According to Dataquest figures just published, the worldwide market for wafer fabrication equipment rose 3% to $6,040m in 1991. Japan and North America experienced sluggish market conditions during the year, with a respective growth of 1% and decline of 4% from 1990 levels. Meanwhile, weak business conditions contributed to a 17% decline in Europe’s wafer fab equipment spending, while the one bright spot… was Asia/Pacific, which grew a healthy 64% from its 1990 level, according to Dataquest analyst Peggy Wood. Companies in this region are on an aggressive campaign to gain market share in DRAMs and other advanced semiconductor devices, she explained, and thus are adding the necessary capacity to support this strategy. Even with its depressed market environment in 1991, Japan still accounted for 50% of the worldwide wafer fab equipment market, followed by North America with 25%, Asia/Pacific with 14% and Europe with 11%; and Japanese wafer fab equipment companies increased their share of the worldwide market to 53% at the expense of both European and US wafer fab equipment manufacturers.

Own back yard

European company share declined 1.5 percentage points to 8%, while US company share shrank half a percentage point to 35%. Joint venture companies – mostly between US and Japanese organisations – maintained their 4% share. While Japanese companies gained market share in the US and Asia/Pacific, US wafer fab equipment company share experienced a downturn in these two regions. However, US company share increased in the Japanese and European equipment markets. Says Ms Wood, these shifts in market share reflect the increasingly global nature of the semiconductor manufacturing industry. While US firms are increasing their presence in the export market, they are having to compete more and more with Japanese equipment companies in their own back yard. San Jose-based VLSI Research Inc, meanwhile, has been surveying the ranking of the various semiconductor equipment companies in 1991, in revenue terms, revealing the top five performers to be Tokyo Electron Ltd TEL, Applied Materials Inc, Nikon, Advantest and Canon Inc. Under Canon then rank Varian Associates Inc, Hitachi Ltd, Teradyne Inc, General Signal Corp and, in tenth position, Silicon Valley Group. Combined market share was flat at 43%: of the total $9,900m market, the top 10 companies accounted for $4,200m. While the same names appear, the contenders’ positions in the league table have undergone some shuffling, and the split of sales between the companies has varied significantly. US companies edged up three percentage points to 41%, representing a significant comeback for the US. VLSI also points to a noteworthy milestone for Sematech, which has been working closely with all of these companies to improve US manufacturing.

Internships

Tokyo Electron Ltd maintained its number one position, it seems thanks to the breadth of its product line. Its etcher sales for example jumped 23% to $134m, while its chemical vapour deposition business increased 15% to $77m. Applied Materials Inc, the number two name, is described as a global achiever – it was one of the first US companies to open offices in Peking, and one of the first to manufacture semiconductor equipment in Japan. Applied Materials is now about to enter the East European community via student internships at universities in the former German Democratic Republic. Nikon is described as the technological heavyweight among lithographic houses. In 1987 it moved from position number seven to number one in just a year, growing at 66%. Its stepper sales – which give it 49% of that market – are more than twice that of its closest rival. Nikon was also one of the first companies to successfully exploit active matrix liquid crystal display equipment. Japanese company Advantest – a dominant character in logic and memory test equipment – is nowadays a multinational business, and has recently put in place a US management team. Canon, meanwhile, is the number two stepper supplier worldwide, with about half the sales of

its nearest rival. A bulk of the company’s business has been in Japan, a dependency which didn’t do Canon any favours in 1991, due to the country’s drastic drop in equipment purchases. Varian is described as a unique perennial – the only company to have retained a position among the top 10 suppliers across the entire 13 years that VLSI Research has been gauging the leaders. It specialises in thin-film sputtering and ion implantation equipment. In 1991, the company began to reap the benefits from its joint venture with Tokyo Electron. Hitachi, meanwhile, is descibed as a quiet company which seldom makes itself strongly visible in this industry. However, it has risen to leadership in Japan and Korea on the strength of its equipment, becoming the number four supplier of steppers, this year shipping some 40. It has also done well in chemical vapour deposition and etch. For a while, VLSI says, it seemed that Hitachi might displace Applied Materials as being number two in Japan, a threat which has however now largely dissipated. Hitachi’s stepper sales were down some 55% this year, the company down 4% overall – this was enough to drop it into seventh position from last year’s sixth spot. Teradyne, another perennial among the top 10, specialises exclusively in test equipment. About 52% of its sales are in semiconductor equipment, the rest in board test and telecommunications test. General Signal experienced a loss in position this year, due partly to its exit from resist processing, diffusion, chemical vapour deposition and manual wafer probing.

Give-and-take

Finally, Silicon Valley Group – in the league table now for two years in a row – seems to be doing well in resist processing and vertical diffusion furnaces, its overall sales this year up 15% at $235m. The company is, however, still struggling with its Perkin-Elmer acquisition, and overall lithography system sales were down 8% from $63m. VLSI’s interprets its findings as showing that the semiconductor industry is experiencing a significant shift within the wafer fab infrastructure. Chemical vapour deposition, it says, seems to have displaced lithography as the chief runner, long term. And, the research group continues, issues today seem more film-oriented than line-width oriented. So, according to VLSI, it isn’t so suprising to see film-oriented companies doing so well at the moment. Secondly, VLSI concludes that there is a clear US comeback. Sematech is credited for its part; a consequential improvement in US kit has lead to an increased willingness in the US to buy US equipment. Thirdly, VLSI notes, all the top 10 companies are becoming true multinationals and are successful in all parts of the globe. Fourthly, the current analysis seems to point to a more open give-and-take in trade: of the 2.8% increase in US share among the top 10, a full 2% was gained by extracting market share in Japan from Japanese competitors; only 0.8% came from US companies regaining US market share from Japanese companies.