3/3/20061

2005: A Year in Review for the Semiconductor Equipment and Materials Market and Trends Moving Forward

AVEM Seminar on the Latest Market Trends

Lara ChamnessSenior Market AnalystFebruary 22, 2006

Outline

• Semiconductor Market Trends & Outlook

• Equipment and Materials Regional Trends

• Emerging Markets: China & Nanotechnology

• Summary & Conclusions

3

Industry Trends

The Electronics Ecosystem

Materials

SemiconductorEquipment

SemiconductorsSemiconductors

Electronic End EquipmentElectronic End Equipment

Source: SEMI, SIA November 2005, Henderson Ventures January 2006

SEMI®membership

$1,680B

Estimate2005

Forecast2008

$31B

$33B

$228B

$1,340B

$41B

$47B

$309B

{

5

Semiconductor Cycles

3345 49 51 55 60

77102

132137126150

204

139141

228213

166144

$0

$50

$100

$150

$200

$250

$30019

87

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

(E) -50%

-25%

0%

25%

50%

75%

100%

Semiconductor Revenue Annual Growth

Source: SIA/WSTS historical year end reports

Glo

bal S

emic

ondu

ctor

Rev

enue

US

$B

(bar

gra

ph)

Ann

ual G

row

th %

(lin

e gr

aph)

6

Worldwide Semiconductor Trends

Source: SIA/WSTS January 2006

0

20

40

60

80

100

120

140

1Q00

2Q00

3Q00

4Q00

1Q01

2Q01

3Q01

4Q01

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

Actual Billings (left scale) Units (left scale) ASP (right scale)

Bill

ions

Ave

rage

Sel

ling

Pric

e

7

2006 Semiconductor Revenue Forecasts

Source: SEMI

20.0%

17.3%

8.5%

8.0%

8.0%

7.9%

9.5%

6.7%

4.0%

0% 5% 10% 15% 20%

Future Horizons (Jan 06)

Semico Research (Jan 06)

VLSI Research (Jan 06)

WSTS (Oct 05)

IC Insights (Jan 06)

SIA (Nov 05)

Gartner (Feb 06)

iSuppli (Jan 06)

Henderson Ventures (Feb 06)

8

2007 Semiconductor Revenue Forecasts

Source: SEMI

21.2%

13.0%

12.4%

12.1%

10.6%

10.5%

8.5%

7.0%

22.0%

0% 4% 8% 12% 16% 20% 24%

Future Horizons (Feb 06)

Semico Research (Jan 06)

IC Insights (Jan 06)

iSuppli (Jan 06)

Henderson Ventures (Feb 06)

WSTS (Oct 05)

SIA (Nov 05)

VLSI Research (Jan 06)

Gartner (Feb 06)

9

Regional Trends

10

WW GDP Trends

N. America

23%

Europe24%Japan

7%

Asia Pacific

27%

ROW19%

N. America

22%

Europe22%Japan

6%

Asia Pacific

31%

ROW19%

20052000

Source: IC Insights, IMF

11

End Markets – Next Killer App?

There is no 1 killer application

Source: IC Insights, The McClean Report, 2006 Edition

12%Computer App - Special purpose Logic/MPR

14%Telecom -Special purpose Logic/MPR17%Consumer - Special purpose Logic/MPR

17%Automotive – Special purpose Logic/MPR19%Flash Memory

22%Industrial/other – Special Purpose Logic/MPR

CAGR (2004 – 2010)

Product Category

12

WW Semiconductor Consumption

N. America31%

Europe21%

Japan23%

ROW25%

Europe17%

Japan19%

ROW46%

N. America18%

20052000

Source: IC Insights

13

IC Manufacturers Sales by HQ Region

Source: IC Insights, The McClean Report, 2006 Edition

49% 48%

25% 19%

9%10%

17% 23%

0%

20%

40%

60%

80%

100%

2000 2005

N. America Japan Europe ROW

14

Production Fab Capacity Trends

Source: World Fab Watch, January 2001 and January 2006

Theoretical 200 mm equivalent wafer starts per month of Theoretical 200 mm equivalent wafer starts per month of fabsfabsin full production or ramping 1st siliconin full production or ramping 1st silicon

