Why We Believe Applied Materials’ Silicon Equipment Market Share Will Improve Going Ahead?

October 4th, 2016 by Trefis Team
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AMAT: Applied Materials logo
AMAT
Applied Materials

Historically, Applied Materials (NYSE:AMAT) has enjoyed the highest market share in the silicon equipment market, averaging around 14%-16%, in global semiconductor equipment sales because of its broad portfolio of products and its global reach. We have estimated the company’s market share at 16.3% in 2015. We believe Applied can manage to further improve its market share to 24.5% by the end of our forecast period. We base this on the strong surge in orders Applied has has been witnessing in the last few quarters. It is worth noting that Applied booked orders worth $3.7 billion in Q3, which is highest in any given quarter in the last 15 years. This should translate into strong sales growth for the company in the coming quarters.

The surge, in turn, reflects hefty uptick in customers’ capital expenditures on new equipment required for leading technologies wafer fabrication facilities. The growth in the orders in Applied’s silicon systems segment is being driven by the surge of investment in manufacturing capacity by its customers. The company’s leading customers are aggressively pursuing 7 nm and 10 nm process technologies, which is providing a key source of equipment demand for the company. Capacity additions on core geometries (22nm and 14nm) are strong as well. In addition, the company is seeing strong demand from its key customers that are upgrading their manufacturing capacity to satisfy an anticipated strong demand for 3D NAND Flash memory products. Furthermore, semiconductor manufacturing is highly capital intensive and complex, involving a wide range of advanced manufacturing processes  that occur in rigorously controlled environments over weeks and even months.  The range of equipment required is wide and supports a fairly large number of equipment providers.  Individual process areas are dominated by large providers, including KLA Tencor in process control and metrology, ASML in photolithography, and Teradyne and Advantest in testing. That said, through consolidation and consistent execution, a number of large diversified participants have emerged,  including Applied, Lam Research and Tokyo Electron.

Notes:

1) If you like or have any questions about our analysis, please write us back at content@trefis.com. We hope such lean communication sparks thinking, and encourages you to ask questions. The purpose of these analyses is to help you focus only on a few important things. 
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Applied Materials
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