Thursday, April 8, 2021

Why China denied Applied Materials take over of Hitachi Kokusai

According to a recent analysis by Robert Castellano (Seeking Alpha/The Information Network LINK), Hitachi Kokusai holds a strong position in tube/non-tube LPCVD and oxidation/diffusion semiconductor equipment. For some time Applied Material has planned the acquisition of Kokusai that would have increased its global market share, for silicon wafer processing equipment by adding a big segment that it does not have in its product portfolio - LPCVD, Diffusion, and ALD Furnaces. According to the market assessment, Hitachi Kokusai holds a leading market share in this segment over No. 2. Tokyo Electron. 

Castellano brings up the interesting observation that "China blocked Applied Materials' acquisition of Kokusai while permitting the Marvell-Inphi deal the same week". Basically meaning that there are more than just US-China Trade issues behind the decision. He concludes that "China is developing a home-grown equipment industry infrastructure, and the deal would impede on that effort." and follows up by breaking up the segments and global competitive situation as below.

Summary by Castellano of China OEM active in LPCVD, Diffusion, and ALD segments vs. the global leaders

China’s NAURA makes oxidation and diffusion furnaces and its products have captured a significant share (40-50%) of YMTC’s thermal process equipment purchases, per our channel checks. In RTP, major players include Applied Materials, Tokyo Electron, and Mattson Technology.

NAURA is developing etchers and deposition equipment for 7nm and 5nm nodes. NAURA has a large product offering, and its customers consist of SMIC, Hua Hong, YMTC, and GTA Semiconductors.

NAURA also makes thermal furnaces and has a 45% share of China’s memory maker YMTC purchases. Whereas NAURA sold 8 etch systems and 6 CVD and ALD deposition systems to Chinese semiconductor companies, the company sold 34 furnaces in 2019 as well as 16 cleaning systems.

Shenyang Piotech also supplies PECVD and ALD deposition equipment. Piotech received orders for 4 PECVD (for SiN, SiO2) systems from YMTC, and is also receiving repeat orders from Hua Hong, and SMIC.


The size of the semiconductor equipment market and the small share China's equipment suppliers currently enjoy compared to foreign suppliers (source: The Information Network LINK)

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