YOLE Group

WFE revenue grows moderately, while overcapacity builds up

We live in unprecedented times for semiconductor device processing. Equipment purchases are governed more by geopolitics than end-market demand, while a technology roadmap has been established for every device type. Despite increasing overcapacity and fab redundancy worldwide combined with low utilization rates and low profits for foundries and IDMs, WFE revenue is still set for a growth.
WFE vendors draw their revenue from equipment shipments (at 82%) as well as service and support (at 18%), totaling $140B in the 2024. In 2030, WFE revenue will reach $185B (+4.8% CAGR'24-'30).
For Equipment technology, in 2024, the patterning segment held a dominant total market share, followed by deposition, etch & clean, metrology & inspection, thinning and CMP, ion implantation and wafer bonders. For device application, 2024 - 2030 WFE CapEx will be led by advanced logic devices, DRAM, NAND, while legacy logic and specialty device WFE CapEx enters now a digestion phase.

Status Quo still strong but geopolitics’ influence more visible year-on-year

In 2024, WFE shipment’s $115B total revenue was generated mostly by companies headquartered in the USA, followed by EMEA, Japan, Greater China and other territories. However, a very different picture is envisioned for WFE manufacturing geography, led by EMEA, Japan, Southeast Asian territories, USA and others. Most of WFE revenue is financed by chipmakers located in Greater China, followed by South Korea, Taiwan, and the USA.
WFE-specific supply chain is complex. Traditionally, top-WFE vendors remain at the market leadership due to the control of their subsystem supply chain and more recently, a large inventory, resulting in a disconnect between WFE and subsystems market trends.

Technology innovation driven by harsh competition

Device design, technology, and architecture changes all influence equipment requirements – hence morphology, which in turn influences subsystem requirements. All supply chains must adapt at each manufacturing node change.
The main 2024 - 2030 drivers for technology innovation are device architecture transitions for logic: from FinFET to GAA to GAA with Power Delivery Network to CFET ; 2DRAM adopting EUV lithography; architecture change to 4F2 and logic / memory wafer desegregation; NAND superlattice layer increase and possible transition to multistack; advances across specialty devices with non-Si materials; advanced packaging scheme proliferation; innovation across the photomask industry; and engineered wafers.
WFE vendors provide not only process hardware but also a complete process solution. Thus, they need to account for problems coming from the semiconductor industry both upstream and downstream. The “Holy Grail” is to create versatile.

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Advanced packaging technologies fuel unprecedented growth in semiconductor back-end equipment

The semiconductor back-end equipment sector is experiencing significant growth driven by increasing complexity in semiconductor manufacturing and rising demand from AI, automotive, and high-performance computing (HPC). Key segments like Die Bonders, Flip Chip Bonders, Wire Bonding, Wafer Thinning, Dicing, and Metrology & Inspection are central to market expansion. TCB and Hybrid Bonding segments, essential for advanced packaging and high-bandwidth memory integration, show remarkable growth. Die Bonders and Flip Chip Bonders are set to grow, fueled by automotive electronics and consumer devices. Wire Bonding maintains steady demand in legacy applications, while Wafer Thinning and Dicing benefit from wafer-level packaging advancements. Metrology & Inspection sees ongoing expansion driven by precision needs in advanced packaging processes. Leading equipment vendors and foundries continue to invest heavily, reflecting confidence in market dynamics and long-term technological advancements.

Strategic alliances and technological innovation are reshaping the semiconductor supply chain landscape

The semiconductor back-end equipment supply chain faces transformation driven by geopolitical tensions, technological evolution, and regulatory shifts, prompting major vendors like K&S, Besi, ASMPT, DISCO, and Hanmi to diversify geographically. Demand for advanced packaging technologies is accelerating rapidly, fueled by growth in AI, HPC, automotive electronics, and 5G infrastructure. Leading foundries and integrated device manufacturers (IDMs), including TSMC, Intel, and Samsung, are increasingly focused on hybrid bonding technologies. Strategic collaborations and mergers highlight increased integration within the supply chain. OSATs like ASE, Amkor, JCET, SPIL, and Powertech expand capabilities in Flip Chip and advanced packaging techniques, emphasizing strategic partnerships and technological cooperation.

