Secondary Equipment Market Readies for New Era

Secondary Equipment Market Readies for New Era

While buyers and sellers of used semiconductor equipment wait out the prolonged industry downturn, most players agree that the market for used equipment and services will be significantly transformed in the coming months and years. With a dramatic increase in the supply of used equipment— and the increasing role it plays in both capacity planning and new products— buyers are increasingly looking to establish long-term, strategic relationships with value-added suppliers.

“We see sophisticated device manufacturing organizations laying plans to solidify value-added support in the long term for secondary equipment, services and technology.” said Tim Tobin, CEO of Entrepix (www.entrepix.com) a leading provider of Chemical Mechanical Polishing (CMP) and related process outsourcing and equipment services. “They are openly looking for and growing what they have classified as strategic relationships for the long term with companies who intend to play a large and valuable role in this space.”

According to Vince McGinty, president of Rhetech, a wholly-owned subsidiary of Semitool that provides new and rebuilt manufacturing equipment (www.rhetech.com), “There's a lot of used equipment becoming available. End-users are partnering with secondary equipment providers because they need help evaluating their alternatives and developing strategies to reduce their equipment acquisition costs.”

Over the past several years, the secondary equipment market has transitioned from a fringe interest on the part of some users to a mainstream capital acquisition strategy used by a large number of semiconductor manufacturers. Interest in secondary equipment is now well established throughout the user community. What was once a low bid, “buyer beware” marketplace has become a critical of part of capacity and product mix planning.

As the market rebounds, there will be a strong and increased need for both parts and service support in addition to the secondary equipment because so many device manufactures have harvested parts from non-essential equipment. Furthermore, they have laid off so many of the talented engineers and maintenance support staff who are skilled in assessing “as is/where is” condition of used equipment. Many OEMs have also reduced service and support staff, making established, value-added secondary equipment suppliers increasingly important partners.

Another complicating trend is the merger, acquisition, retrenchment, and even bankruptcy of some primary equipment providers. “Unfortunately, a lot of primary new equipment suppliers will most likely evaporate and there are likely to be substantial opportunities to support this equipment which no longer has primary factory support,” said Frank Bazarre, CEO of Axic, a supplier of new and remanufactured semiconductor wafer processing equipment (www.axic.com). “In the same vane, equipment brokers will have to be careful what they buy, as software and component availability may also be troublesome issues.”

New services and customer needs are also shaping the secondary equipment market. “Foundry service and process development engineering performed is a growing segment,” said Barrie VanDevender, vice president of sales and marketing at Axus Technology, a global leader in leading-edge CMP and wafer thinning solutions (www.axustech.com). “Companies that are using tools for new technologies, such as MEMS, photonic applications, or for novel substrates, are developing and qualifying their processes with smaller, specialized companies that source, remanufacture and integrate secondary equipment as part of a mix of services. There are a number of suppliers, as well as small foundry fabs, that are supplying these services to both large and small production users.”

Like new equipment, most observers don’t see the secondary market significantly improving until fab capacity improves sometime in the Q4 2009, and in 2010. While Tobin sees a tough 2010 in the US as the next round of mortgage defaults occur, he sees promise in 2009. “We believe we will see some rebound through the end of the year, culminating with a better than expected holiday season.”

“We are seeing as many requests for information and quotations as we ever have had, said VanDevender. “On the other hand, customers are being very cautious, resulting in a consistently slow equipment sales market. The service and parts business is returning, but the market is likely to have been reduced as a result of fab closings and continued low fab utilization.”

McKinty and Bazzarre don’t see the rebound until later in 2010. “The market for secondary equipment will tend to lag the market for new equipment,” said McGinty. “The market for secondary equipment tends to be dominated by purchases for production capacity. During the early phase of this upturn we will see IDMs and foundries increasing their production output using existing capacity, and only later needing additional equipment to continue expanding output. That will put off a major rebound of secondary equipment sales until the 2010 time frame.”

Public Meeting of the SESTG at SEMICON West

For additional information and resources, a public meeting of the Secondary Equipment, Services and Technology Group will be held at SEMICON West on July 15, 2009 at 4:00pm at the SEMI Theatre. A networking reception will be held immediately after a short presentation and introduction of the special interest group.

SESTG Officers Elected

On July 7, SEMI announced the results of the Secondary Equipment Services and Technology Group (SESTG) officer elections. Newly elected officials include new committee Chairman Eduard Hoeberichts, CEO of SIMAX Global Services; Vice Chairman Tim Tobin, president and CEO of Entrepix; and Executive Officer Bruce Kim, CEO of SurplusGLOBAL. The officers represent a diverse set of interests, as well as three major semiconductor producing regions around the world— the U.S., Europe and Asia.

More Information

For more information on the Secondary Equipment, Services and Technology Group, or to become a member, please visit

http://www.semi.org/en/IndustrySegments/SecondaryMarket/index.htm

Updated July 6, 2009