Monday, April 2, 2012

Can Nikon or Canon ever again catch ASML in semiconductor lithography market?

USA: A decade ago, it was a three company race to achieve dominance in the semiconductor lithography market, but ASML has emerged as the clear leader with no signs of relinquishing its lead, according to the report 'The Global Market for Equipment and Materials for IC Manufacturing' from The Information Network.

As shown in the chart below, in 2001 Nikon held a 41.6 percent share of units shipped, compared to 34.8 percent for Canon and 22.4 percent for ASML. In 2011, Nikon’s share dropped to 27.8 percent, Canon’s share dropped to 15.2 percent, while ASML’s share increased to 57 percent.Source: The Information Network, USA.

In the low-end, the i-line stepper market, which is the least sophisticated lithography technology to make a chip, Canon held a 48.8 percent share in 2006, Nikon was second with a 34.9 percent share, while ASML was third with only a 16.3 percent share. In 2011, Canon held a 52.9 percent share, Nikon held a 40 percent share, and ASML held a 7.7 percent share.

While the product mix landscape was similar in 2006 in the i-line market, these tools sell for only $5 million. However, the really big money is in ArF immersion tools that sell for $30 million and more depending on all the bells and whistles.

In 2006, the first year of the immersion market, ASML jumped to a 72.4 percent share, while Nikon held a 27.6 percent share and Canon did not participate. In 2011, ASML’s share increased to 82 percent while Nikon’s share dropped to 18 percent.

We see a bifurcation in the market that started in 2004, when ASML for the first time led the ArF market with a 37.5 percent share followed by Nikon with a 33.8 percent share, and Canon with a 28.8 percent share. It appears the current lithography landscape is set, and the next battleground will have to be EUVL for Nikon or Canon to regain market lead in premier technology.

Indeed, Nikon got off to an early start, shipping one Extended Ultra Violet Lithography (EUVL) tool in the fourth quarter of calendar year 2008, but delayed further development. In mid-2010, Nikon announced its high-volume EUVL tool will “ready” in 2014-2015. Meanwhile, in 2011, ASML shipped 3 EUVL units with an average selling price of $52 million (equivalent to the price of 10 i-line steppers).

The monopoly held by ASML in the high-end stepper market (ArF and EUVL) has and will continue to have an impact on semiconductor manufacturers. ASML products command a much higher selling price than competitors, and in the semiconductor market advanced lithography is so critical that buyers are willing to pay the higher price.

For example, while ASML held a 57 percent share of unit shipments in 2011, it held an 81.6 percent share of revenues.

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