Underappreciated EU suppliers lead the semiconductor equipment market
Europe is a surprisingly strong player in the overall semiconductor ecosystem and many of the region’s suppliers do not get the recognition they deserve.
Chipmakers in Europe are falling behind in global manufacturing – accounting for less than 10% of industry revenues – but European companies are world leaders in producing manufacturing equipment and its associated supply chain.
In 2023, European suppliers represented 8% of the $30 billion global market for production of semiconductor devices. At the equipment level, they accounted for 28% of the $30 billion market worldwide and 34% of the total $20 billion subsystem market.
What is the status of the European semiconductor industry? Who are the prominent players in European equipment and subsystems? How do these companies strategize in competition with U.S. and Asian counterparts?
Jean-Christophe Eloy and John West, Yole Group’s CEO and founder, and Deputy Director, Manufacturing & Global Supply Chain Business Line, respectively, invite you to deep dive into the semiconductor industry to get a better understanding of the status of the European ecosystem and its related issues.
Take a coffee and enjoy reading today’s snapshot from Yole Group.
Semiconductor manufacturing, especially at the leading edge, is getting more expensive. European chipmakers do not have the resources to consistently invest at this level, so they should focus on playing to their strengths in specialty markets, according to Jean-Christophe Eloy, chief executive officer of Yole Group.
Europe’s advanced logic manufacturing capability is several generations behind the leading global suppliers, and the industry is dependent on foreign chipmakers for advanced technology nodes. Manufacturers would need to build 65nm up to 18nm fabs to bring the industry back to the level of production in China, but without leading-edge technology it will continue to lag.
However, it is important to note that no semiconductor device is produced worldwide without European equipment or subsystems.
Jean-Christophe Eloy
CEO and founder of Yole Group
European semiconductor device manufacturing is increasing in value but its share of the global market as a percentage remains stable and there is no way for it to reach 20% of worldwide semiconductor manufacturing. Instead of spending $10 billion of subsidies to bring a 7nm Intel fab into Europe that no European companies will use, it is much better to support European equipment and subsystems manufacturers. The impact on the economy, employment and worldwide leadership of these companies will be much higher.
Capital expenditure for chip manufacturing in Europe has increased strongly since 2021. But Europe’s share of worldwide production capacity in square meters of substrate is still falling.
Europe has a lot of work to do to increase its share of manufacturing as other regions ramp up their investments. The EU Chips Act – modelled after US policy to establish a domestic supply chain – will attract more investment in leading-edge manufacturing technology, but it will not significantly increase Europe’s market share.
However, European equipment suppliers excel in high-growth specialty markets.
Equipment suppliers in the EMEA region accounted for 27% of all semiconductor manufacturing equipment—WFE, assembly, and testing—in 2023. US-based firms KLA, LAM Research, and Applied Materials own multiple WFE suppliers, which if included increase the region’s market share to 31%.
John West
Deputy Director, Manufacturing & Global Supply Chain Business Line at Yole Group
European companies thrived last year thanks to two factors: their activity in packaging and specialty applications, and Dutch firm ASML’s dominance in the wafer exposure segment. ASML manufactures in the Netherlands and its supply chain is deeply embedded in Europe. Despite the overall semiconductor market downturn, ASML’s revenue increased by 30% year on year. The company generated 22.74% of total EMEA WFE revenue, driven by logic and DRAM production adopting EUV technologies.
European leaders have particular strengths in patterning, where ASML owns 90% of the market; deposition, where ASM International and Aixtron are key players; and metrology and inspection, where there are many European suppliers, such as NOVA, Zeiss and Semilab as well as ASML. The region also leads in wafer bonding with companies such as EV Group and SUSS MicroTEc. However, there are no European leaders in the thinning and CMP, etch and clean, and ion implantation segments.
European companies also play an essential role in providing critical subsystems, components and modules that are indispensable for fabricating new WFE as well as delivering service and support to keep it running with upgrades and replacements.
Europe has a long history of vacuum and optical technological development, and strong expertise in the associated instrumentation and metrology, with honorable mentions for RF power and process monitoring.
Zeiss and Edwards Vacuum are among the top three semiconductor subsystem companies in the world in terms of annual revenue, accounting for 10% and 9%, respectively.
Zeiss provides optical systems typically used in photolithography, in addition to inspection and metrology equipment. It is also a captive supplier of ASML for its EUV optical system. ASML itself is part of the top 10 companies as the sole player in the EUV lithography market and a major DUV supplier.
Edwards Vacuum benefits from its dominant position in the vacuum pump market, especially as the vacuum content of WFE has increased over the past three years.
Depth, diversity, and underappreciated European leaders – Key take aways
While the EU Chips Act is expected to stimulate investment in cutting-edge manufacturing technology, it may not substantially elevate Europe’s market share.
However, European chipmakers excel in specialty markets, and European WFE suppliers are poised to dominate mainstream lithography while maintaining a leading role in specialty equipment.
Additionally, European subsystems and components suppliers are projected to maintain their global leadership in areas such as vacuum, optics, abatement, vacuum capacitors, and instrumentation.
This underscores Europe’s strength across the semiconductor manufacturing supply chain, characterized by depth and diversity. Despite this, many of these suppliers remain underappreciated, despite their significant contributions.
Stay tuned to yolegroup.com to get more insights all along the year!
About the authors
John West is Deputy Director, Manufacturing & Global Supply Chain Business Line at Yole Group.
He has over 20 years of industry experience and a successful track record in various strategy and consulting projects.
John has a Bachelor’s degree in Medical Physics from King’s College London and an MBA from Cranfield School of Management.
Jean-Christophe Eloy is Yole Group’s CEO and President. Created in 1998, the market research & strategy consulting company has grown to become a group of companies providing marketing, technology and strategy consulting, media in addition to corporate finance services. His mission is to oversee the strategic direction of Yole Group of companies, including Yole Intelligence, Yole SystemPlus and PISÉO.
All year long, Jean-Christophe builds deep relationships with leading semiconductor companies, discussing and sharing information across his global network. His aim is to get a comprehensive understanding of their strengths and guide their success.
Jean-Christophe is a graduate from EMLyon Business School (Lyon, France) and has a Ph.D. in Semiconductor Engineering from the National Polytechnic Institute of Grenoble (France).
Jean-Christophe Eloy CEO and founder of Yole GroupEuropean semiconductor device manufacturing is increasing in value but its share of the global market as a percentage remains stable and there is no way for it to reach 20% of worldwide semiconductor manufacturing. Instead of spending $10 billion of subsidies to bring a 7nm Intel fab into Europe that no European companies will use, it is much better to support European equipment and subsystems manufacturers. The impact on the economy, employment and worldwide leadership of these companies will be much higher.
