Large Portion of Demand Coming from China
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
Demand for products using 200mm processes (eg, automotive semiconductors) has been increasing rapidly as of late. Regarding 200mm process capacity investment, firms are generally opting for used equipment rather than new equipment. We expect used equipment trading companies to benefit from this trend.
Demand surging for used 200mm semicon equipment
Equipment demand has surged strongly as of late, with semiconductors using 200mm wafers (eg, automobile semiconductors) remaining in short supply. Meanwhile, most semicon equipment makers have stopped producing 200mm equipment. While firms such as Applied Materials and Lam Research have resumed production of some 200mm equipment, they have yet to catch up with recent demand growth.
As a result, demand for used 200mm equipment is on the rise. We draw attention to Surplus Global as a related domestic play. Of note, eased US trade sanctions against Chinese foundry SMIC are pushing up demand for semicon equipment in China. Currently ramping up investment to recover lost orders, SMIC plans to invest in new 200mm wafer capacity of 45K wpm this year.
Large portion of used equipment demand coming from China
Currently, about 90% of used equipment from semicon players in countries such as Japan is being exported to China. In general, export contracts for used manufacturing equipment are being signed even before the equipment reaches the warehouse of a used equipment trading firm. In order to secure purchase of equipment in high demand, it is now common to purchase several bundled pieces of unpopular equipment at once. Due to these factors, used semicon equipment prices have risen by around 20% as of late. And, even in the case of Canon’s 200mm lithography equipment, for which production has recently resumed, used product prices are higher than new product prices at this time.
Meanwhile, the major semicon industry associations of China and the US have formed a joint working group to address semicon industry technology issues and trade restrictions. In particular, the working group plans to discuss export and trade regulations enacted by the Trump administration. In the future, if the US’s easing of semicon-related sanctions against China accelerates, the entire semicon equipment industry should benefit.