Download Photomask Revenue

Photomask Market Outlook:
Growth Returns
Advanced Reticle Symposium 2003
San Jose, CA • 23 June 2003
Klaus-Dieter Rinnen
Managing Vice President
Manufacturing and Design
Emerging Technologies and Semiconductors
Gartner Dataquest
Forecast Growth Scorecard
Revenue Growth (%)
2002
Base
2003
Up Base Down
World GDP
U.S. GDP
Electronic
Equipment*
+2.0
+2.4
-1.4
+2.2
+2.4
+4
Semiconductor
+1.9
+12 +8 +1
-37
+15 +7 -1
-3
+5 +2 -1
Capital Spending
Photomask
*Production revenue
1
Global GDP Growth, 2000-2004
Real GDP Growth (Percent)
5
+3.4
3
+4.0
4
+1.2
1
+2.2
+2.0
2
0
2000
2001
2002
2003
2004
Source: Global Insight
2
Key Economic Issues






Economic policy
– United States gets high marks for very accommodative monetary and
fiscal polices, but eurozone is failing badly and hurting global recovery
Capital spending
– Spending revival still key to a true, sustainable recovery; fundamentals
are improving, but lingering uncertainty remains a strong inhibitor
Consumer spending
– U.S. consumers certainly have done their part but could fatigue any time;
need stronger consumer spending in Europe and Japan
Dollar depreciation
– Dollar has dropped for temporary and more fundamental reasons; will
likely continue depreciating going forward, hopefully at slow rate
Global trade
– Trade continues to languish with weak economy but should revive with
recovery; depreciated dollar is shifting advantage to United States at
expense of Europe and Japan.
Wild cards
– SARS, terrorism, Middle East turmoil and South Korea tensions all
remain potential threats to global recovery (not to mention those we
can’t identify yet!).
3
Economics Health Score
2003
Economic
Policy
North America
Europe
Japan
Asia/Pacific
Capital
Spending
North America
Europe
Japan
Asia/Pacific
Consumer
Spending
North America
Europe
Japan
Asia/Pacific
Dollar
Depreciation
North America
Europe
Japan
Asia/Pacific
Global
Trade
North America
Europe
Japan
Asia/Pacific
Wild Cards
North America
Europe
Japan
Asia/Pacific
SARS, South Korea,
Terrorist Attacks
2004
2005
?
4
Global GDP Growth, 2000-2004
 U.S. tax cuts stimulate strong
U.S. consumer spending
 Eurozone adopts looser
economic policies
 Capital spending revives
 Dollar depreciates slowly
 Wild cards limited
Real GDP Growth (Percent)
5
+3.4
3
+4.0
4
+1.2
1
+2.2
+2.0
2
0
2000
2001
Source: Global Insight
2002
2003
2004
2H03 revival still
possible, but full
recovery may be
pushed out to 1H04
 U.S. tax cuts fail to stimulate
U.S. consumer spending
 Eurozone maintains tight
economic policies
 Capital spending falters
 Dollar crashes
 Wild cards wreak havoc
5
Macroeconomic Picture Brightens:
Quarterly U.S. GDP Growth — June 2003
U.S. GDP Growth (Percentage of SAAR)
6
5
3
2
1
0
Forecast
4
-1
-2
-3
Source: Global Insight and Gartner Dataquest (June 2003)
6
overall IT demand
IT Spending — Unweighted/Weekly:
War With Iraq and SARS Outbreak Sway Sentiment
Projected
Index
200
Current
Trend:
 Current spending remains
below budgeted levels
 Stalled recovery in current
spending
Contributing factors:
Major break in SARS news
Major combat finished
War breaks out
Strong
demand
– War with Iraq
– SARS outbreak
– Slow economy
100
Weak
demand

0
9-Mar.
23-Mar.
6-Apr.
20-Apr.
Week Ending
Untrended and Unweighted Projected
Untrended and Unweighted Current
4-May
18-May
1-Jun.

Technology manufacturing
and communications vertical
market lag current spending
Projected demand in 2004
slightly higher, but still below
prewar level
7
Overall IT Trend — Weighted/Monthly:
2003 Cautious Underspending; 2004 Increase
Trend:
 Current spending remains
below budgeted levels
 Stalled recovery in current
spending
Contributing factors:
– War with Iraq
– SARS outbreak
– Slow economy


Technology manufacturing and
communications vertical market
lag current spending
Projected demand in 2004
slightly higher, but still below
prewar level
8
Gartner Dataquest’s Index of Semiconductor
Market Leading Indicators — June 2003
Semiconductor Revenue Growth
60%
Actual Forecast
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
Semiconductor Growth
Indicator
-40%
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003
9
Monitoring Phased Recovery Through 2004

Recovery under way but:
– Equipment markets slow
– Cell phones the only bright
spot, but can it be sustained?
– PC market remains sluggish

