Overview of Wafer Inspection Equipment Industry in China

Semiconductor equipment can be divided into two categories: front-end equipment (wafer fabrication) and back-end equipment (packaging and testing). The front equipment involves silicon wafer processing, lithography, etching, ion implantation, thin film deposition, cleaning, polishing, metallization and other processes, and the corresponding core special equipment includes silicon wafer processing equipment, lithography equipment, etching equipment, cleaning equipment, ion implantation equipment, thin film deposition equipment, mechanical polishing equipment and so on.

The back-end equipment includes packaging equipment and test equipment, while the back-end advanced packaging process will also use some of the front-end equipment.

Semiconductor process control (quantity/detection) equipment is one of the core equipment in the integrated circuit production process, which runs through the whole process of integrated circuit production and is the key to ensure the yield of chip production.

From the process point of view, the quantity/detection equipment can be divided into two major links: detection (Inspection) and measurement (Metrology).

Detection refers to detecting whether there are heterogeneous conditions on the surface of the wafer or in the circuit structure, such as particle contamination, surface scratches, open short circuits and other characteristic structural defects that have a negative impact on the performance of the chip process.

Measurement refers to the quantitative description of the structural dimensions and material properties on the wafer circuit being observed, such as the measurement of physical parameters such as film thickness, critical dimensions, etching depth, surface morphology, etc.

Among them, the front volume detection is mainly used in the wafer processing link, at present, mainly in-plant production line online monitoring.

Back-end testing is mainly used for chip electrical testing and functional testing after wafer processing, and is currently mainly based on in-plant production line online monitoring and third-party testing.

Laboratory testing mainly focuses on defect location and fault analysis of effective samples, mainly focusing on third-party laboratories and self-built laboratories in the factory. From the technical principle, quantitative testing mainly includes optical testing technology, electron beam testing technology and X-ray measurement technology, of which optical testing is the main testing technology at present, with fast speed and no contact.

Judging from the capital expenditure of the fab, 20%-30% is used for plant construction and 70%-80% is used for equipment investment. Investment in front-end equipment (wafer manufacturing) accounts for about 80% of semiconductor equipment investment, and packaging and test equipment account for about 10% and 8%, respectively.

In 2022, the value of lithography equipment, etching equipment and thin film deposition equipment accounted for 22%, 21% and 21%, respectively, while the value of volume/inspection equipment accounted for about 11%, significantly higher than cleaning, CMP, adhesive development, ion injection and other sub-sector equipment.

The localization rate of semiconductor equipment in mainland China has steadily increased. The localization rate of etching equipment, thin film deposition equipment, cleaning equipment and CMP polishing equipment is between 10% and 30%, and the localization rate of heat treatment equipment is between 30% and 40%. The localization rate of glue remover reached 90%.

However, the localization rate of volume/detection equipment, ion injection equipment and adhesive development equipment is still low, below 5%, and the localization rate of lithography equipment is only less than 1%, which means that there is a large space for domestic substitution.

China Wafer Inspection Equipment Industry Chain

Wafer inspection equipment industry chain upstream for parts manufacturers, including motion and control, optical, mechanical processing parts manufacturers, etc.

The business model of domestic wafer inspection equipment manufacturers is to purchase high-precision components from overseas and then assemble them by domestic manufacturers.

Domestic head equipment manufacturers due to the large procurement volume, usually in the procurement of overseas parts manufacturers high-precision parts have a channel advantage.

One of the core competitiveness of domestic wafer inspection equipment manufacturers lies in the channel capacity of parts suppliers, and the core competitiveness of domestic parts suppliers lies in the stable acquisition of overseas high-precision parts.

The business model of domestic wafer inspection equipment manufacturers and overseas head manufacturers is to purchase parts and assemble them, however, overseas head equipment manufacturers can usually participate in the research and development design of upstream parts manufacturers.

