Semiconductors are an integral part of electronic components and systems used across industries such as consumer electronics, automotive, industrial, medical and telecommunications. Semiconductor equipment including wafer processing tools, packaging equipment, and chip testing tools among others are extensively used for the manufacturing of semiconductors and integrated circuits which are then used in various end-use applications. The growing demand for semiconductor devices from various industries is fueling the demand for semiconductor equipment market. The global Semiconductor Equipment Market is estimated to be valued at US$ 95.97 Mn in 2024 and is expected to exhibit a CAGR of 12% over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
The ongoing chip shortage issue across various industries has resulted in supply chain disruptions and production halt. However, with rising investments by key players in capacity expansions and new facilities, the market is expected to witness recovery from chip shortage over the coming years. The recovery from ongoing chip shortage presents a major market opportunity for semiconductor equipment providers to cater to growing demand. With investments directed towards resolving supply chain issues and ramping up semiconductor manufacturing worldwide, the semiconductor equipment market is poised to grow significantly over the forecast period.
Porter's Analysis
Threat of new entrants: The semiconductor equipment market requires huge R&D investments and economies of scale to produce technologically advanced semiconductor equipment. This poses high entry barriers for new players.
Bargaining power of buyers: The presence of major semiconductor manufacturers as buyers gives them significant bargaining power over equipment suppliers. However, the need for continuous technological advancements limits buyers' options.
Bargaining power of suppliers: Due to consolidation in the industry, key materials and components suppliers wield influence over equipment manufacturers. However, the specialized nature of inputs maintains some balance.
Threat of new substitutes: There are limited substitutes for semiconductor equipment as it is essential for chip fabrication. Equipment for newer and smaller node sizes requires innovative solutions with fewer alternatives.
Competitive rivalry: Being an oligopolistic market, intense competition exists among major players to gain market share and reduce costs through scale and technological leadership. This drives continuous R&D investments.
SWOT Analysis
Strengths: Technological expertise, global servicing network, patent portfolio, and diverse product portfolio gives major players an edge.
Weaknesses: Huge capital requirements, long sales cycles, and high customer concentration poses challenges.
Opportunities: Growing semiconductor consumption, expansion in 5G/IoT/AI markets, and advancement in materials/processes drive market opportunities.
Threats: Trade disputes, geopolitical issues, and economic cycles impact capital expenditures of chipmakers posing threats.
Key Takeaways
The Global Semiconductor Equipment Market Growth is expected to witness high over the forecast period led by increasing demand for semiconductor ICs across various applications. Equipment for smaller process nodes and new materials will see rising demand.
North America dominates currently due to presence of leading chipmakers and equipment suppliers in the region. However, Asia Pacific is predicted to be the fastest growing market led by governments' support for semiconductor manufacturing in countries like China, South Korea, and Taiwan. Countries are aiming for self-reliance in chip production.
Key players operating in the semiconductor equipment market are Northrop Grumman Corporation, BAE Systems, Lockheed Martin Corporation, Clearpath Robotics Inc., John Bean Technologies Corporation, ECA Group, Israel Aerospace Industries Ltd., Endeavor (Now a part of FLIR system), Harris Corporation, and General Dynamics. They are focusing on developing innovative solutions for fabrication of advanced nodes and new materials to maintain leadership.
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