On 31 January, semiconductor process equipment maker Veeco acquired Epiluvac AB, a Swedish manufacturer of chemical vapour deposition (CVD) epitaxy systems for advanced silicon carbide (SiC) applications in the electric vehicle market. The second acquisition of a SiC equipment manufacturer in less than a year, the purchase points to a trend towards semiconductor equipment makers broadening their portfolios amid supply chain issues and making strategic moves to enter the Power SiC market, which is expected to enjoy strong growth in 2023.
Yole Group and its entities, Yole Intelligence and Yole SystemPlus has been analysing the silicon carbide (SiC) and related epitaxy equipment market since 2003 with a significant collection of analyses: Power SiC – Toshiba 3rd Generation SiC MOSFET – StarPower’s 1200V SiC MOSFET Power Module – SiC Transistor Comparison – Compound Semiconductor Market Monitor (Module 1) and Epitaxy Equipment for More than Moore… The acquisition of Epiluvac marks the beginning of many exciting developments expected in this emerging field.
A significant trend towards silicon carbide
Veeco, whose revenues totalled $583.3 million in 2021, paid $30 million at the time of closing for the 11-employee Epiluvac, and will pay a potential additional $35 million in performance based earn-outs. The company will gain a team of engineers with decades of research and development experience from the CVD reactor field and especially high temperature (HT) CVD epitaxy equipment for silicon carbide.
“The Epiluvac team has developed a superior platform and process know-how aligned with markets that are a great strategic fit for Veeco,” said Bill Miller, Veeco’s Chief Executive Officer. “Their well-designed CVD platform achieves high productivity, is easy to maintain and has superior process control capability that make it uniquely qualified to produce devices that enable lighter, smaller and more efficient power conversion systems. We see this acquisition as a great complement to our metal organic chemical vapor deposition epitaxy product line. This acquisition accelerates our penetration into the emerging, high-growth SiC equipment market by reducing our time to market.”
The sale parallels the July 2022 purchase of LPE, another modest manufacturer (in terms of revenue) of epitaxial reactors for SiC and silicon, by semiconductor giant ASM International. Both ASM and Veeco did not offer SiC growth capabilities prior to these acquisitions, signifying an ongoing strategy by large instrument makers to penetrate and gain a market share in the silicon carbide epitaxy equipment market, which has an attractive outlook.
In contrast to the ‘bumpier’ environment expected in the overall semiconductor market in the short term, the SiC market is set to experience double-digit growth in 2023, Yole predicts. In the next 5 years, SiC power devices will soon represent 30% of the overall power device market. Yole estimates a market potential of $6 billion by 2027, up from around $1 billion in 2021.
Epiluvac’s market share and competition
Epiluvac’s share in the HTCVD SiC equipment market is expected to grow considerably following its purchase by Veeco. Prior to the acquisition, Epiluvac was largely focused on the power (SiC and GaN) and RF (GaN) markets, but had a small foothold in SiC equipment, taking a 2% market share in 2021 and a 3% to 4% (maximum) share in 2022. But with access to Veeco’s network, customer base, and high-volume manufacturing support, this share is expected to increase substantially. This prediction is also the case for LPE, which now shares ASM’s network, although LPE holds a much larger market share of the global SiC epitaxy equipment market (>15%).
Veeco/Epiluvac’s main competitors with HTCVD (SiC) capabilities include large players such as Tokyo Electron, NuFlare, and Aixtron, as well as ASM/LPE. It is now the first equipment maker to offer three types of epitaxy equipment: metal organic chemical vapour deposition (MOCVD), molecular-beam epitaxy (MBE), and the newly acquired HTCVD SiC capabilities from Epiluvac.
Importantly, Epiluvac’s HTCVD SiC reactors are compatible with 8-inch silicon carbide wafers, which is crucial for production ramp-up. Driven by the high volumes of the automotive (particularly electric vehicle) market, all the major HTCVD SiC equipment manufacturers – including Veeco’s competitors – offer 8-inch compatible equipment, and it is of great advantage to Veeco to not have to make this transition from scratch.