Domestic wafer testing equipment manufacturers mainly include Zhongke Flying Test, Shanghai Precision Test, Shanghai Ruili, Saiteng shares, Chengfeng Technology, Silicon Semiconductor, Oriental Wafer, Shanghai Yuwei, Nanjing Zhongan and so on.

At present, domestic wafer inspection equipment manufacturers can only bulk shipment of 28nm and above process products, for 28nm process products are still under development and verification.

Overseas head manufacturers' products can generally cover processes below 2Xnm, while Corey Semiconductor (KLA)'s non-graphic wafer defect detection product Surfscan SP7XP has been applied to 5nm and below processes.

Semiconductor volume/testing equipment market size

It is expected that the global volume/testing equipment market will begin to pick up in the first half of 2024, but the recovery growth of the Chinese mainland market will lag by half a year to a year. The growth lag is mainly due:

1) As of the first quarter, the growth of wafer foundry orders in mainland China was not significant, and there was no obvious sign of capital expenditure increase;

2) Affected by U.S. chip sanctions, products with high-end chips are difficult to ship to Chinese mainland, and the difficulty in obtaining high-end main chips in Chinese mainland will affect the volume of foundry orders for affiliated mid-and low-end chips, while Chinese mainland wafer foundries mainly produce mid-and low-end chips.

Manufacturers can make the combination of mid-range chips have the performance of high-end chips through high-end packaging, while mainland Chinese manufacturers still need six months to a year to master high-end packaging technology. The mastery of high-end packaging technology can increase the demand for mid-range chip foundry, which in turn drives the demand for semiconductor equipment procurement, including volume/testing equipment.

Competition Pattern of Wafer Inspection Equipment Industry in China

In 2020, the global volume/testing equipment market is dominated by U.S. and Japanese manufacturers, with a high degree of market concentration, with CR5 exceeding 80%.

Among them, Kelei Semiconductor (50.8 percent), Applied Materials (11.5 percent), Hitachi (8.9 percent), Innovative Technology (5.6 percent), and Leitai Optoelectronics (5.6 percent).

China's semiconductor volume/testing equipment market is still showing a super-strong pattern, in 2020 Kelei semiconductor market share of 54.8 percent, while Chinese manufacturers in the science and technology, precision electronics, Ruili scientific instruments contributed a total of 2.3 percent of the market share.

The localization rate of semiconductor volume/testing equipment has increased from about 2% in 2020 to about 5% in 2023.

In the field of product segmentation, the localization rate of high-precision Overlay measurement equipment is close to 0. The localization rate of X-ray quantity detection equipment is less than 1%; The localization rate of film thickness measurement equipment has reached 15%. The localization rate of optical reexamination equipment has reached 10%. The localization rate of AOI testing equipment can reach 15%.

Chinese mainland wafer inspection equipment manufacturers have a high degree of localization, there is a certain domestic market customer base, however, the introduction of wafer inspection equipment accuracy is mostly m level, and overseas head manufacturers technology generation difference is larger.

In recent years, domestic manufacturers in the field of semiconductor volume/testing equipment continuous breakthrough, equipment localization rate continued to improve.

Among them, Zhongkefei has batch shipped series of products such as non-graphic wafer defect detection equipment, graphic wafer defect detection equipment, three-dimensional topography measurement equipment, thin film thickness measurement equipment, and overlay precision measurement equipment, and has been successfully applied to domestic integrated circuit manufacturing lines with 28nm and above processes. Shanghai Precision Film Thickness Series Products, OCD Equipment and Electron Beam Equipment have obtained batch orders from many domestic customers, semiconductor silicon wafer stress measurement equipment also received repeated orders from customers. At the same time, its bright field optical defect detection equipment has completed the delivery and acceptance of the first set, and has obtained more advanced process orders. Chengfeng Technology has made an important technological breakthrough in the field of YE (Quality Control) graphic detection, and has provided five-in-one multi-functional front AOI detection equipment, which integrates the five functions of crystal surface detection, crystal back detection, edge detection, warpage measurement and wafer thickness measurement, and has been shipped to domestic head customers.