Semiconductor Manufacturing Equipment Market

Market Overview

The global semiconductor manufacturing equipment market size was valued at USD 86.5 billion in 2022. It is projected to reach USD 175.9 billion by 2031, growing with a CAGR of 8.2% during the forecast period (2023–2031).

Semiconductor manufacturing equipment is used to make semiconductor circuits, memory chips, and other electronic components. In the early phases of the semiconductor manufacturing process, wafer fabrication equipment is utilized, whereas testing and assembly equipment is used in the later stages. Various emerging technologies, including 5G, artificial intelligence, and autonomous driving, are paving the way for the market's growth. Semiconductor manufacturing equipment is critical for the implementation of fabrication processes. The manufacturing of semiconductors is an arduous activity and demands superior-quality facilities. The semiconductor manufacturing equipment market is pegged to be mature and geographically concentrated, with a limited number of large firms located in a few countries. These firms supply a significant share of the equipment. The demand for semiconductor manufacturing equipment is surging with the rising investments in the semiconductor industry. This spending surge can be mainly attributed to the escalating demand for ICs and electronic products in which semiconductor chips are incorporated. Moreover, various innovations are being implemented in consumer electronics products, which also aids in the growth of semiconductor spending. Technological innovations, including artificial intelligence and cloud computing, also aid the development of the semiconductor industry.

Market Dynamics

What are the factors driving the market growth?

Growth of Modern Technologies, Including AI

Artificial intelligence is  gaining traction in a majority of applications today. Deep neural networks and machine learning are among the key applications of artificial intelligence, and the practical implementation of these technologies necessitates advanced technologies in the semiconductor industry. Semiconductor manufacturing equipment plays a critical role in the production of semiconductors that are designed for artificial intelligence. Thus, the growth of artificial intelligence will create growth prospects for the semiconductor manufacturing equipment market.

Demand for Electric & ADAS Vehicles

The demand for electric vehicles, as well as autonomous and connected vehicles, is increasing rapidly. The rising need for fuel-efficient vehicles, coupled with government regulations, drives the demand for these vehicles. Electric and autonomous vehicles require many chips and related semiconductor products for operation. Advanced Driver Assisted Systems (ADASs) are also gaining momentum, with people desiring automation in every aspect of life. The semiconductor content in these vehicles is considerably high, as automation requires a large number of semiconductor chips and components. A research study by Deloitte projects that partially automated cars will have about USD 100, and a fully automated car will have approximately USD 550 worth of semiconductor content. Several semiconductor devices, such as microcontrollers and sensors, are used in vehicle production, catalyzing market growth. Moreover, electrification, automation, connectivity, and security will further add semiconductor products to the automotive market in the coming years. In addition, the rising number of collaborations between semiconductor companies, OEMs, and tier-one automotive companies will result in market progression. For instance, Mobileye, Intel, and BMW collaborated to build 40 autonomous test vehicles. Audi collaborated with NVIDIA for the introduction of novel features to its A8 luxury sedan, which contains advanced systems that offer automated driving in intricate situations, including traffic jams.

Regional Analysis

The global semiconductor manufacturing equipment market is bifurcated into four regions: North America, Europe, Asia-Pacific, and LAMEA.

Asia-Pacific dominates the global market, backed by key players in China, South Korea, Japan, and Taiwan. The region has become a lucrative market with the growth of mobile communications as well as cloud computing technology. Taiwan is home to several prominent semiconductor manufacturing equipment providers, such as Taiwan Semiconductor Manufacturing Company and original design companies, such as Foxconn Technology Group and Quanta Computer Incorporated. Japan is one of the primary suppliers of high-end equipment and semiconductor materials. South Korea dominates the global HBM DRAM (dynamic random-access memory) market. China leads the global market in semiconductor production and consumption statistics. The country is home to a substantial number of international firms engaged in the manufacturing of electronic products for the global market. In order to decrease its dependence on chip importing, China announced the Made in China 2025 initiative and a National Integrated Circuit Plan, which entail various strategies to develop a closed circuit semiconductor manufacturing environment that has independence at each stage of the manufacturing process. China intends to develop superior-quality fabrication facilities and foundries. Currently, China has approximately 30 new semiconductor manufacturing plants. A majority of the new plants target memory chip fabrication facilities.