Breakthrough innovations accelerate the transformation of semiconductor back-end equipment technologies

Semiconductor back-end technology is rapidly evolving, driven by advanced packaging needs in HPC, AI, automotive electronics, and 5G applications. Laser and plasma dicing technologies are gaining traction, improving precision and reducing mechanical stress on semiconductor devices. Wafer thinning continues to advance with ultra-thin grinding and chemical-mechanical polishing techniques enhancing wafer uniformity. Die Bonders now feature increased accuracy, speed, and versatile capabilities, benefiting automotive and consumer electronics applications. Flip Chip bonding innovations support higher interconnect densities critical for advanced chiplets and substrates. Hybrid Bonding emerges as a key interconnection technology enabling ultra-high-density stacking. Metrology and Inspection techniques enhance reliability and compliance through automation and advanced analytics.

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The semiconductor content in servers is increasing due to the rising need for more silicon in storage, processing, and interconnection—driven largely by AI, ML, and Frontier Models. AI-powered servers are growing rapidly, rising from a few percent of total computing servers in 2020 to over 10% by 2024. This trend follows an S-curve: slow initial growth, a fast rise, then plateauing after 2026, staying stable through 2030. The data center semiconductor acceleration market is projected to begin scaling in 2024, reaching an estimated $493 billion by 2030. By then, data center semiconductors are expected to make up more than 50% of the total semiconductor market, reflecting a dramatic shift powered by AI, cloud computing, and hyperscale infrastructure needs. The CAGR for this segment (2025–2030) is nearly double that of the overall semiconductor industry.

• Logic semiconductors will continue to dominate, growing fastest due to increasing complexity and processing demands of AI-heavy workloads.
• Memory, especially High-Bandwidth Memory (HBM), is the second-largest segment, experiencing rapid growth to support the high-throughput requirements of AI and HPCs.
• The expansion of photonics and co-packaged optics (CPO)—pushed by companies like Nvidia and Broadcom—is also transforming server architectures. Photonics alone is forecasted to achieve multibillion-dollar revenues by 2030.
• In power, the future of data center design is being reimagined for maximum efficiency. Previously long-term goals like DC power distribution are now active priorities. Disruptive AI data centers, which demand extreme power efficiency, are accelerating the move toward liquid cooling, shifting it from optional to essential. The market is expected to exceed $1 billion by 2030.
• At the same time, AI and GPU-intensive operations are driving the need for embedded sensor intelligence across server infrastructure. With rising thermal and environmental constraints, on-chip temperature sensors are becoming standard. Furthermore, liquid cooling systems will require advanced sensors to monitor pressure, flow rate, and coolant quality effectively.
• Finally, the volume of semiconductor wafers for servers is projected to exceed 20 million units by 2030, with most manufactured on sub-28nm nodes to meet the demands of advanced AI chips.
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New power level triggers a new TAM for PSU with a CAGR24-30 of 15.5%

The PSU is one of the essential parts of the hardware in data center powertrain. There are three mainstream PSU standards having different specifications: ATX (Advanced Technology eXtended), CRPS (Common Redundant Power Supply) and Open Compute project (OCP). CRPS dominates across most segments due to flexibility and modularity. OCP is hyperscaler-centric, driven by scale and cost efficiency. Custom PSUs thrive in HPC, where standardization doesn’t meet extreme demands. ATX remains in legacy/low-power setup, but growth is declining. As of 2025, the total PSU market for data centers is estimated to worth more than $7B. Seeing the increasing demand for higher power required by PSU, the market value of PSU higher than 3 kW is expected to dominate the market (~80%) by 2030. Therefore, to meet efficiency and density requirements, wide Bandgap (WBG) semiconductors (i.e., GaN and SiC), are increasingly adopted. The CAGR24-30 market value of SiC and GaN devices will feature a double-digit growth.

Nvidia is influencing the power supply chain

On one hand, major PSU suppliers include Delta, Liteon, Huawei and Advanced Energy collectively holding over 60% market share. Therefore, Delta is not only the N°1 in PSU market share, but they have also secured a privileged position, working closely with Nvidia across almost the entire powertrain. On the other hand, Nvidia, as the leader in computing GPUs, is setting stringent requirements, leading to rapid adoption of technologies like liquid cooling and high-power PSUs. PSU makers are aligning with Nvidia’s power, thermal, and mechanical requirements (e.g., 5.5kW–33kW PSU, liquid-cooled racks).

AI is driving the adoption of new technologies

The architecture of future data centers is being completely rethought by industry giants to maximize efficiency. What was once considered a long-term design goal—such as DC power distribution—is now being actively pursued, with Meta and Microsoft planning deployments in the second half of 2026. In parallel, the 80 PLUS Ruby standard has emerged as the highest official PSU efficiency certification to date, requiring up to 96.5% efficiency at 50% load and 92% at full load. Introduced in January 2025, it was specifically designed to meet the demands of AI workloads. At the same time, the target of 100 W/in³, once considered a roadmap milestone, has already been achieved by several players. As a result, wide-bandgap adoption has become essential to meet both the rising power levels and new efficiency requirements. Rather than choosing between Si, GaN, or SiC, the new trend is to combine their strengths in a single architecture—commonly referred to as a hybrid design.