Epiluvac’s modular design of its SiC equipment will also allow Veeco/Epiluvac to compete with the major players in this area. The cluster-based approach of its machine allows up to 4 wafer reactors to be plugged in at once to increase throughput. This design element distinguishes the machine from some of its direct competitors – particularly Tokyo Electron and NuFlare, which are more “traditional” in their approach with a two-chamber type equipment while Aixtron remains the only major equipment manufacturer to offer SiC planetary reactors.
“We are excited to join Veeco, a recognized leader in semiconductor and compound semiconductor capital equipment,” commented Per-Anders Eriksson, Epiluvac’s Chief Executive Officer. “Our complementary technology platforms, along with Veeco’s extensive worldwide sales, service and manufacturing capabilities, will position us well to help our customers enable accelerated SiC adoption. The decades of research and development the Epiluvac team has invested in this demanding epitaxial process will be a great asset to Veeco’s already impressive process capabilities.”
With the HTCVD SiC a more promising market than HTCVD Si, more players are likely to move into this space through acquisitions – especially as semiconductor equipment makers see more of their competitors target this market.
Further evidence of consolidation happening in the epitaxy equipment space is the acquisition of NovaSiC by SOITEC in November 2021. Although NovaSiC is not technically an equipment maker, SOITEC gained much know-how in growing SiC layers (including specialist equipment) and processing SiC wafers through the transaction.
Future consolidation may not necessarily mirror the acquisitions of Epiluvac and LPE. With few companies remaining of similar size to these SiC epitaxy equipment businesses, future purchases will involve much larger entities, or much smaller companies that mainly serve the R&D equipment market (not high-volume manufacturing).
There has also been evidence of Chinese equipment makers emerging for SiC. Could we also see major Chinese Si equipment players such as AMEC or Naura make strategic acquisition moves to penetrate this market?
At a time when geopolitics and supply chain issues are creating challenges for business, it makes sense for semiconductor companies, including equipment makers, to diversify their portfolios and look towards markets that are developing with promise. The SiC epitaxy equipment market looks to be just that, with strong growth and exciting acquisitions expected in the near future.
About the authors
Gaël Giusti, PhD., is a Technology & Market Analyst specializing in Subsystems for Semiconductor Manufacturing at Yole Intelligence, part of Yole Group. As part of the Semiconductor Equipment, Subsystems and Testing division at Yole, Gaël’s expertise is focused on subsystems, components and modules related to wafer fab equipment for front-end manufacturing processes. He is involved daily in the production of a quarterly Subsystems Market Monitor and Custom Consulting projects.
Prior to Yole, Gaël served as a R&D engineer at Sil’Tronix Silicon Technologies for 5 years where he was in charge of developing epitaxial AlN thin film on sapphire processes for RF applications.
Gaël holds a master’s degree from ENSICAEN (Caen, France) as well as a PhD in Materials Science from the University of Birmingham (UK).
Poshun Chiu is a Senior, Technology & Market Analyst specializing in Compound Semiconductor and Emerging Substrates at Yole Intelligence, part of Yole Group. As a member of the Power Electronics & Wireless division at Yole, Poshun focuses on power, RF, and opto-electronics. He is engaged in the development of technology and market reports and is also involved in custom projects.
Before joining Yole, Poshun had 9 years’ experience in R&D and product management at Epistar (TW & CHN). He is the author or co-author of more than 10 patents in solid-state-lighting. Poshun was also engaged in the development and evaluation of novel applications of process technology and components based on relevant semiconductor material systems
Poshun received an MSc degree in Microelectronics from National Cheng Kung University (TW) and an MBA from IESEG School of Management (FR).
Ezgi Dogmus, PhD. is Team Lead Analyst in Compound Semiconductor & Emerging Substrates activity within the Power & Wireless Division at Yole Intelligence, part of Yole Group. With an international team of technology & market analysts, she is managing the expansion of the technical expertise and the market know-how of the company. In addition, Ezgi actively assists and supports the development of dedicated collection of market & technology reports, monitor as well as custom consulting projects.
Prior to Yole, Ezgi worked as a process development engineer for GaN-based RF and power solutions at IEMN (Lille, France).
After graduating from University of Augsburg (Germany) and Grenoble Institute of Technology (France), Ezgi received her PhD. in Microelectronics at IEMN (France).