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13 Jul 2023
Key sector for laser and photonics expected to bounce back strongly from 2023 'adjustment'.
The market for semiconductor manufacturing equipment - one of the largest sectors for sales of optics and photonics products - is now expected to shrink by nearly 20 per cent this year, before bouncing back strongly in 2024.
That’s the latest prediction from the Semiconductor Equipment and Materials International (SEMI) industry group, which updated its forecast during the Semicon West trade show taking place this week in San Francisco.
“Despite current headwinds, the semiconductor equipment market is set to see a strong rebound in 2024 after an adjustment in 2023 following a historic multi-year run,” said Ajit Manocha, SEMI’s president and CEO.
“Projections for robust long-term growth driven by high-performance computing and ubiquitous connectivity remain intact.”
2022 peak
For context, SEMI’s latest projection comes after the industry reached an all-time record high of $107.4 billion in 2022, as chip manufacturers raced to alleviate supply shortages in the aftermath of the Covid-19 pandemic.
But 2023 has seen a sharp contraction in demand from that peak, with the overall market expected to shrink by nearly 19 per cent, to $87.4 billion.
That is largely driven by sales of wafer fab equipment, including wafer processing, fab facilities, and mask/reticle equipment, declining to $76.4 billion, a sharper drop than SEMI had predicted at the end of last year.
However, a 15 per cent rise next year should see the wider market recover to somewhere in the region of $100 billion in 2024, with wafer fab equipment accounting for $87.8 billion of the total.
The remainder of the market includes back-end equipment, largely for test, assembly, and packaging functions. Semiconductor test equipment market sales are projected to contract by 15 per cent this year, to $6.4 billion, this year, before rising 8 per cent in 2024.
Meanwhile, assembly and packaging equipment sales are expected to drop by more than 20 per cent, to $4.6 billion, before rising by around 16 per cent next year.
DRAM glut
The 2023 slump largely reflects much weaker conditions in the memory production sub-sector, where continuing weak consumer and enterprise demand will depress equipment sales by around one-third from the 2022 total.
Of the different types of memory chip, DRAM equipment sales are expected to fall 28 per cent this year, to $8.8 per cent billion, before rising 31 per cent in 2024.
NAND memory device production is witnessing an even sharper swing, with SEMI saying that equipment sales will drop more than 50 per cent this year, before surging nearly 60 per cent in 2024, to an expected $13.3 billion.
Last week Samsung, the world’s leading manufacturer of both DRAM and NAND devices, said it would post its lowest quarterly profit for nearly 15 years for the three months ending June 30 - largely a result of the current glut of chips and resulting drop in prices.
However, some semiconductor industry analysts say that the memory downturn will bottom out in the September quarter, with prices potentially rebounding towards the end of this year. Samsung also looks set to increase its dominance of the memory sector, as it is continuing to invest in production capacity despite the current conditions.
Equipment sales for foundry and logic applications are proving much more resilient in comparison, but will still be down around 6 per cent this year, to $50.1 billion.
“Demand for leading-edge foundry and logic in 2023 is expected to remain stable, with a slight softening balanced out by a rise in spending on mature nodes,” SEMI announced. “Foundry and logic investments are projected to increase 3 per cent in 2024.”
In terms of geographic demand, China, Taiwan, and Korea are expected to remain the top three destinations for equipment spending in both 2023 and 2024.
Taiwan is forecast to regain the lead in 2023, but China should return to the top position next year, thinks SEMI.
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