advanced reticle symposium 2003 san jose, ca 23 june 2003 photomask market outlook: growth returns...
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Advanced Reticle Symposium 2003San Jose, CA • 23 June 2003
Photomask Market Outlook:Growth Returns
Klaus-Dieter Rinnen
Managing Vice President
Manufacturing and Design
Emerging Technologies and Semiconductors
Gartner Dataquest
2
Revenue Growth (%) 2002 2003 Base Up Base Down
World GDP +2.0 +2.2U.S. GDP +2.4 +2.4Electronic -1.4 +4Equipment* Semiconductor +1.9 +12 +8 +1
Capital Spending -37 +15 +7 -1
Photomask -3 +5 +2 -1
*Production revenue
Forecast Growth Scorecard
3
+2.
2
+3.
4
+2.
0
+1.
2
+4.
0
0
1
2
3
4
5
2000 2001 2002 2003 2004
Source: Global Insight
Real GDP Growth (Percent)
Global GDP Growth, 2000-2004
4
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; fundamentalsare 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 wecan’t identify yet!).
5
Economics Health Score
Economic Policy
Capital Spending
Consumer Spending
Dollar Depreciation
GlobalTrade
SARS, South Korea, Terrorist Attacks
North AmericaEuropeJapanAsia/Pacific
North AmericaEuropeJapanAsia/Pacific
North AmericaEuropeJapanAsia/Pacific
North AmericaEuropeJapanAsia/Pacific
North AmericaEuropeJapanAsia/Pacific
2003North AmericaEuropeJapanAsia/Pacific
2004 2005
??Wild Cards
6
+2.
2
+3.
4
+2.
0
+1.
2
+4.
0
0
1
2
3
4
5
2000 2001 2002 2003 2004Source: Global Insight
Real GDP Growth (Percent)
2H03 revival still possible, but full recovery may be
pushed out to 1H04
U.S. tax cuts stimulate U.S. tax cuts stimulate strong strong U.S. consumer U.S. consumer spendingspending
Eurozone adopts looser Eurozone adopts looser economic policieseconomic policiesCapital spending revivesCapital spending revivesDollar depreciates slowlyDollar depreciates slowlyWild cards limitedWild cards limited
U.S. tax cuts fail to stimulate U.S. tax cuts fail to stimulate U.S. consumer spendingU.S. consumer spendingEurozone maintains tight Eurozone maintains tight
economic policieseconomic policiesCapital spending faltersCapital spending faltersDollar crashesDollar crashesWild cards wreak havocWild cards wreak havoc
Global GDP Growth, 2000-2004
7
-3
-2
-1
0
1
2
3
4
5
6
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
U.S. GDP Growth (Percentage of SAAR)
Fo
rec
as
t
Source: Global Insight and Gartner Dataquest (June 2003)
Macroeconomic Picture Brightens:Quarterly U.S. GDP Growth — June 2003
8
overall IT demand
9-Mar. 23-Mar. 6-Apr. 20-Apr. 4-May 18-May 1-Jun.
Week Ending
0
100
200
Untrended and Unweighted ProjectedUntrended and Unweighted Current
Index
Strong
demand
Weak
demand
War breaks outMajor combat finished
Major break in SARS news
CurrentProjected
IT Spending — Unweighted/Weekly: War With Iraq and SARS Outbreak Sway Sentiment
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
9
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
10
Gartner Dataquest’s Index of Semiconductor Market Leading Indicators — June 2003
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003
Semiconductor Growth
Indicator
Actual Forecast
Semiconductor Revenue Growth
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1H03 2H03 1H04 2H04
Cell Phones
PCs
SpendingConsumer Corporate
Communications
?
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
12Optimistic PessimisticMost Likely
30
35
40
45
50
55
60
65
1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04
Billions of Dollars
2002
1.9%
Scenarios
OptimisticMost LikelyPessimistic
2003
+12.3% +8.3% +1.3%
Quarterly Semiconductor Revenue: Market Expands on 2H03 Improvement
13
0
50
100
150
200
250
300
1996 1998 2000 2002 2004 2006
Billions of Dollars
8%2%
23%
22%-5%
6%
Semiconductor Revenue Forecast:Recovery Gains Momentum in 2003
14
Key Conclusions:Inventory days peaked in 1Q01
Healthy drop in 1Q03
Gartner Dataquest Semiconductor Inventory Index
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1Q99 1Q00 1Q01 1Q02 1Q03
Supply Outlook: Semiconductor Inventory
15
Ratio of Silicon Consumed to Fab Capacity
40%
50%
60%
70%
80%
90%
100%
1Q00
3Q00
1Q01
3Q01
1Q02
3Q02
1Q03
3Q03
1Q04
3Q04
Leading Edge
Overall Wafer Fab Utilization
16
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1996 1998 2000 2002 2004 2006 2008
Millions of Dollars
2002
-2.9%
Scenarios
OptimisticMost LikelyPessimistic
2003
+5.4% +2.2% -1.2%
Photomask Revenue Forecast:After Two-Year Decline, Growth Returns in 2003
17
0
50
100
150
200
250
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Semiconductor Revenue(Billions of Dollars)
Photomask Revenue (Percentage of Semiconductor Revenue)
Semiconductor vs. Photomask Revenue
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0%
20%
40%
60%
80%
100%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Sub-0.25 Micron
0.25 to 0.7 Micron
0.7 Micron and Above
Photomask Revenue by Layer Linewidth: Sub-0.25 Micron Is Driving Force
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400,000
450,000
500,000
550,000
600,000
650,000
700,000
750,000
800,000
1996 1998 2000 2002 2004 2006 2008
Photomask Units (Plates)
Photomask Unit Forecast:Growth Returns in 2003, but Muted
20
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1996 1998 2000 2002 2004 2006 2008
Aggregate Photomask ASP ($)
Aggregate Photomask ASP Forecast:Mix Drives Strong Growth
21
0
100
200
300
400
500
600
700
1992 1995 1998 2000/1 2003
Photomask Set Cost: Cost in Second Year of Production
0.5 Micron18 Layers
0.35 Micron20 Layers
0.25 Micron22 Layers
0.18 Micron28 Layers
0.13 Micron32 Layers
Thousands of Dollars
Note: Set cost is best estimate for 2002.
22
Wanted! Needed! New Business Models
for Photomask and ASIC
Classifieds
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?
23
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 LineThe longer incumbent technologies are extended and maskless technology is delayed or muted, the better for photomasks.
But please, no bifurcation in lithography technologies.
What Does the Future Hold for Lithography?
24
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?