- Chip tool supplier chief expects U.S. and Europe to become bigger players in time
According to Nikkei Asia article published on January 30, 2023, South Korea and Taiwan will still be key semiconductor hubs in years to come, even as pressure to diversify supply chains leads to new competition from places like the U.S. and Germany, according to the CEO of U.S. chipmaking equipment supplier MKS Instruments.
John T.C. Lee, president and CEO of MKS, added that the current slump in the chip market is just a cyclical downturn, and that the industry is still on track to grow at a "healthy rate" in the medium to long term.
"We've been throughfrom 2022. But you know, I've been in this industry a long time. Ten years ago, that number was $35 billion, and that was a good year. Now we say $70 billion is a bad year."
MKS is a provider of electronics subsystems, including radio frequency (RF) power sources and lasers used in chipmaking and other fields, and has top global semiconductor equipment makers as customers, including Applied Materials and Lam Research.
Chipmakers rely on MKS's RF power sources to etch extremely fine transistors, especially for cutting-edge processors and 3D NAND flash memory chips. According to the company's estimate, 85% of the world's chipmaking equipment use its technologies.
On the question of supply chain shifts, Lee expects South Korea and Taiwan will still be important centers of chipmaking in the future despite major economies pushing to onshore vital areas of production.
"As long as Samsung, SK Hynix and TSMC remain chip leaders, I think Korea and Taiwan will continue to be important countries for semiconductor manufacturing," Lee told Nikkei Asia. He said for most advanced chip plants, the core technologies will likely develop close to the leading players' headquarters and later be deployed to other places if needed.
But the CEO said more such chip "hubs" will likely emerge, especially in the U.S. and European countries such as Germany. "It's maybe not as efficient in the beginning, but I think once a hub is established, it gets pretty efficient. And once you have multiple fabsin one area, the infrastructure is now supporting multiple fabs, not just one."
The overarching trend of devices needing ever more chips will also help more hubs to flourish, he said.
"The number of chips will definitely continue to grow in years to come," the CEO said.
But the semiconductor industry is no longer a place for small companies, he cautioned, as the bigger players will only get bigger. "In the 1990s, companies that had $20 million or $30 million in revenue were fine," he said. "Now you can't do that because the problems that we have to solve now are so difficult. That requires a lot of engineering, and a lot of sustained engineering over multiple years."
MKS has made several acquisitions over the past few years to expand its product portfolio and scale. In 2021 it acquired Photon Control, a supplier of optical sensors for temperature control used in chipmaking. The following year it bought the specialty chemical company Atotech.
The acquisitions not only also help MKS to expand the scope of its business but also its manufacturing footprint, Lee said. The company has production sites in the U.S., China, Mexico, Singapore, Malaysia, Thailand and other countries around the world.
Lee added that the unprecedented supply chain constraints of the past two years made people realize how important chips and their ecosystem are.
"The supply chain constraints woke up everybody. There's a lot of ecosystems and support that go all the way back to your mining of minerals. ... When you start investigating where's the constraint, you keep going down and downand you realize, 'Wow, the entire world economy has something to do with making a chip,'" Lee said.
