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Chip materials market outshines IC equipment sector

Posted: 12 Sep 2008 ?? ?Print Version ?Bookmark and Share

Keywords:chip materials market? semiconductor equipment? photomask?

The semiconductor materials segment will be $12.6 billion larger than the semiconductor equipment market this year, according to a report from Publications. While a lot of attention is given to the equipment industry, the semiconductor materials market has been quietly posting record revenues since 2004 and is forecasted to dominate the equipment market over the next few years.

IC equipment vs. materials
The SIA said semiconductor revenues will hit $267 billion this year, marking the fifth consecutive revenue-breaking year for the industry. Not coincidentally, semiconductor materials have been recording record revenues and volumes over this period. Growth was seen in both the wafer fabrication materials and packaging sectors, both of which will reach $26.8 billion and $19.9 billion, respectively.

Regional trends
Japan continues to dominate the global semiconductor materials consumption at 22 percent market share. In 2004, Taiwan surpassed North America for the second spot. North America now ranks as fifth largest consumer of semiconductor materials by value after being surpassed by both Rest of World (ROW) region and South Korea over the past couple of years.

Included in the ROW region are Singapore, Malaysia, Thailand and other areas in Southeast Asia. Considerable levels of new fab capacity have been invested in these regions and each has a more substantial package assembly base compared to North America, according to the report.

Taiwan is expected to remain number two for the immediate future. While both Japan and Taiwan have significant fab and packaging bases, the materials market in the ROW region is primarily due to packaging materials.

The semiconductor materials market will grow in all regions except Europe and North America this year. China will have the strongest growth at 24 percent.

Wafer fab materials
Fab materials account for 60 percent of the total semiconductor materials market, with majority of revenues coming from silicon wafer sales. Taken together, silicon and photomasks account for 62 percent of the wafer fabrication materials market. All wafer fab product categories had strong growth in 2007 except wet chemicals, photomasks and sputter targets. This resulted in a growth of 16 percent for the entire segment. This year, market growth is expected to be more moderate, with overall growth of 7 percent. In 2009 and 2010, overall fab materials will have moderate growth of 9 percent and 6 percent, respectively.

Packaging materials
One notable change in the semiconductor materials market is the emergence of the packaging materials segment. As it becomes increasingly critical to the performance of the device, packaging materials represented about 33 percent of the total semiconductor materials market by revenue in 1998. The sector is forecasted to account for 43 percent of this year's semiconductor materials market.

Driving this shift is an increased use of laminate substrates and advanced polymeric materials for ball grid array, chip scale and flip chip packaging. These materials will have stronger growth in the coming years as portability and functionality drive more demanding packaging requirements.

As the price of gold has increased, the wire-bonding segment grew 36 percent in 2007. In response to the soaring price of gold, device manufacturers are turning to thinner diameter wires and are exploring copper wiring.

Like wafer fabrication materials, semiconductor packaging materials are also expected to exhibit slower growth. During the next three years, growth is forecasted within the range of 5 percent in both 2009 and 2010 to reach $20.9 billion and $22 billion, respectively. Excluding variabilities in gold pricing and assuming laminate substrates are removed from the forecast, the growth rate drops to 3 percent to 2 percent annually. Thus, a good portion of the forecasted growth in packaging materials is due to advanced substrates.

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