2007 will be over $5 billion, while the amount spent on new rooms will be $3.6 billion (see Table 1). Both of these sectors will represent growth over 2006 and records for the industry. The consumables market grew 9 percent in 2006 and is expected to grow 11 percent in 2007. This is in inflated dollars. The market adjusted for inflation is expected to grow by 7 percent. While this is good in many industries, it is below the double-digit growth rate enjoyed by the cleanroom industry in the 1980s and 1990s.
Gloves will be the largest single segment of the market, at 21 percent. Laundry revenues will constitute 19 percent of the market. Garment rental can be derived by combining reusable clothing and laundry revenues. Paper, supplies, and packaging are included in the “Other” segment (see Fig. 1).
The semiconductor industry will by far be the largest purchaser of consumables, with a 41 percent market share, followed by the disk drive manufacturing industry (see Fig. 2).
The semiconductor industry had a big year in 2006, with sales of semiconductor equipment rising 18 percent above 2005 figures. Performance in 2007 is expected to be equally good, with the likelihood of double-digit growth again in 2008. Growth in the semiconductor industry will be driven by new applications, a growing economy and the continued transition to 300 mm wafers. Microsoft’s new Vista operating system and increased cell phone functionality are two specific drivers.
In 2007, Japan will install almost a quarter of the world’s new semiconductor cleanrooms, followed by North America, Taiwan and South Korea (see Fig. 3).
Facing increased competition, some U.S. and European producers are responding by building a manufacturing presence in Asia through partnerships or greenfield facilities. India and China are attractive because of the size of the potential markets.
The Chinese pharmaceutical industry will ultimately be a major market for cleanroom products and services, but presently it is not. Intellectual property protection remains a major concern in China and this has slowed construction of facilities by international pharmaceutical companies. Nevertheless, China has a growing number of domestic research institutions that must build new biopharmaceutical facilities in order to manufacture emerging products. With these developments, China is beginning to position itself as a significant competitor in the world biopharmaceutical production market.
Medical device industry
The medical device market in China is the fastest growing in the world and is expected to sustain a growth rate of 10 to 15 percent over the next ten years. This will mean that, by 2010, China will be the third largest medical device market, and will rival the Japanese market as the second largest by 2020.
Flat-panel display industry
The market for flat-panel cleanroom products is largely confined to three Asian countries. Taiwan will be the leading purchaser in 2007, with Japan in second place (see Table 2).
China, while not a large purchaser of cleanroom products in 2007, will see an increase in manufacturing in future years. According to China’s Ministry of Information Industry, around 80 percent of flat-panel TVs in the China market are currently imported from foreign countries and the ministry is working on developing the local flat-panel display industry. Domestic sales and exports of Chinese-made LCD TVs rose six-fold last year to over 4 million units.
TFT-LCD producer Chi Mei Optoelectronics Corp, AU Optronics Corp., LCD-polarizer maker Optimax Technology, and Sony Corp. are some companies expanding their production facilities in China to take advantage of lower wages and proximity to China’s growing TV-manufacturing industry. The manufacturers are also trying to attract suppliers to the area.
Disk drive industry
The global hard disk drive industry will expand to over 700 million units by 2010, driven by increasing usage in multiple markets including computers, consumer electronics, mobile phones and automobiles. Consumer applications represent one of the fastest-growing segments within the hard drive industry.
Ultimately, huge new cleanroom markets will be created by the manufacture of nanomaterials and nanodevices. But in 2007, the cleanroom opportunities will be mostly for research establishments. The federal government is spending more than $1 billion per year on the White House National Science and Technology Council’s National Nanotechnology Initiative. The National Science Foundation is distributing much of that money to fund research projects ranging from semiconductor nanocrystals and nanoelectromechanical sensors to new materials for propellants, explosives, and nanoparticles. The Department of Defense has a large nanotechnology program for military purposes, and the Department of Energy is focusing on new fuels and energy sources that incorporate nanotechnology.
Despite the growth of a few large players, such as ITW, the cleanroom industry remains fragmented with a few exceptions. Suppliers of filter media are mostly international, and several major filter-media manufacturers are now producing their products in China for both the local market and export.
The suppliers of rooms, devices, panels and other components are typically small companies with an industry or geographic focus. Suppliers of garments, gloves and other consumables are also not global in their reach. With the growth of the industry in Asia, there are more companies being created than are being absorbed through acquisitions, so fragmentation will accelerate in the near term.
In general, 2007 will be a good year for suppliers of cleanroom hardware and disposables. However, it will not show the double-digit growth that the industry has historically achieved.
Robert McIlvaine is president and founder of The McIlvaine Company in Northfield, IL. He can be reached at email@example.com.
Karen Vacura is the air filtration market editor for The McIlvaine Company. She can be reached at firstname.lastname@example.org.