More than Moore (MtM) devices, such as power GaN, power SiC, and VCSELs, are penetrating strongly into the consumer and automotive markets. In addition, a few other applications, like microLED, have huge potential and are ready to explode at any moment in mass production. Epitaxy and the equipment to manufacture these devices are the critical choke points. They not only enable their very existence but also define their performance and hence prove decisive in the business proposition offered by various players later in the supply chain.
The COVID situation has accelerated the demand for these MtM devices and equipment. In addition, different macroeconomic factors, such as the US-China tension, chip shortage, and quest for national self-reliance in semiconductor manufacturing have further exacerbated the demand for semiconductor manufacturing equipment (SME).
This analysis is well detailed in the new semiconductor manufacturing report released by Yole Développement (Yole) last month: Epitaxy equipment for More than Moore 2021. For this article, our analyst Vishnu KUMARESAN interviewed Veeco, a leading player in the MtM equipment space, to understand the SME market dynamics.
Vishnu Kumaresan (VK): Can you please introduce yourself, Veeco, and its broad portfolio of products?
Anil Vijayendran (AV): Hello Vishnu. I’m Anil Vijayendran, Veeco’s Vice President, Strategic Marketing.
Veeco is a global semiconductor capital equipment company. Solving difficult material challenges, enabling customers to innovate and improve the human experience is at the heart of everything we do. We accomplish this through the design and manufacture of differentiated semiconductor process equipment. Our ion beam, laser annealing, lithography, ALD, MBE, MOCVD, PVD, wet processing, dicing, lapping, and gas delivery systems play an integral role in the fabrication and packaging of the most advanced semiconductor devices. Veeco historically is best known for our integral role in enabling the fabrication of data storage and compound semiconductor devices such as LEDs. We acquired Solid State Equipment Company (SSEC) in 2014 and added wet processing technologies designed for the semiconductor, compound semiconductor, and data storage markets. Our most recent acquisition of Ultratech in 2017 expanded the company outside of compound semiconductors and accelerated opportunities for both our laser and lithography systems and also technologies like our ion beam deposition into mainstream semiconductor processing.
VK: There are many applications (e.g., Power GaN and MicroLED) where epitaxy is an integral part, and the market has huge potential. In your opinion, where is the biggest opportunity for epitaxy equipment in the immediate future?
AV: We see Power GaN as the largest immediate opportunity driven by fast charger applications. Continued growth will follow with automotive adoption. We see traction on 6-inch wafers currently and are engaged with customers transitioning to 8-inch for cost-saving advantages.
MicroLED growth comes a bit later, in our opinion, as microLED adoption will most likely occur with new applications such as AR/VR, automotive, smartwatches, and potentially smartphones. Veeco has a unique GaN-on-Si approach which has seen some success while we are also involved in As/P applications for red microLEDs at a leading developer and manufacturer of next-generation advanced display applications.
VK: Veeco seems to be uniquely positioned in the epitaxy equipment market, having products in MOCVD as well as MBE. How do you see your solution offerings positioned or evolving in the coming years for the upcoming applications?
AV: Our MOCVD systems are based on Veeco’s production-proven, proprietary TurboDisc technology that gives our customers a compelling solution for power GaN and microLED applications by delivering superior process uniformity and low defectivity.
Our Propel single wafer platform is capable of superior performance at 200mm and 300mm. We are seeing adoption in power GaN and at disruptive microLED players like Aledia who are using GaN-on-Si.
Our Lumina MOCVD platform is targeted at red microLED production, and we are engaged with leading microLED players.
Our MBE technologies give us unique advantages. Over the past decade, we’ve sold more than 50 R&D systems to a diverse set of customers across academia, national institutes and laboratories, and industrial R&D. By collaborating closely with these customers, we develop and enable next-generation technologies for over the horizon applications. Veeco is an ideal partner for these customers to scale devices as we collaborate with customers to scale devices into mass-production with our suite of deposition technologies, including ALD, IBD, MBE, MOCVD, and/or PVD. Today we are finding success with our offerings in photonics, power, and RF markets, but we see exciting opportunities developing in next-generation devices such as photonics (e.g., microLED/display, integrated photonics, LIDAR) as well as advanced computing applications (e.g., quantum computing).
VK: Historically, Veeco has been quite strong in the MOCVD market. When we see 2020 revenue figures, it seems Veeco has considerably increased its MBE market share as well. Is there a particular reason behind this?
AV: Our MBE business is an important business for Veeco. For decades, Veeco has been a pioneer and well-respected supplier of MBE systems, sources, and components. We have led in market share for many years, but we don’t discretely break out revenue numbers for this equipment in our financials. It seems there is more awareness of our market position as we’ve just been talking more about our MBE products. Recently we won a repeat order for our GEN2000® system, our 10th system sale to an industrial customer in the past year.
