Shortage of chip needed for equipment production exasperating situation, sources say
The lead time for fab equipment has increased to on average 14 months as of July, according to those in South Korea fab equipment makers and data of global fab equipment makers collected by TheElec.
This extension of the leading time is being caused by chipmakers increasing their spending on their fabs and the prolonged global chip shortage that has caused even equipment makers to procure the chip they need for their products.
Lead time for fab equipment last year were between three to six months. This was extended to 10 months on average in the first quarter this year. This extended even further as of July this year at 14 months on average. For some fab equipment, the lead time were over two years, people familiar with the matter said.
Equipment for front-end processes, which usually has a shorter lead time, were also marking over a year in lead time on average, they said. The lead time for equipment in general were at an all time high, they said.
TheElec also looked at the lead time of world’s top equipment vendors. As of July, ASML’s ArF equipment had a lead time of 24 months; i-line equipment 18 months; and extreme ultraviolet equipment’s was at 18 months. Back-end equipment maker Disco had a lead time between 12 to 15 months for its equipment.
Equipment for 8-inch (200mm) wafers were especially in short supply. This is because orders have for them has surged due to their capacity shortage. KLA’s overlay equipment currently a lead time of 14 months. Those of Ebara and Applied Materials had lead times of 14 months and 13 months, respectively.
Lead times for equipment manufactured by Tokyo Electron, Hitachi High-Tech, Kokusai Electric, Advantest, Screen Semiconductor Solutions and Kulicke & Soffa were all at around 12 months. Varian Semiconductors and Edwards’ stood at around 10 months. Lead times for wire bonders supplier by Chinese firms were currently at over 5 months, the people said.
In June, Lam Research CFO Doug Bettinger had also said the company was seeing lead times for its equipment being delayed.
Some fab equipment makers are finding it difficult to procure field programmable gate array (FPGA) needed to make their equipment, the people said.
The current chip shortage has gotten so serious that it is impacting the entire value chain, they said. The irony is that more fab equipment are need to manufacture more chips but there isn’t enough chips to make the fab equipment, they added.
The delay in lead times are also causing demand for used fab equipment to increase as they have relatively shorter lead times. Most used fab equipment use the core components of a prior equipment and upgrade them to be usable. Demand for 8-inch pre-owned equipment are increasing dramatically. Market research firm VLSI Research said prices of pre-owned equipment increased by 20% on average from the previous year during the first half of 2021.
Lam Research had said during its second quarter conference call that its refurbished equipment business (which it calls Customer Support Business Group) also record its highest sales ever of US$1.4 billion during the second quarter.
The high demand and under supply for fab equipment are expected to continue for a while going forward. According to SEMI, fab equipment spending is expected to increase 15.5% in 2021 from the previous year to US$70 billion. This will increase another 12% year-on-year in 2022 to over US$80 billion, the organization had said.