Does China drive the epitaxy equipment market?

The epitaxy equipment market, including MOCVD, HTCVD, and MBE, is key for power and optoelectronic applications. Yole announces a $1.1 billion market in 2026.

“We are at a crucial period of history where each device around us is becoming smarter, greener, and more compact.” asserts Vishnu Kumaresan, PhD., Technology & Market Analyst, Semiconductor Manufacturing at Yole Intelligence, part of Yole Group. He adds: “Even the excruciating COVID-19 situation has had nothing more than a positive impact on the semiconductor industry by only further accelerating technological innovation. In such an innovation race to add more functionalities into our everyday devices using the More-than-Moore approach, the PPAC factor is improved not only by scaling but also by using non-Si materials and by heterogeneously integrating them to one another”.

In this regard, the Si market segment, along with other market segments including non-classical substrates such as GaAs, GaN, SiC, and InP, is growing at significant CAGRs. However, the choice of these materials comes with stringent material quality requirements and hence necessitates ultra-pure thin films grown using epitaxy equipment.

As of 2020, epitaxy equipment sales for More-than-Moore applications amounted to around US$692 million and are expected to grow to US$1.1 billion by 2026, with a CAGR_2020-2026 of 8%. However, these figures do not do justice to the vitality and omnipresence of the epitaxy step in mission-critical applications in market segments such as automotive (EV/HEV), consumer (smartphone, smartwatch, AR/VR), and aerospace & defense. It is further intriguing to realize that these complex epitaxy equipment systems used in HVM are supplied by only very few players, including some not very well known in the mainstream front-end market.

The market research and strategy consulting company, Yole releases today the Epitaxy Equipment for More than Moore 2021 report. With this new semiconductor manufacturing study, analysts present the status of the epitaxy equipment market and provide detailed information about different applications. The aim of Yole’s semiconductor manufacturing team is to deliver a comprehensive overview of the technological trends involving epitaxial layers. The report also gives a significant snapshot of the equipment vendors, the competitive landscape, and a deep exploration of supply-chain synergies by identifying key players in the epitaxy field.

As analyzed by this new Epitaxy Equipment for More than Moore 2021 report, this high demand for equipment is only satisfied by very few equipment vendors, today.
In total, Yole has identified about 11 major epitaxy equipment vendors in the More than Moore space. The top three, Aixtron from Germany, Veeco from the US, and AMEC from China clearly dominated the market in 2020, with more than 60% of the market share by revenue. However, this market is more complex. Indeed, it is also occupied by various other front-end equipment giants. Yole’s analysts identified AMAT, TEL, ASM International, Naura for example; some domain-specific players such as Taiyo Nippon Sanso, NuFlare, LPE; and also some unidentified start-ups from China.
According to Vishnu Kumaresan from Yole: “The dominance by the top three players in 2020 was not a big surprise. Therefore, it has remained the case at least since 2018. However, if we look at the top-2 players, between 2018 and 2020, the Germany equipment company, Aixtron increased its market share by 10%, while Veeco has seen its market share fall by 15%. One of the many reasons for this is the US-China trade tension, which has chosen the semiconductor industry as one of their battlegrounds. This battle is even more pronounced in the epitaxy equipment space as the demand is primarily driven by China. As a result, 2020 resulted in one of the best sales years in China for Aixtron, with approximately 57% of their revenue coming from the region, in contrast to Veeco’s mere 13% revenue”.
Naturally, Aixtron continues to be the leader in the overall epitaxy equipment market, with Veeco retaining its second spot (thanks to its improved MBE revenue in 2020).
In parallel, AMEC follows closely in third place with a good volume of equipment shipped for LED devices.
With the geopolitical situation evolving and the supply chain ever more fragile, Yole’s analysts expect the competition between equipment vendors to intensify in the coming years.