Top 5 dominated
According to data from Bloomberg, the world’s five largest semiconductor equipment providers in 2018 are:
- Applied Materials (AMAT): please see my post of “How does Applied Materials, lord of semiconductor equipment, make money?“
- ASML (ASML): please see my post of “ASML, who dominate TSMC’s fate“
- Tokyo Power Technology (TEL)
- Lam Research: please see my post of “How does Lam Research, top chip equipment player, make money?“
- KLA
These five major semiconductor manufacturers accounted for more than 70% of the global semiconductor equipment manufacturing industry in 2018 with their leading technology and strong financial support.
Q1 2024, performance
According to Counterpoint Research statistics, in the first quarter of 2024, the revenue of the world’s top five semiconductor equipment providers decreased by 9% year-on-year. In order of their revenue ranking, the specific data of individual manufacturers are as follows:
- Applied Materials (ticker: AMAT) quarterly revenue was US$6.63 billion, a year-on-year decrease of 1%.
- ASML (tickere: ASML) quarterly revenue was US$4.87 billion, a year-on-year decrease of 26%.
- Lam Research (ticker: LRCX) quarterly revenue was US$3.79 billion, an annual increase of 1%.
- Tokyo Electron (ticker: TOELY) quarterly revenue was US$3.62 billion, an increase of 18% year-on-year.
- KLA (ticker: KLAC) quarterly revenue was US$2.36 billion, a year-on-year decrease of 5%.
Semiconductor equipment supply chain
Because in the capital expenditure of advanced semiconductor processes, front-end process equipment accounts for as high as 80~90%, mainly provided by the five major equipment suppliers. In addition to Applied Materials, there are also ASML (ticker: ASML) , Lam Research (ticker: LRCX), Tokyo Weili Science and Technology (tickere: TOELY), Ke Lei (ticker: KLA).
These five major semiconductor equipment manufacturers account for more than 70% of the global semiconductor device manufacturing industry with their leading technologies and strong financial support.
Due to the technology gap, local manufacturers in Taiwan have less focus on front-end process equipment. The main entry points are equipment OEM, factory engineering, back-end process equipment, component maintenance and access, etc. Related supply chains such as Jingding, Fan Xuan, Xiangming, Ruiyun and Gongzhun etc.
Indtroduction in my book and blog
For a complete description of the semiconductor equipment supply chain, please see:
- Another of my previous post of “The lucrative semiconductor supply chain“
- A dedicated introduction to Section 3-2 of my book “The Rules of 10 Baggers“
Risks
China dominate their revenue
“Nikkei Asia” reported that China accounted for 43% of Applied Materials’ total sales from February to April this year, an increase of 22% from the same period last year; in comparison, Applied Materials’ 2023 fiscal year, The United States only contributes 15% to total annual revenue. Lam Research, 42% of its sales from January to March this year came from China, an annual growth of 20 percentage points.
US expands chip curb on China
In October 2022, the Biden administration’s chip curb on mainland China set off a storm in the semiconductor equipment industry. After the U.S. government announced the escalation of its curb on Chinese chips, U.S. suppliers such as Applied Materials, KLA and Lam Research were severely affected.
Take YMTC as an example
These American suppliers have begun to evacuate their employees from YMTC and suspended their operations in China. Applied Materials, KLA and Lam Research suspended equipment installation support for YMTC and have begun to evacuate their employees from YMTC.
Reuters revealed that several U.S. semiconductor equipment suppliers have received letters from the legal department and must immediately stop supplying some products to customers operating in China, including NAND wafers with 128 layers or above, 18 nanometers and more advanced. DRAM chips and high-end logic chips, etc.
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