Semiconductor Manufacturing Equipment Market Dynamics: Growth Opportunities and Challenges

The semiconductor manufacturing equipment market is projected to reach USD 149.8 billion by 2028 from USD 91.2 billion in 2023, at a CAGR of 10.4% from 2023 to 2028. Need for semiconductor parts in electric and hybrid vehicles and wide adoption of 5G technology are some of the major factors driving the market growth globally.

The prominent players in the semiconductor manufacturing equipment market are Tokyo Electron Limited (Japan); Lam Research Corporation (US); ASML (Netherlands); Applied Materials, Inc. (US); KLA Corporation (US); SCREEN Holdings Co., Ltd. (Japan); Teradyne, Inc. (US); Advantest Corporation (Japan); Hitachi, Ltd. (Japan); Plasma-Therm (US). These companies not only boast a comprehensive product portfolio but also have a strong geographic footprint.

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Driver: Adoption of 5G technologyand IoT increases demand for advanced semiconductors in US
5G technology has been pushing the boundaries of wireless communications, enabling use cases that rely on ultra-fast speeds, low latency, and high reliability. The necessity of higher data rates, better coverage, greater spectral efficiency demands 5G network infrastructure development. According to the Global System for Mobile Communications Association (GSMA), the number of 5G connections in North America is expected to reach 272 million by 2025. 5G-enabled smartphones play a crucial role in raising the demand for advanced semiconductors. According to GSMA, the 5G smartphone adoption would witness an increase from 82% in 2021 to 85% by 2025 in North America. In this, the US 5G smartphone market will reach 118.1 million units shipped in 2022, up by 27.3% from the 92.8 million units shipped in 2021.

Restraint: Complexity of patterns and functional defects in semiconductor chips
A cleanroom and clean equipment is essential for the fabrication of semiconductors. Tiny dust particles can hinder the overall semiconductor manufacturing setup. As a result, the owner plant owner had to face a substantial financial loss. The reduced size and increased density of semiconductor chips have resulted in the complexity of wafers, which decreases lithography wavelength. Moreover, the reduction in node size makes photomasks and wafers more complex, resulting in the need for new semiconductor manufacturing equipment. All these factors inhibit the growth of the semiconductor manufacturing equipment industry.

Opportunity: Shortage of semiconductors leading to development of new manufacturing facilities
Semiconductors are critical components that power all kinds of electronics. Their production involves a complex network of firms that design the chips, companies that manufacture them as well as those that supply the required technologies, materials, and machinery. As the worldwide semiconductor crisis continues to disrupt supply chains and create widespread uncertainty in the automotive and consumer electronics sectors, some manufacturers have announced their expansion plans.

Challenge: Lack of skilled workfoce worldwide
The semiconductor manufacturing challenges persist after the completion of semiconductor facilities. One such challenge is the lack of a skilled workforce. The production of semiconductor chips necessitates specialized expertise; it requires professionals with the knowledge and skills to transform raw materials into finished goods utilizing specialized equipment, such as CNC machines. The global talent gap in the semiconductor industry is a widespread concern, as major semiconductor hubs are facing shortages of qualified personnel in varying degrees. According to the Workforce Development Survey, among 95% of the overall graduates, hiring engineering professionals for critical fields in the semiconductor industry proved to be highly challenging.