Specialist
Former SVP at Lam Research Corp
Agenda
- Semiconductor capital equipment market's overall operating environment
- WFE (wafer fab equipment) spend in H2 2022 and 2023 through logic, foundry, IDM (integrated device manufacturer) and memory
- Competitive positioning and market share across players such as KLA, Applied Materials, Nova (TLV: NVMI), Tokyo Electron (TYO: 8035) and more
- Demand outlook across geographies, capacity across Intel (NASDAQ: INTC), TSMC (NYSE: TSM) and Samsung (LON: SMSN), and transistor architecture advancements
- Impact of China's growth and geopolitical nuances, including impact of growing government subsidies
Questions
1.
What are your thoughts on the current state of the semiconductor capital equipment market? What do you think should be front of mind for investors?
2.
Could you discuss how the WFE [wafer fab equipment] market performed during the last recession during 2008-10? What do you think is different about today and do you consider the WFE market to be particularly recession-resilient in any particular subcategories?
3.
What is your overall view on capital intensity going forward? Do you think it could decline, stay the same or continue to go up? What could continue to drive capital intensity in the market?
4.
Are there any specific areas that could continue to see gains, due to higher intensity themselves and regardless of where WFE goes from here? For example, if we’re looking at lithography at the leading edge, it seems that could continue to gain WFE shares as high-NA [numerical aperture] ASPs are materially higher. Are there any other areas that might just continue to see gains simply due to those macro factors you outlined?
5.
Could you explain supply chain constraints in the WFE market today, and especially the increased logistics cost that some players are facing? Where are we in terms of these supply chain bottleneck constraints and what is your outlook for the supply side of the sector?
6.
ASML had reported in its Q4 2021 earnings that it saw material and chip shortages impact sales. Could you discuss that in light of the Russian-Ukraine conflict and a potential shortage of neon? In previous Forum Interviews, specialists have stated that this won’t create a significant impact on the industry, at least over the next couple of quarters, but do you think this could present any type of long-term headwind for litho players such as ASML or anybody else throughout the WFE market as we head into 2023?
7.
How robust do you expect demand for semi cap equipment to be across geographies, highlighting nuances in the US, Taiwan and China?
8.
What impact will the US CHIPS [Creating Helpful Incentives to Produce Semiconductors] for America Act have on the WFE market specifically? The bill proposed in its current iteration would include about USD 52bn in investments to support future domestic semiconductor growth across research, design and manufacturing. How much of this could be benefiting the semi cap equipment industry?
9.
Do you consider them to be overly necessary and likely to continue to boost the industry? If we’re looking at these investments as integral to matters of what the US would see as national security, we’ve also seen the EU pass its European Chips Act. A lot of investment has been coming from China, so if you look at things just particularly, what do you think would be the most likely net effect on the WFE space in the next five years from government stimulus worldwide?
10.
With the migration to new architectures that will use high-NA EUV [extreme ultraviolet], who do you think would be the potential winners or losers in the space when that occurs?
11.
We’ve seen process control intensity gain share in WFE over the past few years. What technology challenges might be driving this, so we can get a better sense of how long this trend might continue?
12.
One thing that’s come up is the potential shortage or expected labour shortages in the broader semiconductor sector over the next 3-5 years. There are estimates we could be short, roughly, 300,000 semiconductor workers by as soon as 2025. Do you think the shrinking pool of talent across the board has any readily available solution? How do you foresee talent shortages affecting the WFE market?
13.
India appears to be increasing its semiconductor stimulus as well. Do you consider the country a significant player at the moment? How significant a role do you think India and the Middle East could play in not only the semiconductor sector as a whole but the WFE market, in particular over the next 3-5 years and beyond?
14.
Could you help us understand the relative positioning of equipment players more at the leading vs trailing edge? How have dynamics shifted throughout the pandemic?
15.
Nova has seemingly emerged as a potentially disruptive player in the metrology sector using ML software. What do you make of that company and any other new entrants into the market from the past few years?
16.
What are barriers to entry for any equipment providers from fringe to mainstream? Are there any ubiquitous hurdles to climb for a player such as that to rise through the ranks and move themselves more to the mainstream across all of the subcategories we’re discussing?
17.
What are your expectations for structural growth in the WFE market going forward? We’ve seen upswings have historically lasted roughly 2-3 years, or 8-10 quarters. What are the main tailwinds that have been driving this stronger growth outlook? What are your expectations for when this upcycle could level out?
18.
How has market share been shifting among players in the WFE sector? Are there any specific pockets of that TAM opportunity that you think we should be focused on, such as memory? Who is taking share among the major players in NAND and DRAM?
19.
Could you discuss market share shifts across areas such as deposition, etch, logic or foundry? Are there any particular areas that seem the most volatile, in which there might be the most share gains to be had?
20.
What percentage of WFE spend from the larger players is spent on lagging vs leading edge nodes?
21.
Who’s better positioned in leading vs lagging edge across the sector? Who do you consider to be potential leaders in leading edge at the moment?
22.
What is your assessment of key developments or advancements made on the leading edge, highlighting possible product releases from Applied, Tokyo Electron and broader front-end equipment? How are we seeing transitions playing out in etch and deposition, and how are they impacting the major players in the market today?
23.
I’ve seen estimates we could reach a sector oversupply by as soon as 2025 if we continue to see increases in semiconductor capacity to help keep up with demand. Are there any points that could indicate whether foundries are purchasing more equipment that they might be rolling out in terms of capacity? Is there a way to measure whether could be an oversupply reached by a specific time frame?
24.
Are there any potential disruptors or wild cards for the WFE sector? Is there anything in particular that could prove to be a negative externality for the WFE market over the next 1-3 years?
25.
Is there anything additional you’d like to highlight regarding the WFE sector?
