Summary China is one of the world’s biggest buyers of second hand semiconductor equipment. With the continuing global shift of electronic manufacturing activities to the country, China’s thirst for semiconductors will remain strong in the foreseeable future. Strong demand combined with the government’s encouragement will ensure that investment in semiconductor manufacturing factories will continue to be robust in the next 5 to 10 years. Due to market demand for low to mid-level technology products, financial restraints, and technology export restrictions, most equipment purchased has been and will remain to be second hand equipment. The shift in world manufacturing of electronic products is accompanied by the relocation of semiconductor production lines to China. Domestic equipment manufacturers are in an awkward situation of competing with suppliers of both new equipment and second hand equipment from overseas. Market Overview It is difficult to find current data on the market size of the used semiconductor equipment market in China. Therefore, for illustrative purposes, we provide the following data as a gauge of the market size. According to a September 15, 2004 DigiTimes report, China purchased about $800 million of used semiconductor equipment in 2003, accounting for 80% of a $1 billion total Asian market. The report quoted a forecast by the consulting firm VSLI, Research Inc., that used equipment for 2004 in China would reach $1.44 billion. According to Semi China, China’s 2004 total investment in equipment was about $2.71 billion, accounting for 8% of world’s total. Therefore, it is reasonable to surmise that China may have spent between $1 billion and $2 billion on second-hand equipment in 2004. Of the 36 semiconductor production lines currently operating in China, none was built solely with new equipment. Only a few mainly used new equipment. Why used equipment? First, the re-use of phased out equipment is not uniquely a Chinese phenomenon. Because semiconductor industry requires heavy investment, it has become a common practice to use on investment. According to industry insiders, leading industry manufacturers also use second hand equipment. Another reason to use second hand equipment is due to rapid technology progress, which necessitates equipment be replaced by newer equipment with newer technology before reaching the end of its life cycle. This type of equipment can still be used to produce products that have market demand. In certain cases, manufacturers have to turn to used equipment for certain processes for which new equipment is no longer equipped to handle. Chinese manufacturers choose to use second hand equipment primarily due to lack of sufficient funding to purchase new equipment. However, this is also due to the business strategy of the investors and the technology levels of products they target for production. Most Chinese manufacturers target products, which fall into mid- to lower-levels. For processing these products, it is not necessary to use all new equipment. Currently, China has only one 12-inch foundry, which is owned by SMIC. Most fabs in China process wafers ranging from 5- to 8- inches, and about half of their products are exported. In addition, restrictions imposed by the Wassenarr Agreement are also factors that force the Chinese investors to build fabs mostly in the 6- to 8-inches range.
Used Semiconductor Equipment Markt下载