SAN FRANCISCO—Applied Materials Inc. failed to lead semiconductor equipment vendors in sales in 2011 for the first in 20 years, as strong sales of lithography tools propelled Dutch lithography vendor ASML Holding NV into the top sport, according to market research firm VLSI Research Inc.
ASML (Veldhoven, the Netherlands) notched sales of $7.88 billion in 2011, up 32 percent from 2010, according to VLSI (Santa Clara, Calif.). Applied, which slipped to No. 2, posted equipment sales of $7.44 billion, up 2 percent from 2010.
Applied slipped from the top spot in chip equipment sales for the first time since 1991, despite two months of Varian Semiconductor Equipment Associates Inc. sales were added to Applied Materials revenues after the close of acquisition in November 2011. According to VLSI, lithography spending overwhelmed non-litho related equipment spending, causing the change in rankings
Overall, the top 15 equipment suppliers grew 13 percent in 2011, according to VLSI. The lithography equipment suppliers, ASML and Nikon, grew 27 percent combined, more than twice the industry growth rate, the firm said.
Japanese equipment suppliers also recorded higher than average growth rates, VLSI said. Advantest led growth of the Japanese suppliers by recording 28 percent sales increase in 2011, helped by the acquisition of Verigy Ltd. and strong SoC test equipment sales in North America, VLSI said.
VLSI said 2011 equipment spending was driven by aggressive capacity expansion in the foundry and logic sectors, mostly the result of increasing demand for mobile devices. Capacity expansions in memory sector were limited as strong pricing pressure reduced profitability for memory suppliers and their ability to expand, the firm said.
One big reason for ASML's large sales growth is because litho is fast becoming a sole supplier business. ASML has more than 75% market share in immersion litho, and therefore possesses tremendous pricing power.
When EUV tools are sold, expect the gap between ASML and Applied Materials to widen considerably. Since Nikon and Canon have negligible EUV presence, ASML can charge whatever they want.
Expect EUV tool prices above $100M for this reason. Fabs could cost well above $10B. We could see the next big wave of consolidation in our industry then. I wonder how Applied Materials' Mike Splinter and Randhir Thakur plan to tackle this important strategic shift??? Litho tool prices will eventually impact companies' inclination to scale, and thereby impact sales at Applied Materials and elsewhere.
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