As our customers explore novel materials and new applications, they can rely on Veeco to deliver innovative MBE systems, sources, and components for use in complex R&D, as well as high-volume production environments.
VK: How does the geo-political situation impact Veeco’s business? Being a US-headquartered company, is Veeco facing headwinds in delivering to the Chinese market?
AV: China is an important market to Veeco, especially as they ramp their semi manufacturing. Like many US companies doing business in China, we have faced challenges. Throughout these challenges, we’ve maintained close connectivity with our customer base and continued to work closely with our Chinese customers to support their businesses. With a few exceptions where all US companies are constrained, we have largely avoided disruptions in serving the Chinese market.
VK: A few equipment suppliers seem to be facing supply chain issues in meeting the huge SME demand and hence delay delivering equipment. In general, how is the chip shortage affecting Veeco in terms of equipment demand and supply?
AV: While we aren’t immune to challenges in the supply chain, we have been working very closely with suppliers to monitor upstream risk. We’ve been making selective buys ahead of demand and have been sourcing alternative suppliers. Overall, supply chain issues have had a minimal impact on our operations.
VK: When do you see the different initiatives by governments, such as the CHIPS act from the US and a hinted-at European chips act, translating into SME demand?
AV: While it’s premature to know if there will be a direct benefit to Veeco, we do believe there will be indirect benefits. That is, semiconductor device manufacturers are expected to benefit, and the downstream effect is that equipment providers like Veeco will inevitably benefit as these companies scale their US operations.
VK: In your opinion, is the peak equipment demand in 2020 and 2021 part of an equipment demand cycle or a permanent shift? i.e., Do you expect a cooling period, or will the trend continue in the coming years?
AV: We see demand is becoming more secular rather than cyclical. Demand drivers such as mobile, high-performance computing, AI, automotive, 5G communication, and cloud storage are broader than past demand drivers.
For Veeco specifically, we expect growth to continue in 2022 and generally don’t provide guidance on the company’s expected performance beyond that. Based upon our backlog and recent customer wins, we have strong visibility and expect tremendous growth in our semiconductor market with broad contributions from laser annealing, advanced packaging lithography and EUV mask blank systems. And we also expect significant growth in our compound semiconductor market based on backlog and visibility. This growth is led by MOCVD and other systems selling primarily into photonics applications and, secondarily, GaN power.
VK: Would you like to add a message to our readers from the semiconductor and compound semiconductor industries?
AV: Veeco has transitioned its focus to the semiconductor industry over the past three years. We have seen growth in front-end semi and advanced packaging applications and recently announced that we shipped our first laser annealing system from our brand-new San Jose, CA facility. On the compound semiconductor side, 5G is driving growth across many of our product lines, such as wet processing, MOCVD, MBE, ion beam etching and atomic layer deposition, and we see opportunities in display and power as well. In fact, we were awarded the 2021 Process of the Year by 3DInCites for our 5G technology solutions. We have a number of beta systems performing well at leading semi and compound semi customers and feel we are well-positioned in multiple high-growth markets.
Anil Vijayendran serves as Veeco’s Vice President, Strategic Marketing where he oversees marketing strategies for all product lines. Prior to this role, he served as product line leader for Veeco’s Foundational businesses. He also served as vice president of marketing for Veeco’s wet processing business unit. Prior to his role with Veeco, Vijayendran was the vice president of sales and marketing for MiaSolé and has previously served as the director of business development and product management at Novellus Systems, a Lam Research company.
Vijayendran earned his MBA from the University of California, Berkeley, and also received a master’s and bachelor’s degree in chemical engineering from Massachusetts Institute of Technology.
Vishnu Kumaresan, Ph.D., is a Technology & Market analyst in the Semiconductor Manufacturing Team, part of the Semiconductor, Memory & Computing division of Yole Développement, France. He focuses on the semiconductor manufacturing domain, covering both equipment and material segments. His scope includes mainstream microelectronic applications as well as More-than-Moore applications. Having lived and worked in four countries, he has more than 11 years of international experience in the electronics industry, covering semiconductor, display, and software technologies. Prior to joining Yole, he worked as an Epitaxy engineer at Aledia, an advanced startup in the microLED display industry, and has previously gained corporate experience at IMEC, CNRS, Saint-Gobain, and Infosys.
Vishnu obtained his Ph.D. in Epitaxy, Material Physics & Chemistry from Sorbonne University, France, and his Masters in Microelectronics from the National University of Singapore and the Technical University of Munich, Germany.
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