China's influence on equipment manufacturers increases, and semiconductor supply chain becomes more complete

EUV is finally in mass production. Some leading chip manufacturers plan to use it in 2018 or at the latest by early 2019. ASML president and CEO Peter Wennink said in 2017 that "the preparation for EUV to enter a large number of chip manufacturing will further accelerate."

ASML’s revenue in 2017 reached US$1.34 billion and received an additional 10 EUV systems in the fourth quarter. At present, ASML has accumulated 28 orders for unfilled EUV equipment.

ASML pointed out that as the company continues to support China’s expanding semiconductor industry, sales of semiconductor manufacturing equipment in China increased by more than 20% in 2016. In addition to shipments of foreign-funded fabs operating in China, ASML also plans to be in 2018. Supply to 5 domestic Chinese customers.

EUV revenue accounted for a new high, ArF-immersion is still the largest product in the market of yellow light equipment

The introduction of EUV into wafer fabrication has been delayed for a long time. As advanced processes using only ArF-immersion for yellow process are difficult to continue to bring cost benefits to manufacturers, semiconductor manufacturers have to commit to introducing EUV into reality. Therefore, the increase in the proportion of EUV's revenue to ASML is a predictable result. Advanced process introduction to EUV.

Although reducing the number of masks for the front-side transistor process key-layer will significantly reduce the use of ArF-immersion in the Key-layer, the transistor shrinks the metal line width further, and the manufacturer still uses ArF-immersion for cost-based considerations. Metal wire manufacturing process, coupled with the continuous expansion of memory manufacturers' production capacity, ArF-immersion is still a yellow light device that manufacturers rely on.

China's influence on equipment manufacturers rises

▲ ASML's local revenue and backlog order statistics in China source: Tuoba Research Institute

As shown in the figure, ASML's revenue contribution from local yellow equipment sales in China increased year by year. In 2017, it reached US$7.2 billion, accounting for 11.3% of ASML's total revenue. Although the proportion of ASML is relatively small compared to Taiwan, South Korea and the United States, It is 2.1 times that of five years ago, and the growth is not small. In addition, the backlog in China has reached a record high of 800 million U.S. dollars.

It is clear that China’s investment in the semiconductor manufacturing industry has not stopped. For ASML, China’s influence is increasing. The same is true for other semiconductor equipment industry and related material manufacturers. The semiconductor supply in the future can be foreseen. The chain becomes more complete.