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Driven by Generative AI, the data center processor market is expected to reach $372B by 2030

The data center processor market is experiencing rapid expansion, driven by growing demand for generative AI applications, which require high-performance computing. The global market for data center processors reached $147B in 2024 and is projected to hit $372B by 2030. GPUs and AI ASICs are at the heart of generative AI and largely drive the market, with double-digit growth. CPUs and networking processors, such as DPUs, are also essential in this market and are experiencing steady growth. In the AI context, where GPUs and AI ASICs dominate, FPGAs have experienced a sharp decline and are expected to remain flat in the medium term. The rapid expansion of the cryptocurrency market, such as Bitcoin, has led to strong growth in crypto ASICs within crypto farms, essential for validating cryptocurrency transactions.

Nvidia leads the AI race, but Google and AWS are betting big on in-house AI ASICs

Generative AI, driven by OpenAI since 2022, has transformed the data center processor market and greatly benefited Nvidia's GPUs. Facing Nvidia's dominant position and the strategic stakes represented by AI, hyperscalers such as Google and AWS are forming partnerships with Broadcom, Marvell, and Alchip to co-design their own AI ASICs and achieve greater independence. Within this shift towards AI ASICs, numerous startups like Groq, Cerebras, and Graphcore, are seeking market positions with innovative approaches, prompting a wave of M&A and fundraising activities. This push towards performance efficiency, is driving a transition towards arm-based CPUs, thereby disrupting Intel and AMD’s longstanding leadership with x86 architecture. With expertise in cooling solutions and high power capacity, cryptocurrency mining farms are now also entering the AI market by hosting the most powerful GPUs.

Multi-chiplet architectures and advanced nodes are shaping the future of Generative AI

Chiplets play a critical role in GPUs, CPUs, and ASICs, optimizing yield while enabling increasingly larger dies with ever more advanced nodes. In 2024, the latest CPUs are on 3nm, while GPUs and AI ASICs remain at 4nm, though 3nm is expected to arrive as early as 2025, with AWS Trainium 3. To meet AI demands, compute performance has grown eightfold since 2020 and continues to accelerate, with Nvidia announcing its Rubin Ultra for 2027 at 100 PetaFLOPs in FP4 for inference. However, memory plays a crucial role in AI applications as AI models become larger and the need for low latency and high bandwidth increases. HBM memory currently fulfills this critical role within Nvidia, AMD, Google and AWS solutions, but many AI ASIC startups, such as Groq and Graphcore, are striving to establish processors based on SRAM memory to improve performance.

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A critical market for semiconductor manufacturing

Welcome to the 2025 editions of Yole Group’s Semiconductor Equipment Subsystems Monitor. This quarterly monitor aims to covers three main types of parts and associated services:​ Subsystems​, Components​ and Sub-Assemblies/Modules​.

The Semiconductor Subsystems Market Monitor offers data from more than 200 subsystem, component, and module/Sub-assemblies (SCM) suppliers. These SCMs are critical to operating front-end wafer fab equipment (WFE), yet these products are often overlooked. They represent a substantial $50B annual market, and SCM suppliers such as Edwards Vacuum, MKS Instruments, Zeiss, VAT, Ebara, UCT, and Horiba do not have the public recognition they deserve as "technology enablers. Quarterly and yearly forecasts of segments such as process monitoring, power, vacuum, and optics are compiled along with annual vendor shares. Specific market dynamics and comments are offered for each segment.  A unique segmentation was developed to capture the whole bill of materials by segment per type of WFE, giving the reader a comprehensive view of the entire semiconductor SCM market, including the service and support side.

Subsystems market is rebuilding

The subsystems market felt down in almost all segments, compared with revenues in the previous quarter (QoQ) but increased compared to the previous year (YoY).
Demand for Wafer Handling and optical subsystems has seen a growth, while all other segments fell down in the high single-digit, low double-digit range.

• Tops (subsystems segments that have seen growth) : Wafer Handling subsystems with +12.3% QoQ and Optical subsystems with +8.7% QoQ
• Downs (subsystems segment that saw little or no growth) : Thermal control subsystems with -13.1% QoQ and Process monitoring with -9.1% QoQ.
• Others segment decreased in the range -2% to -5% QoQ
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