Global FEOL semiconductor equipment market to boom after the high demand for semiconductor chips

According to the latest market study released by Technavio, the global front-end-of-the-line (FEOL) semiconductor equipment market recorded a revenue of over USD 22 billion in 2015 and this growth is expected to exceed $24 billion in 2020.

This research report titled ‘Global Front-end-of-the-line Semiconductor Equipment Market 2016-2020’ provides an in-depth analysis of the market in terms of revenue and emerging market trends. This market research report also includes up to date analysis and forecasts for various market segments and all geographical regions.

FEOL equipment experienced a decline in 2015 due to a decline in sales of PCs and oversupply of DRAM. However, it will gain pace 2016 onward with the growing memory market and the increasing investments in fabs. The semiconductor market will see a high demand for semiconductor chips and memory devices from 2017 onward due to the growing adoption of IoT, high demand for connected devices, and increased vehicle automation.

Sunil Kumar Singh, a lead analyst at Technavio, specializing in research on semiconductor equipment, says, “Semiconductor device manufacturers are increasing their capital spending by expanding their production facilities or constructing new fabs. The majority of the investment for new facilities will be for the development of memory and logic ICs due to their high demand.”

Based on end-user, the report categorizes the global FEOL semiconductor equipment market into three segments. They are:

  • Foundry
  • Memory
  • Integrated device manufacturers (IDMs)

Foundry

The foundry segment dominated the global FEOL semiconductor equipment market in 2015 and will grow at a CAGR of 2.25% during the forecast period. In 2015, the foundry segment saw a decline in capital expenditure due to a decline in the sales of tablets and PCs, which impacted the demand for new equipment by the foundries. However, the market will see a positive growth rate 2016 onward until 2019. The foundry segment will gain momentum during the forecast period due to the increasing number of fab construction — some of which are scheduled to start construction in 2016 while some already started construction in 2015. Around seven foundry fabs are expected to be completed by 2017. The R&D spending by TSMC, the industry’s biggest pure-play foundry, rose by 10% in 2015 compared with 2014.

Memory

The memory segment will grow at a CAGR of 2.58% during the forecast period. In 2015, the memory segment saw a strong growth primarily due to structural changes such as segment consolidation in DRAM, higher market entry barriers, and more diversified demand. The major change includes the transition from planar to second-generation 3D NAND. The memory market is gradually transitioning to 3D NAND and next-generation non-volatile memory (NVM) technologies. The major memory customers are ramping up 3D NAND volume production, which will result in the growth of production equipment. For instance, Intel entered the 3D NAND business in 2016, partnering with Micron, which will significantly increase the spending levels on semiconductor capital equipment such as FEOL semiconductor equipment.

IDM

The IDM segment will decline during the period of 2015-2016 due to the cyclical nature of the semiconductor industry. The manufacturing of ICs is a long and expensive process, from the conceptualization to the actual production and thus mandates high investment for the installation of equipment and machines like lithography equipment for chip fabrication. The shift of the IC manufacturing companies to the fabless model for reducing the pressure on their cash reserves and improving the focus on their core strengths will steady the decline in price after 2016.

The top vendors highlighted by Technavio’s research analysts in this report are:

  • Applied Materials
  • ASML
  • TEL
  • Lam Research
  • KLA-Tencor

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