Recently, the top five global semiconductor equipment manufacturers have successively released their first-quarter 2024 performance reports.
According to the data shown in the chart below, Applied Materials, ASML, Lam Research, Tokyo Electron, and KLA reported significant changes in revenue for the first quarter of 2024 compared to the same period in 2023.
Lam Research and Tokyo Electron were among the few companies that saw growth, with increases of 1% and 18%, respectively. The revenue of the other three companies declined significantly.
Overall, the combined revenue of these five major semiconductor equipment manufacturers decreased by 9% year-on-year.
Another noteworthy data point is that in the first quarter of 2024, the revenue from the Chinese market for these five companies grew by 116% year-on-year.
Revenue from the Chinese market accounted for over 45% of their total revenue, nearly half of the total.
This underscores the importance of the Chinese market to the performance of these companies; without support from the Chinese market, their performance would further deteriorate.
In conclusion, it can be inferred that in the first quarter of 2024, these five major semiconductor equipment manufacturers mainly relied on the Chinese market to sustain business growth.
So why is China strongly supporting these underperforming multinational companies?
On the one hand, the global chip industry is facing challenges with overcapacity in many wafer fabs, reducing the immediate need for new chip fabs or capacity expansions.
Therefore, global demand overall is declining.
On the other hand, China's chip industry is growing rapidly. According to SEMI data, mainland China is set to initiate 18 new wafer fab projects in 2024, expecting capacity to increase from 7.6 million wafers per month to 8.6 million wafers per month, a 13% increase.
Additionally, TrendForce reports that China currently has 44 operational wafer fabs with another 22 under construction, planning to build 10 more by the end of this year.
Thus, the only growing chip capacity globally currently comes from China.
This has led these semiconductor equipment manufacturers to export equipment to China, making the Chinese market a crucial driver of their revenue growth.
However, these companies also face a serious issue: as China's self-sufficiency in semiconductor equipment increases, their market prospects become uncertain.
According to data from a certain institution, China's self-sufficiency rate in semiconductor equipment was only 11.7% in 2023, rising to 13.6% by 2024.
While the rate of increase has accelerated, it still remains far below the level of complete self-sufficiency.
Currently, over 85% of semiconductor equipment is still reliant on imports.
But with the development of China's local supply chain, if self-sufficiency exceeds 30% or even 50%, this would significantly reduce dependence on external equipment.
Therefore, these semiconductor equipment manufacturers are concerned about securing future revenue.
If demand in the Chinese market were to halve, their revenue could be directly impacted by a quarter.
To better understand the dynamics of the global semiconductor equipment market, it is necessary to analyze the global layout and strategic adjustments of these companies.
As leaders in the industry, such as Applied Materials, ASML, Lam Research, Tokyo Electron, and KLA, they not only have significant advantages in technology innovation and market development but also achieve stable global market expansion through cooperation with emerging markets like China.
In the context of the global semiconductor market, these companies not only face challenges of declining market demand but also uncertainties brought by technological changes and global supply chain restructuring.
For example, the proliferation of smart manufacturing, artificial intelligence, and 5G technologies is reshaping the competitive landscape of the global semiconductor equipment market.
Although the Chinese market plays a crucial role in supporting the performance of these companies, a diversified global market strategy remains key to their future development.
By strengthening technological innovation, deepening global cooperation, and enhancing service quality, these companies can better cope with market fluctuations and competitive challenges, ensuring long-term sustainable development.
Therefore, looking ahead, these top five semiconductor equipment manufacturers need to continue to strengthen their diversified global market layout and strategic adjustments while consolidating their position in the Chinese market to address the rapid changes, challenges, and opportunities in the global semiconductor industry.
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