As China's semiconductor equipment company AMEC saw operating profit in the first through third quarters rise more than 30% from the same period last year, it also sharply increased investment in research and development.
AMEC supplies etching and deposition equipment used in semiconductor chip manufacturing, as well as thin-film tools. It is one of the largest semiconductor equipment corporations in China and supplies equipment to Chinese semiconductor corporations such as SMIC, Huahong Semiconductor, and YMTC, and it has a record of supplying equipment to Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturing) corporation.
◇ AMEC, R&D investment up 63% in Q1–Q3
According to AMEC on the 5th, the company's revenue for the first through third quarters this year was 8.063 billion yuan (about 1.6318 trillion won), up 46.40% from a year earlier. Operating profit for the same period was 1.22456 billion yuan (about 248.27954 billion won), up about 30% year over year. Notably, research and development expenditure was 2.523 billion yuan (about 511.7 billion won), up 63.44% from a year earlier. R&D as a share of revenue was 31.29%.
As U.S. restrictions on China intensify, AMEC is analyzed to be putting large amounts of capital into R&D to internalize advanced semiconductor equipment technology. With the artificial intelligence (AI) market taking off, demand is surging for advanced semiconductors and the semiconductor equipment used to make them, but U.S. export controls on semiconductors have blocked access to advanced tools. AMEC is developing and supplying equipment in cooperation with SMIC, China's largest foundry corporation, and memory chip corporation YMTC.
AMEC's research and development expense outlays are high compared with Korean semiconductor equipment corporations. According to business reports from Jusung Engineering and Eugene Technology, Jusung Engineering invested 72.7 billion won in the first half of this year, and Eugene Technology invested 78.4 billion won in research and development. Like AMEC, Jusung Engineering and Eugene Technology are leading domestic semiconductor equipment corporations that supply deposition process equipment, such as atomic layer deposition (ALD) tools that coat desired materials onto wafer surfaces.
◇ "Higher than global semiconductor equipment makers"
AMEC's R&D expense as a share of revenue was analyzed to be higher than that of the four major global semiconductor equipment corporations—ASML, Applied Materials, Lam Research, and Tokyo Electron (TEL). The R&D expense ratio to revenue in the last fiscal year was ASML (15.19%), Applied Materials (11.8%), Lam Research (13.2%), and TEL (10.28%). Market research firm TrendForce said, "Not only does it far exceed the average R&D share of revenue of 15–20% among semiconductor corporations listed in the Chinese market, it is also the highest level compared with global equipment corporations such as Applied Materials and Tokyo Electron."
However, as AMEC has yet to stand out in the advanced semiconductor market, some note that it falls short of catching up with global semiconductor equipment corporations in total R&D scale. In the last fiscal year, R&D expenditure was tallied at 4.3 billion euros (about 7.1 trillion won) for ASML, $3.23 billion (about 4.6 trillion won) for Applied Materials, $1.98 billion (about 2.8 trillion won) for Lam Research, and 250 billion yen (about 2.3 trillion won) for TEL.
An industry official in semiconductor equipment said, "It is true that China's AMEC is growing rapidly as it pours massive R&D capital," but added, "Its technology level has not caught up enough to threaten global semiconductor equipment corporations, so a short-term chase falls short."