2024-04-21 - tech

The top 5 global wafer fab equipment vendors in 2023 are released

ASML topped the list in 2023.

According to a report published by the market research firm Counterpoint Research, the top 5 wafer fab equipment (WFE) manufacturers' revenue decreased by 1% year-on-year in 2023, reaching $93.5 billion, due to weak memory spending, macroeconomic slowdown, inventory adjustments, and low demand for smartphones and PC end markets.

Among these five WFE suppliers, ASML and Applied Materials achieved year-on-year growth in 2023, while Lam Research, Tokyo Electron, and KLA saw their revenues decline by 25%, 22%, and 8%, respectively. Strong sales of DUV and EUV systems propelled ASML to the top position in 2023.

Inventory adjustments and the downward trend in memory had a significant impact on overall revenue in the first half of 2023. However, the normalization of inventories and the rise in DRAM demand in the second half of 2023 helped to limit the overall revenue decline for the year.

Counterpoint Research analysis suggests that the foundry sector's revenue grew by 16% year-on-year in 2023, due to the continuous development of gate-all-around transistor architecture and customers' investment in mature node equipment for fields such as the Internet of Things, artificial intelligence, cloud, automotive, and 5G.

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Revenue in the memory sector declined by 25% year-on-year due to weak overall memory WFE spending (especially NAND). However, the strong momentum of DRAM in the second half of 2023 helped to curb this decline.China's strong push for self-sufficiency, the increase in backend DRAM shipments, and the growth in DRAM demand and mature node investment have driven a year-on-year increase of 31% in shipments to China, accounting for about one-third of the total system sales in 2023.

ASML Achieves Record Revenue in 2023

Despite the cyclical downturn experienced by the semiconductor industry in 2023, record sales in the fourth quarter of 2023 propelled ASML's revenue to a historical high of €27.6 billion for the year. The increase in service and upgrade revenue further supported this growth, with logic seeing a year-on-year increase of 60% and memory a 9% increase.

ASML's Chief Executive Officer, Peter Wennink, commented on the most complex high NA tools, saying: "Over the years, confidence in high NA tools as the most cost-effective solution in memory and logic has been growing. Our customers believe that high NA is a more cost-effective solution compared to multi-patterning with low NA tools, which is clearly reflected in the orders received."

Looking back at ASML's 2023, it can be seen that ASML's revenue from shipments to China doubled in 2023. Driven by increased demand for critical and mature nodes, China accounted for 29% of ASML's system net sales in 2023, up from 15% in 2022. In the fourth quarter of 2023, China represented 39% of ASML's sales. Despite stringent trade sanctions imposed by the United States, China's robust demand for chip manufacturing tools has bolstered the company's net sales. China will continue to be a major market for global semiconductor tool manufacturers in the coming years.

Additionally, ASML delivered the first batch of modules for the first high numerical aperture EUV system, EXE:5000, to customers in 2023. The transition to high numerical aperture systems aims to achieve feature size reduction and increased transistor density.

ASML anticipates limited growth in 2024 due to the unclear pace of recovery. Although there are positive signs in the chip industry, customers have been grappling with the negative effects of cycles and export control regulations. The strong demand in China for critical and mature nodes will persist. As ASML plans to increase capacity and technology investments to address the expected industry recovery in 2025, a slight decrease in gross margin is expected in 2024.

Counterpoint Research analysis suggests that high NA tools are expected to be introduced in 2024, but the industry is still in the initial stages of establishing a high NA support ecosystem. Chip manufacturers must now order these tools, as they have long lead times and must overcome many challenges surrounding the implementation of a high NA ecosystem before adoption in high-volume manufacturing (HVM).Logic Corporation will leverage their manufacturing and advanced packaging expertise until they no longer achieve significant improvements in power, performance, area, density, and cost before adopting high numerical aperture (NA) EUV.

The use of high-NA EUV (which is difficult to manufacture large chips due to the small exposure area) may involve a trade-off between the cost of advanced packaging and the cost savings from steering the chip set towards a direction of smaller chips, used in conjunction with high-performance packaging, further delaying the adoption of high-NA.

The increasing adoption of EUV in memory is a significant growth driver and a key to driving customers' artificial intelligence-related demands.

Artificial intelligence is now one of the top priorities for chip manufacturers as it is transforming into a healthy technological transition. The rebound in memory chip manufacturers' expenditure commitments has driven ASML's orders to a new high in the fourth quarter.

In anticipation of a surge in demand for generative artificial intelligence, chip manufacturers have prioritized DDR5 and HBM. Memory companies are developing the next generation of process nodes, increasing the number of EUV layers to create the smallest possible DRAM nodes, and leveraging EUV technology to drive pattern innovation to overcome obstacles related to the scaling of future memory nodes. The increasing adoption of EUV technology to accommodate most applications that require higher energy consumption, speed, and higher packaging density to improve overall productivity is driving the demand for these tools and will contribute to long-term overall revenue growth.

Furthermore, as the industry scales up to 12 and 16-stack HBM, chip manufacturers will need to leverage EUV technology, which is crucial for providing the performance required by interconnect devices to meet the growing demand.

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