The growth of the North American market is contingent upon the expansion of the semiconductor wafer processing industries. Due to increased chip design costs, new materials, lower linewidths on a chip, and the need for integrated production processes, memory manufacturers and foundries are placing a greater emphasis on innovative equipment investments. Industrial automation and automotive sensors are expanding the uses and demand for semiconductors across all industries. As smartphone applications and other consumer goods gain popularity, the semiconductor manufacturing Equipment market industry is expanding. In order to get a competitive advantage, businesses invest more in process equipment. For instance, Intel will invest over USD 20 billion in two new chip manufacturing facilities in Ohio. This investment will considerably enhance the United States' ability to manufacture semiconductors, an essential component of computers, smartphones, vehicles, and other electronic devices. As the market for semiconductors expands, so will the market for semiconductor manufacturing equipment.

In Europe, several government measures have been implemented to drive the semiconductor manufacturing equipment market further. These initiatives provide numerous benefits to enterprises in the region that manufacture semiconductor manufacturing equipment, fostering the expansion of the semiconductor manufacturing equipment industry. Germany dominates the market for semiconductor manufacturing equipment and is expected to continue to lead the market for semiconductor manufacturing equipment in Europe throughout the projected period. Germany is the world's fourth-largest maker of electronic devices and the sixth-largest export market for equipment used in semiconductor fabrication. As a developed economy, the region is experiencing rapid expansion in the markets for 5G wireless technologies, connected transportation, and high-performance computing. All of these markets need the use of semiconductors; hence indirectly, the semiconductor equipment market is expanding in the region. Universities, governments, and businesses in the region are collaborating to develop new processes. Regional manufacture of semiconductors and related industries is expanding. In Europe, startup funding is rising as a result of favorable government policies.

For the Semiconductor Manufacturing Equipment market in the LAMEA region, factors such as increased investments in R&D activities and the expansion of emerging markets would generate favorable growth possibilities. With the ongoing globalization of the microelectronics industry and the localization of manufacturing capabilities in expanding electronic markets, the Latin American market offers new prospects for electronics manufacturing and supply chain firms. As the semiconductor industry enters a new growth cycle, a number of organizations are shifting gears by devising and implementing various strategies. Saudi Arabia exhibited a similar market expansion. The MICT (Ministry of Communications and Information Technology) of Saudi Arabia aspires to develop a cutting-edge and robust digital architecture supporting Vision 2030. Vision 30 intends to digitally change the nation, with a 50 percent rise in the Information and Communications Technology (ICT) industry and a 50 percent increase in employment.

Segmental Analysis

The global market is segmented by type, application, and dimensions.

On the basis of equipment type, the global semiconductor manufacturing equipment market is classified into wafer processing/wafer manufacturing and assembly and testing equipment.

The wafer processing segment dominates the market and is expected to remain the most prominent segment throughout the forecast period. A research study by the United States International Trade Commission estimates that 85% of SME spending is targeted at front-end wafer manufacturing. The wafer manufacturing process is complicated and sophisticated as it entails a high level of automation and digitalization. In order to attain a competitive advantage and strengthen operational efficiency, the wafer manufacturing plants implement a combination of lean programs and industry 4.0 techniques. While lean initiatives aid waste reduction, industry 4.0 largely entails digitalizing the manufacturing sector.

Based on application, the global market is segmented into a fabrication plant/foundry, a semiconductor electronics manufacturer, and a testing home.

The semiconductor fabrication plant/foundry sector accounts for the largest market share of semiconductor manufacturing equipment. This expansion is due to the growing demand for semiconductors in various industries, including consumer electronics, automobiles, medical devices, and machinery.

Based on dimensions, the market is segmented into 2D and 3D.

The 3D sector will likely experience the fastest growth rate and drive the market in the near future. This expansion is attributed to technological developments that make 3D integrated circuits (IC) more efficient. Moreover, the design of 3D ICs is anticipated to emerge as a promising alternative to conventional geometric scaling problems.

Recent Developments

• November 2022- ASML Holding NV, a leading global producer of chipmaking machinery headquartered in the Netherlands, has announced plans for a factory in New Taipei City, Taiwan, to assist international clients and the growth of the semiconductor sector.
• October 2021- KLA Corporation has announced the launch of two key facilities in Chennai, India, which will support the company's investment in innovative research and talent development. The Artificial Intelligence-Advanced Computing Lab, administered in collaboration with the Indian Institute of Technology (IIT) Madras, will serve as an AI-focused research and development center. In addition, a new office facility in Chennai facilitates the expansion of KLA's existing business activities as the company continues to expand and recruit in the region.