Fun With Data – Epi-Wafers & Equipment
Epitaxial[1] growth is a process by which silicon and III-IV compound devices are produced, with silicon substrates the leading material. Much has been said about the necessity for high quality wafers on which various devices can be deposited but the underlying demand is what is expected to drive the expansion of the epi-wafer industry over the next few years. Based on a model developed by Yole, demand in 2019 was for ~7.8m 6” equivalents, driven primarily by power electronics applications, but that will both grow and change by 2025 to ~21.3m 6” equivalents, driven by photonics, traditional LEDs, and Mini/Micro LED demand.
[1] Epitaxy is the deposition of materials on a crystalline substrate.
[1] Epitaxy is the deposition of materials on a crystalline substrate.
Epi-WAfer Demand by Application - 2019 - 2025 (f) - Source: Yole Development
Epitaxy equipment, ~$692m last year is expected to grow to $1.1b by 2026, roughly an 8% CAGR but there are only a few suppliers of this equipment and over 60% of the market is controlled by the top three suppliers, Aixtron (AIXA.GR), Veeco (VECO), and AMEC (688012.CH). As the technology for each application develops over the next few years, more specialized equipment could become necessary, which would give other tool vendors a better entry point when competing in this market. Aixtron’s dominance in the Chinese market has allowed them to grow share by 10% over the 2018 – 2020 period, while both others have lost share, with a portion of those gains and losses a result of the trade war between the US and China.
As noted smaller players are able to gain share with equipment such as MBE (Molecular Beam Epitaxy), which will be used for some forms of micro-LED production, but for traditional LED and Mini-LED, which use the same basic deposition process, the leaders have yet to be challenged, even by such equipment powerhouses such as Applied Materials (AMAT) and Tokyo Electron (8035.JP), who have been rumored to be entering the MOCVD market for many years. That said, as device sizes continue to shrink, production techniques tend to move more toward semiconductor processes and that gives semi tool vendors an entry point into the equipment supply chain as it morphs into a semiconductor-like market in 2025 and beyond. We doubt the big semiconductor equipment players will miss an opportunity to capture some of that potential business.
As noted smaller players are able to gain share with equipment such as MBE (Molecular Beam Epitaxy), which will be used for some forms of micro-LED production, but for traditional LED and Mini-LED, which use the same basic deposition process, the leaders have yet to be challenged, even by such equipment powerhouses such as Applied Materials (AMAT) and Tokyo Electron (8035.JP), who have been rumored to be entering the MOCVD market for many years. That said, as device sizes continue to shrink, production techniques tend to move more toward semiconductor processes and that gives semi tool vendors an entry point into the equipment supply chain as it morphs into a semiconductor-like market in 2025 and beyond. We doubt the big semiconductor equipment players will miss an opportunity to capture some of that potential business.
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