Demand for wafer fab equipment from foundries could rebound sharply in the first half of this year, although market conditions overall are likely to remain weak, said Steve Newberry, CEO of Lam Research Corp. (Fremont, Calif.) The market for wafer fab equipment could decline by as much as 15% this year, with “general uncertainty globally” as the key variable in any forecast. If the global economy holds up, that decline could be held to only 5% year-on-year, Newberry said.
In a conference call following the release of financial results for the quarter ending Dec. 27, 2007, Newberry said Lam finished calendar year 2007 up 19% in revenues, to $2.62B. Lam now has ~48.5% market share in etch, he said, up two percentage points compared with 2006.
Newberry claimed Lam has drawn dead even with rival Tokyo Electron Ltd. (TEL, Tokyo) in dielectric etch market share. Lam had a net gain of 16 “new applications” in dielectric etch in 2006, allowing it to gain 5% market share in the sector. “We are now in a dead heat with TEL, with both of us having 41% market share. For many, many years, TEL dominated in that sector,” Newberry said.
DRAM manufacturers in the middle of 2007 faced 80,000-100,000 wpm of excess capacity, an enormous overhang that ruined profits and caused the sector to cut investments by 20% compared with the first six months of the year. Although DRAM unit growth is projected to increase by 20-25% in the first half of 2008, Newberry said it will take another sharp cut in additional capacity, perhaps as much as 40%, to regain a supply/demand balance in DRAMs.
The picture is better in NAND, where strong investments in 2007 may continue this year, driven by consumer markets and some solid-state drives being sold in the notebook market. NAND unit growth of 40% is likely, he said, adding that “NAND pricing in 2008 is likely to be flat.”
Foundry spending could be the wild card. “Foundries exited 2007 with 93% capacity utilization, and that will be about 100% by the second half of 2008. With seasonal factors taken into account, capacity additions by the foundries are inevitable,” he said.
Later in the conference call, Newberry returned to the foundry theme, saying that foundry wafer fab spending in the first half of 2008, compared with the second half of 2007, could increase by “100 plus percent.” For Lam, that could result in 25-30% revenue gains in the foundry segment for the year, compared with 2007.
The uncertainty of the global economy hangs over any predictions, “In today’s volatile economic climate, I don’t think any of us should have confidence” in predicting the business climate for the equipment industry, he said. He took a long-range view, saying that if spending declines this year, it is likely to make up ground in 2009 and 2010. Lam is predicting total wafer fab spending of $124B-$134B between 2007 and 2010. If spending declines by 14% this year to $27B, it could rebound to $38B-$40B in 2010, he said.
By 2010, Lam is targeting $4B in annual revenues, driven in part by what it calls its “adjacent markets” strategy. On Dec. 11, 2007, Lam made a bid to acquire SEZ Group (Villach, Austria), the leader in single-wafer cleaning tools. That deal is expected to close this quarter, the Lam executives said, although exact terms “are still outstanding.
