“As semiconductor manufacturers continue to introduce chips with 5nm dimensions, the metrology/inspection market will benefit,” noted Dr. Robert Castellano, president of The Information Network. “The smaller dimensions dictate advanced metrology and inspection equipment to find defects that could negatively affect IC performance and yield.”

KLA is the dominant equipment supplier with a 55% share of the overall market. In 2019, it was the only major company that exhibited positive growth on a year-on-year basis. In Q1 2020, all major competitors exhibited negative growth on a quarter-on-quarter basis.

Israel’s Nova Measuring performed better than competitors in Q1 while ASML, which is the dominant lithography equipment supplier but supplied electron-beam inspection equipment, continued to fare the worse. Included are Nanometrics and Rudolph Technology as separate entities although they announced that their merger was finalized in 4Q 2019, and the new company was named Onto Innovation. In Q1, Onto Innovation exhibited revenue growth of -11.5%.

“Growth of the metrology/inspection sector has outperformed the overall semiconductor equipment market by 3% over the past few years, added Dr. Castellano. “The move to 5nm nodes by some of the largest semiconductor manufacturers such as TSMC and Samsung Electronics is another positive headwind.”