Applied Materials and semiconductor equipment market

Dr. Robert N. Castellano, The Information Network

NEW TRIPOLI, USA: Applied Materials just announced an outstanding Q1. Along with the announcement came conjecture by some industry analysts regarding Applied’s market positions in the semiconductor equipment industry.

While I will not know Applied’s rankings for 2009 for another few months after I collect revenue breakouts from them and all their competitors, we can take a look at the trends over the past 20 years to try to see how Applied is positioning itself against its competitors, particularly Novellus in the vacuum space.

Applied Materials led the world in equipment sales beginning in the early 1990s, and has essentially continued to outperform the industry average. The chart below shows how Applied has positioned itself in the market in 1979, 1989, 1999, and 2008.Source: The Information Network, USA

In 1999 Applied had more than double revenues of its closest competitor Tokyo Electron. In 2008, the company was only 35 percent ahead of number 2 player ASML.

Applied competes in the semiconductor equipment market in nearly 20 sectors, significantly more than any other supplier. As a result, there is little overlap in individual sectors between Applied and the other top 10 market leaders.

For example, there is no competition with ASML whereas Applied competes with Tokyo Electron in plasma etch, deposition, and clean sectors. It competes with KLA-Tencor in metrology/inspection sectors, and Lam Research in plasma etch sectors.

If we hone in on the sectors, we can better understand how Applied is faring and whether July was a rapid ramp in overall equipment sales or share gains.Source: The Information Network