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2024 Wafer Fab Equipment revenue will remain stable before a 2025 surge

Despite -12% quarter-on-quarter revenue drop in Q1 2024,  the Wafer Fab Equipment 2024 calendar year revenue is expected to increase +1.3% year-on-year, reaching $108.1B.

Wafer Fab Equipment (WFE) revenue is estimated to increase in 2024 by +1.3% year-on-year (YoY) to $108.1B. This is due to a WFE expenditure increase across advanced logic as well as NAND and DRAM memory, while legacy node investment is robust. Stronger 2024 growth in service and support revenue is expected, at + 6%YoY to $23.5B, due to increasing fab utilization rates worldwide.
In the long term, WFE revenue is expected to have a +4.3% CAGR24-29, reaching $133.7B in 2029, while service and support revenue will be $27.6B in 2029, at a +3.3%CAGR24-29.
The moderate growth rate is due to the large WFE revenue increase in 2021-2022, which is related to the large demand for semiconductor devices. As device revenue declined in 2023, the ratio of WFE revenue as a % of semiconductor device revenue reached as high as 19%.
In particular, investments in Greater China (domestic and foreign) ensured the overall WFE did not decline in 2023, and similar investment levels should continue in 2024.
However, such high investments by chipmakers will not be sustainable in the long term and are expected to decline slowly due to continuous WFE buyouts, with capacity exceeding production needs, governmental incentives, and general increases in chip production costs.

WFE equipment vendors refer to 2024 as a transition year before the expected increase in shipments in 2024 and 2025. Equipment vendors are still increasing inventory to meet these needs and are releasing new equipment solutions for upcoming process challenges. We see ongoing IPO activity in Asia, mainly in Greater China, while worldwide M&A activity is stagnant.

Regarding WFE revenues, an increased WFE billing is expected in the second half of the 2024 calendar year. The overall Q1 2024 WFE revenue declined -12% quarter-on-quarter (QoQ) to $25.2B. A moderate increase is expected in Q2 2024 to $25.3B at +1% QoQ. After that, we should see an acceleration in Q3 2024 at +9% QoQ and Q4 2024 at +8% QoQ.

The patterning WFE segment reached 29% of the overall 2023 WFE revenue, with ASML becoming the WFE market leader. We expect the patterning segment to maintain its market share in 2024 despite a -25% QoQ revenue decline in Q1 2024. The deposition WFE segment is expected to be flat in 2024 at +0.9%YoY and 25% of the overall market, with a recovery to 2022 revenue levels expected in 2026.

The etch and clean segment, comprising dry and wet processes, suffered a significant revenue loss in 2023 at -16.7% YoY due to a NAND CapEx downturn, with leading equipment vendors Lam Research, Tokyo Electron Limited, and Applied Materials being affected.
In 2024, NAND CapEx is still in a sluggish recovery phase, which may again affect the segment revenue. On the other hand, we expect the etch and clean segment to increase in 2025 by +5% YoY and 2026 by +27% YoY.

Similar to the patterning WFE segment, the deposition WFE and etch WFE segments declined in Q1 2024 by -7% and -8%, respectively. The metrology and inspection WFE segment upheld its position during 2023 with only a -1.0% decline, and it is now primed to increase by +4.1% YoY to $15.7B. The -3.7% revenue slip in Q1 2024 should be mitigated in the coming quarters.

The ion implantation WFE market share has shrunk, though a limited number of suppliers and a good application mix should allow for a revenue increase in 2023 and an expected increase in 2024. Similarly, the thinning and CMP WFE segment is characterized by a very good application mix and is growing YoY, while quarterly variations are related to the financial year of principal vendors in Japan and the U.S.A.

The other equipment segment, which contains fab automation, declined in 2023 by -6% YoY due to multiple fab construction delays and lower fab utilization rates. In 2024, this segment is set to increase. Finally, the wafer bonder WFE segment increased in 2023 by +13.8% YoY and is expected to further increase by +26% YoY in 2024 due to the limited number of suppliers.

In fact, the wafer bonders segment is at only 1% of the overall WFE revenue but becomes critical for fabricating multi-stacked CMOS Image Sensors, stacked NAND and advanced logic devices using the Power Delivery Network.

About the author

Taguhi Yeghoyan, PhD is Senior Technology & Market Analyst, Semiconductor Equipment at Yole Group.

Taguhi’s mission is to daily follow the semiconductor industry and its evolution. Based on her expertise in this field, especially on the semiconductor supply chain (processes, materials, equipment, and related applications), Taguhi produces technology & market products and is engaged in relevant custom projects.

Prior to Yole Group, she worked in world-class European research centers and laboratories, including imec (Belgium), LMI (Lyon, France) and LTM at CEA Leti (Grenoble, France). All along her past experiences, Taguhi has authored or co-authored two patents and more than ten papers.

She has graduated from Wroclaw University of Technology (Poland) and University of Lyon (France). Taguhi also completed her PhD in material science from the University of Lyon (France).

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