VLSI research recently released the list of top suppliers of critical subsystems to the semiconductor and related manufacturing industries in 2019. The data shows EUV adoption greatly benefited optical subsystems suppliers in 2019 as other critical subsystem suppliers battled through the tail end of the downturn.
The list of top 10 suppliers remains largely unchanged from 2018, with only Ichor Systems and Ultra Clean Technology trading 7th and 9th places respectively. ZEISS, a supplier of optical subsystems, was the standout performer of 2019, growing its total critical subsystems revenues by 9.5% compared to an overall market decline of -11%. This helped ZEISS increase its share of the critical subsystems market by 2.6 percentage points. While all other suppliers in the top 10 saw a decline in revenues in 2019, Edward’s managed to increase its market share by 0.3% as a result of completing the acquisition of Brook’s cryogenics business in 2019.
Figure 1. Top 10 suppliers of critical subsystems to the semiconductor, flat panel display and photovoltaic industries. Note that semiconductor sales account for approximately 86% of total critical subsystem revenues.
2019 saw the acceleration of EUV adoption in high-volume manufacturing. EUV technology is essential for manufacturing cutting-edge nodes and chipmakers have continued to invest heavily through the downturn in order to bring the technology into high-volume production. As such, suppliers of subsystems and components for EUV have been largely insulated from the wider industry downturn. ZEISS almost exclusively supplies the highly engineered optical lenses required for EUV and has been the main beneficiary among critical subsystems suppliers of EUV adoption. On the strength of their sheer cost, these lenses make a significant contribution to ZEISS’s revenue even though they ship in relatively low volumes, allowing ZEISS to seize a larger part of the total critical subsystems arket and take market share away from the other main critical subsystem suppliers.
Figure 2. Change in market share from 2018 to 2019 for the top 10 critical subsystems suppliers
Data from the report also highlights that the dominance of the top 10 critical subsystems suppliers is reaching a plateau. Historically, the top 10 suppliers have been increasing their combined share of the market. In the 2000s, significant M&A activity (particularly in the aftermath of the financial crisis) helped consolidate the critical subsystems market. However, in the past 10 years, the combined market share of the top 10 suppliers has plateaued at approximately 50%. We believe an equilibrium has now been reached as the main players have strong established positions in the market and there are fewer opportunities to gain significant market share of the total critical subsystems market through mergers and acquisitions.
Figure 3. Combined market share of the top 10 critical subsystems suppliers 2000 - 2019
The source of this data came from analysis published in VLSI’s Critical Subsystems report (March 2020). For more information, please visit https://www.vlsiresearch.com/public/csubs/.
Julian West is a technical and market analyst at VLSI Research Europe.