Excludes R&D and pilot lines. Silicon based technologies only.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Waf

er S

tarts

/Mon

th

(8"

Equi

vale

nts)

2000 2005

Japan North America Europe Taiwan Korea ROW China

15

300 mm Capacity by Region

Taiwan26%

Korea21%

N. America15%

Japan13%

ROW10%

Europe9%

China6%

Source: World Fab Watch, January 2006

Theoretical 200 mm equivalent wafer starts per month of Theoretical 200 mm equivalent wafer starts per month of fabsfabsin full production or ramping 1st siliconin full production or ramping 1st silicon

16

EquippingChinaHHNEC?

USJapanJapanEurope

USRegion

EquippingFab 24-2Intel

EquippingRFABTexas InstrumentsEquippingKyushu-2SonyEquipping300mmSharp

Equipping300mm Production Line

IM Flash Technologies

StatusFab NameCompany

New 300 mm Fabs in 2006

Source: World Fab Watch, January 2006

17

TaiwanS. Korea

USUSIsraelTaiwan

USChinaJapanRegion

ConstructingFab 14 Phase 3TSMC

ConstructingFab 11X EXPIntelConstructingFab 32Intel

ConstructingLehiIM Flash Technologies

ConstructingFab 2Hynix-ST MicroConstructingE300 – area 3Elpida Memory

ConstructingLine 15Samsung

ConstructingFab 28IntelConstructingFab 2Inotera

StatusFab NameCompany

Source: Strategic Marketing Associates, World Fab Watch October 2005

New 300 mm Fabs in 2007

18

Equipment

19

Semiconductor Equipment Markets by Region

Europe10%

Japan 24%

Korea18%

North America

18%

Taiwan 17%

ROW13%

2000 Market Billings = $47.7 B 2005 Estimate Market Billings = $32.9 B

Source: SEMI/ SEAJ February 2006

Europe14%

Japan 19%

Korea8%North

America26%

Taiwan 20%

ROW13%

20

Front-End Equipment Trends

Source: SEMI/SEAJ

$34.7 B Estimate $25.5 B

29%19%

19%27%

20%18%

15%

10%

9%

18%

9% 18%

0%

20%

40%

60%

80%

100%

2000 2005

North America Japan Taiwan Europe ROW Korea

21

Back End Equipment Tends

Europe10%

Japan19%

North America

21%Korea

7%

Taiwan20%

ROW23%

Europe8%

Japan19%

North America

13%Korea17%

Taiwan15%

ROW28%

2000 Market Billings = $13.0B 2005 Market Billings = $7.4B

Source: SEMI/SEAJ

22

Mass Flow Controller Sales-by Region

Europe7%

Japan37%North

America53%

Korea2%

Taiwan1%

ROW0%

Europe8%

Japan43%

North America

39%

ROW2%

Korea5%

Taiwan3%

2000 Market Billings = $418.3M 2005 Market Billings $213.1M

Source: SEMI January 2006

23

SEMI® 2005 Year-end EquipmentConsensus Forecast By Market Region

$0

$10

$20

$30

$40

$50

N. America Japan Taiwan Europe S.Korea China ROW

ROW 4.49 2.92 3.37 3.79 4.50China 2.73 1.24 1.57 1.98 2.55S.Korea 4.61 5.89 6.36 7.05 8.18Europe 3.44 3.19 3.28 3.56 3.92Taiwan 7.76 5.88 6.57 7.67 9.09Japan 8.27 8.04 8.58 9.55 10.67N. America 5.81 5.79 6.24 6.79 7.72

2004 (A) 2005 (F) 2006 (F) 2007 (F) 2008 (F)

