Lithography machine, etching machine and thin film deposition equipment are the three core equipment in the chip manufacturing process. If the chip is compared to a flat engraving work, then the lithography machine is a draft brush, and the etching machine is an engraving knife. The deposited film is the material that composes the work. The precision of lithography directly determines the size of the components, and the precision of etching and film deposition determines whether the size of lithography can be actually processed. Therefore, lithography, etching and film deposition equipment are the most important in the process of chip processing. Three types of main equipment, the value of which accounts for nearly 70% of the previous equipment.

The global market size of semiconductor equipment in 2018 was approximately 64.5 billion U.S. dollars, and the entire industry was in an oligopoly pattern. Among them, ASM has a monopoly on high-end lithography machines. Fanlin Semiconductor, Applied Materials and Tokyo Electronics are the three most important manufacturers of etching and thin film deposition equipment. Observing the current pattern and characteristics of the semiconductor industry, we need to understand the following three questions:

Why do semiconductor equipment manufacturers still have higher pricing power even with high customer concentration?

In the manufacturing industry, the more steps in the industrial chain, the stronger the voice of upstream equipment and materials suppliers. The wafer processing process requires thousands of steps at every turn. The wafer fab spends a lot of energy to make the yield rate reach the standard, and there is no spare capacity to develop equipment and materials. Therefore, the fab prefers to make more profits for the equipment manufacturers. Get its latest products and continuous technical support. Equipment companies are more like external R&D centers for wafer processing plants. The purchase of semiconductor equipment is not only an increase in production capacity for fabs, but also the basis for process refinement. This cooperative R&D model is another reason for the high profits of the equipment industry throughout the year. In addition, equipment customization also brings high customer stickiness and switching costs.

Why is the lithography equipment almost a complete monopoly, while the etching equipment is an oligopoly?

In the field of high-end lithography, immersion lithography is an alternative technology to dry lithography. The replacement of new and old technologies has brought a complete monopoly of lithography machines. ICP etching is not a substitute technology for CCP etching, but each has its own strengths and focuses on different process steps. The coexistence of new and old technologies has formed an oligopoly in the etching field.

Why has the proportion of the value of etching equipment increased in recent years?

The technical bottleneck of the lithography machine promotes the development of the etching market. In the case of stagnant lithography technology, there are generally two ideas to continue to improve the process, namely double lithography + etching, or multiple thin film + etching, no matter which idea is used, the etching step is inseparable Increase. Changes in chip design have brought about an increase in the demand for etching equipment. In recent years, the application of new structures such as 3D NAND has led to a substantial increase in etching steps in the memory manufacturing process.

Looking to the future, domestic semiconductor equipment is counterattack:

Engineer bonus helps the development of Chinese enterprises. The catch-up R&D risk is relatively lower, while the labor cost of Chinese enterprises is low, and the R&D efficiency is higher.

The transfer of the semiconductor industry chain to China and the localization of memory are major opportunities for Chinese enterprises. my country's semiconductor equipment sales have been increasing year by year in the global market share in the past ten years. In the case of uncertainty in the external environment, cultivating my country's own semiconductor equipment and material manufacturers has become the consensus of the entire semiconductor industry. Memory is the area with the highest proportion of semiconductor equipment expenditures, and the localization of memory provides a good growth opportunity for my country's equipment companies.

First focus on a certain field to become bigger and stronger, and then merge and integrate other businesses. This is the common growth model of international giants. Chinese companies should also refer to them when they are catching up. As one of the three main equipment, etching equipment may have a certain right to speak after entering the customer's production line. Domestic leading etching equipment manufacturers are expected to take the lead in forming a threat to international giants in the field of etching machines, and integrate domestic resources in the future to achieve domestic substitution of semiconductor equipment.

Source: Dongxing Research Circle