Continued recovery depends on:
– Cell phone strength
– Corporate PC replacement
cycle beginning in 2H03
– General improvement in
electronic equipment
production (especially
communications) in 2004
1H03
2H03
1H04
2H04
Spending
Consumer
Corporate
 Cell Phones
? PCs
 Communications
10
Quarterly Semiconductor Revenue:
Market Expands on 2H03 Improvement
Scenarios
Optimistic
Most Likely
Pessimistic
Billions of Dollars
2002
2003
1.9%
+12.3%
+8.3%
+1.3%
65
60
55
50
45
40
35
30
1Q00
3Q00
1Q01
3Q01
Optimistic
1Q02
3Q02
1Q03
Most Likely
3Q03
1Q04
3Q04
Pessimistic
11
Semiconductor Revenue Forecast:
Recovery Gains Momentum in 2003
Billions of Dollars
300
22%
-5%
250
6%
23%
200
8%
2%
150
100
50
0
1996
1998
2000
2002
2004
2006
12
Supply Outlook: Semiconductor Inventory
1.8
1.7
Gartner Dataquest
Semiconductor Inventory
Index
Key Conclusions:
1.6
1.5
Inventory days peaked
in 1Q01
1.4
Healthy drop in 1Q03
1.3
1.2
1.1
1
0.9
0.8
1Q99
1Q00
1Q01
1Q02
1Q03
13
Overall Wafer Fab Utilization
Ratio of Silicon Consumed to Fab Capacity
Leading Edge
100%
90%
80%
70%
60%
50%
40%
14
Photomask Revenue Forecast:
After Two-Year Decline, Growth Returns in 2003
Scenarios
Optimistic
Most Likely
Pessimistic
Millions of Dollars
4,000
2002
2003
-2.9%
+5.4%
+2.2%
-1.2%
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1996
1998
2000
2002
2004
2006
2008
15
Semiconductor vs. Photomask Revenue
Semiconductor Revenue
(Billions of Dollars)
250
200
Photomask Revenue
(Percentage of Semiconductor Revenue)
3.5
3.0
2.5
150
2.0
100
1.5
1.0
50
0
0.5
0.0
16
Photomask Revenue by Layer Linewidth:
Sub-0.25 Micron Is Driving Force
100%
80%
60%
Sub-0.25 Micron
40%
0.25 to 0.7 Micron
20%
0%
0.7 Micron and Above
17
Photomask Unit Forecast:
Growth Returns in 2003, but Muted
Photomask Units (Plates)
800,000
750,000
700,000
650,000
600,000
550,000
500,000
450,000
400,000
1996
1998
2000
2002
2004
2006
2008
18
Aggregate Photomask ASP Forecast:
Mix Drives Strong Growth
Aggregate Photomask ASP ($)
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1996
1998
2000
2002
2004
2006
2008
19
Photomask Set Cost:
Cost in Second Year of Production
Thousands of Dollars
700
600
500
400
300
200
100
0
1992
0.5 Micron
18 Layers
1995
1998
2000/1
2003
0.35 Micron
20 Layers
0.25 Micron
22 Layers
0.18 Micron
28 Layers
0.13 Micron
32 Layers
Note: Set cost is best estimate for 2002.
20
Some Thoughts to Ponder on Mask Cost

Myriad possibilities (in design, material, equipment
process, usage) for reducing photomask cost
– Is there really any price elasticity?
– Where are the margins for photomask maker to secure its and the
industry’s future? Is this a nonprofit business?

Photomask expenditure as a percentage of semiconductor
revenue is not declining but also not appreciating
– Are photomask prices too low to ensure options for an
economically viable future?
Classifieds
Wanted! Needed!
New Business Models
for
Photomask and ASIC
21
What Does the Future Hold for Lithography?




193-nm immersion: Will the industry dip in?
157 nm: To live or not to live?
EUV: Eternal bridesmaid or happily ever after 32?
Maskless, nano-imprint and other technologies:
Is there a chance to break into the market? When?
Bottom Line
The longer incumbent technologies are extended and
maskless technology is delayed or muted, the better for
photomasks.
But please, no bifurcation in lithography technologies.
22
Conclusions

Economy
 Expect improvement in 2003, albeit back-end-loaded
 Weakness in Europe and Japan sharpens need for U.S. improvements

Electronic equipment
 Expect gradually improving macro conditions to spur phased recovery
 Start of Y2K PC replacement cycle expected; strength is questionable
 Corporate spending returns in 2003; strength depends on economy

Semiconductors
 Expect revenue growth of 8 percent in 2003
 Expect tightening capacity utilization and better demand to drive 2004

Photomasks
 Photomask revenue to grow slowly in 2003
 Long-term CAGR of 8.8 percent is ASP-driven
 Rising photomask cost is reality and will lead to lower usage
 Not business as usual anymore:



Consolidation a must for photomask merchants
Will captive component of mask market increase?
Will lithography demand bifurcate?
23