A Glimpse into the Southeast Asian Semiconductor Equipment and Materials Market
by Edwin Hall, Dan Tracy, and Christian Gregor Dieseldorff, SEMI®
The Southeast Asia region has long been the key manufacturing region for the assembly and test of semiconductor devices, especially the countries of Singapore, Malaysia, Thailand, Indonesia, and the Philippines. This area may be overshadowed by fab investment activities in China, Japan, Taiwan, and South Korea—though it is the largest market region for assembly and test equipment and is the second largest market region for packaging materials. Given this, new fab investments are also emerging in this region.
To get an idea of how Southeast Asia fits into the global market for semiconductor equipment (front- and back-end), the entire market will grow to $42 billion in 2007—an increase of about 4% over the previous year. This would surpass the $37 billion mark set in 2004 and would make it the third-best year [excluding year 2000] for the equipment market industry. The equipment market is forecasted to grow significantly in 2008 to $48 billion, a growth of about 13%.
For Southeast Asia, the semiconductor equipment market is expected to gain almost 8% from 2006 to 2007 ($3.7 billion to $4.0 billion). The assembly and test equipment market represents about 50%–55% of this market. Southeast Asia has experienced growth for the last three to four years and the growth rate year-over-year has outpaced Europe.
Not to be overlooked, the global semiconductor materials market, which consists of wafer fab materials and packaging materials, is forecasted to grow 14% from $36 billion (2006) to $39 billion (2007). This will be the sixth consecutive year that this market segment has seen positive growth. Similar to the equipment market, the materials market is predicted to experience healthy growth for the next two years.
In particular, the Southeast Asia semiconductor materials market has enjoyed consistent growth in the last two years and is expected to continue this trend. It is forecasted that for 2007, the materials market will grow from $4.9 billion to close to $5.5 billion—an increase of about 12%. It is predicted that growth will continue in 2008 to $6.0 billion. The packaging segment within this market is expected to reach $4.0 billion by the end of the year and is forecast to reach $4.5 billion in 2008. The region has outpaced Europe in this market and is estimated to also surpass North America in semiconductor materials revenue starting this year. This growth is driven by a consumption of advanced materials such as packaging substrates and green encapsulant materials.
Investments in front-end production capacity are growing in Southeast Asia. Already the location of fabs for Chartered Semiconductor, Hewlett Packard, UMC, ST Microelectronics and others are emerging in the region. For instance, IM Flash Technologies, a joint venture between Intel and Micron Technology formed in early 2006. Late last year, both companies announced their intent to add a fourth fabrication facility to their NAND flash memory manufacturing capacity in Singapore. Ground breaking is expected to begin in the second quarter of this year on an estimated 60K wpm flash fab, which is to cost about $2.6 Billion. In addition, Qimonda recently announced that they will build a new $2.7 Billion fab in Singapore with an expected wafer start of 60k wpm. These new activities will increase the momentum for greater fab capacity in Southeast Asia.
Another example, Infineon—headquartered in Germany—designs, develops, and manufacturers a broad range of semiconductor devices. The company has a worldwide presence including a front-end fab located in Southeast Asia (in Kulim, Malaysia), which is the largest non-memory fab in the world. This $1 billion fab began its production ramp-up in August 2006 and is in a full ramping mode at a capacity of 100K wpm producing power and logic semiconductor devices used for automotive and industrial applications.
In addition, Singapore is home to Chartered Semiconductor, the largest foundry in Southeast Asia. Chartered has plans to expand its wafer capacity in the upcoming months. The company has put in motion plans to expand their 300 mm fab (Fab 7) to 45,000 wafers per month focusing on geometries of 65 nm and 45 nm. Capital expenditures in 2007 are expected to be at $800M (most of it for 65 nm capacity). It is projected that by the end of 2007, Fab 7 will have a capacity of 25,000 wpm.
Chartered Semiconductor Fabs (Image courtesy of Chartered Semiconductor)
In conclusion, Southeast Asia is a region to closely monitor. Although its growth will not be as aggressive as its Greater Asian counterparts, it will make significant strides into the semiconductor equipment materials market as well as in the area of semiconductor wafer fabs.
Portions of this article were derived from the SEMI Worldwide Semiconductor Equipment Market Statistics (WWSEMS), the Material Market Data Subscription (MMDS), FabFutures, and the Fab Capacity Report. These reports are essential business tools for any company keeping track of the semiconductor equipment and material market. Additional information regarding this report and other market research reports can be found at www.semi.org/marketinfo.