US$

Bill

ions

Source: SEMI Year-end 2005 Semiconductor Consensus Forecast, December 2005

$35.97$37.11$40.40

$46.63

$32.95

Totals may not add due to rounding

24

Equipment Spending Trends

16%13%

15%17%

20% 20%

17%

20%

14% 13%

17%15% 15% 15%

24%

17%

13%$139.0$140.7

$166.6

$213.0$228.0

$245.0

$271.0

$204.4

$125.6

$149.4$137.2

$132.0

$144.4$102.0

$77.0$60.0$55.0

0%

5%

10%

15%

20%

25%

30%

35%

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

F20

06F

2007

F

$0

$40

$80

$120

$160

$200

$240

$280

US$

Bill

ions

Equipment Spending % of Semiconductor Revenue

Semiconductor Revenue ($B) WSTS/SIA

Source: SEMI and WSTS/SIA, WSTS semiconductor forecast

Line ChartBar Chart

25

Materials

26

$0

$10

$20

$30

$40

$50

$60

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

(E)

2006

(F)

2007

(F)

2008

(F)

US$

Bill

ions

Equipment $B Materials $B

Total Equipment Revenue vs. Total Material Revenue Trends

200 mm ramp

“IrrationalExuberance”

Source: Rose Associates, SEMI

27

Total Regional Materials Markets

2005 Estimate$31.4 Billion

2004 2005 E %$B $B Change

China 1.26 1.56 24%

Europe 2.72 2.89 6%

Japan 7.67 7.77 1%

Korea 3.65 4.35 19%

North America 4.45 4.54 2%

Taiwan 5.29 6.14 16%

Rest of World 3.75 4.21 12%

Total Regions 28.79 31.47 9%

Region

Totals may not add due to rounding

China5% Europe

9%

Japan25%

Korea14%

North America15%

Taiwan19%

Rest of World13%

Source: SEMI CGMG:Q4 Market Materials Data Subscription

28

Emerging Markets

• China• Nanotechnology

29

The Growing China IC and Manufacturing Markets

176.9

118.5 120.5139.9

178.8

1120 27.6 34.4 42.9

51.5 56.575.3

88.8

0.1 0.2 0.4 1 1.9 2.5 3.1 4.5 6.50

20406080

100120140160180200

2000 2001 2002 2003 2004 2005F 2006F 2007F 2008F

WW IC Revenues ( $B ) China IC Market ($B ) China IC Domestic Supply ($B)

Source: SIA, iSuppli

1.00%

7.32%

5.98%5.49%

4.43%

2.91%

1.45%0.91%

4.85%

30

Top 10 semiconductor vendors' China market share in 2004

01234567

Intel

Samsu

ng TIInf

ineon

Toshib

aPhil

ips

Hynix

STMicro

Freesca

le

AMD

Sale

s re

venu

e in

$ B

illio

n

0.00%2.00%4.00%6.00%8.00%10.00%12.00%14.00%16.00%18.00%

Pece

ntag

e of

mar

ket s

hare

Sales Market share

Source: CCID, SEMI, 2004-2005

The Growing China IC and Manufacturing Markets

31

Nanoelectronics

32

Nano Tools and Equipment for Nanoelectronics

33

Nano Tools and EquipmentGlobal Market Size and Forecast

34

Summary & Conclusions• 300 mm fab investment is strong

• Consensus forecast outlook is for 11% decline in 2005 and 9% growth in 2006 for semiconductor equipment.

• 2005 a record year for the semiconductor materials market; 8% growth forecasted for 2006, 10% for 2007 and 14% for 2008

• The China region will continue to dominate in chip production

• The nanoelectronic equipment market is expected to increase significantly over the next several years

35

Acknowledgements

• Special thanks to:– Dan Tracy, SEMI– Lubab Sheet, SEMI

• Thanks to the SEMI Silicon Manufacturers Group

• Thanks to the SEMI Chemical Gas Manufacturers Group

36

Thank you for your attention!

Questions?

Lara Chamness1.408.943.7982

lchamness@semi.org