In semiconductor manufacturing, a single speck of dust poses a threat to production. It’s why cleanrooms, the sterile labs where silicon wafers get etched and cut into pieces, and then packaged as finished chips—with thousands of steps in between—contain few humans. To reduce the risk of contamination and defects, materials are largely transported by automated monorail systems that travel along the ceiling.
Source: Daifuku.
While advances in generative artificial intelligence (AI) have put a spotlight on the companies that design and manufacture chips, as well as their data-center customers, providers of cleanroom technology play an increasingly critical role in a world of high-performance computing. Not only is the industry for cleanroom automation characterized by an attractive competitive structure, but new trends and challenges in chipmaking are also improving the growth outlook for this specialized material-handling technology. One player in particular may stand to benefit, and that is Daifuku.
Daifuku, based in Japan, is a leading provider of cleanroom-automation solutions such as the monorail described above, which TSMC, Samsung, Intel, and others depend on to keep chip production on track. Each monorail extends 10 kilometers (6.2 miles) and is equipped with about 1,000 autonomous vehicles, called front opening unified pods (FOUPs). Typically, multiple cleanrooms operate together, with several monorail systems connected to one another. Each FOUP can travel 200 meters (656 feet) per minute. This speed is important because the photoresist light-sensitive polymers will degrade if the process takes too long. Dynamic routing, or the ability of the FOUPs to find the best path depending on the wafer’s condition while avoiding collision with other vehicles, is one of Daifuku’s key competitive strengths.
Because the company has only one significant rival, Murata Machinery, Daifuku enjoys strong bargaining power over buyers. (Samsung has a subsidiary that also does some of this work, but exclusively for its parent company.) And although the broader cleanroom-automation market is largely split between Daifuku and Murata, fabrication facilities, or fabs, working on the most cutting-edge technology—chips with features two and three nanometers small that are highly sensitive to contamination and degradation and require more precision—primarily turn to Daifuku. To create smaller transistors and other components, fabs not only must limit airborne and aerosol particles but also minimize machine vibrations and have other critical environmental controls. Daifuku is distinguished by its ability to engineer large, sophisticated projects such as these. Rather than focus on manufacturing all the disparate parts that go into an automation system, the company’s core competency is designing ways for various solutions to work together to address each customer’s increasingly complex needs.
Cleanroom automation isn’t Daifuku’s only business, although it may soon be its biggest. For much of the company’s 87-year history, its largest source of revenue has been factory and warehouse conveyor systems, including those used today by Amazon.com, Home Depot, and Walmart to swiftly transport boxes around facilities that can span several football fields. Its elevator-like systems of storage racks can also organize and retrieve crates stacked multiple stories high (a common setup in Asia, where land is limited, and warehouses tend to be tall rather than wide). Daifuku’s systems are also used in automotive plants to hoist cars through assembly lines, and in airports to move baggage.
Source: Daifuku. Data as of March 31, 2024.
In 2023, cleanroom-automation solutions grew to account for about a third of Daifuku’s sales—nearly on par with the intralogistics division that serves warehouses. But by 2025, cleanrooms will likely be the largest part of Daifuku’s business. The growth is being fueled by the changing production needs of its chipmaking customers, both in how and where they assemble their devices.
First, the how. This requires a brief tour through the physics of chipmaking as well as Moore’s Law, which is the observation that the number of transistors on an integrated circuit doubles every two years with a minimal rise in cost. As these devices get smaller, more can be added to the chips, giving them more processing power. However, innovations in transistor size have slowed in recent years, which is leading chipmakers to explore other solutions in a paradigm shift known as “More than Moore.” For instance, TSMC Chairman Mark Liu projects that within a decade, a graphics processing unit (GPU), a type of chip used for AI, will contain 1 trillion transistors, up from about 100 billion today, but the current pace of transistor miniaturization won’t allow such density. Unable to shrink transistors much further so that they fit side by side, chipmakers are instead stacking them in vertical layers, which saves space and improves processing efficiency by shortening the distance that signals must travel.
What does this mean for Daifuku? More of chipmakers’ budgets may be set to flow its way, as priorities shift from the front end of the production process, where the sizes of the chips and components are determined, to the back end, where transistor stacking and packaging takes place. In 2021, global semiconductor capital expenditures totaled nearly US$100 billion. About 80% of this went to the front end, as the focus on chip miniaturization over the past decade required foundries such as TSMC to make large outlays for expensive lithography machines that print the chips. Now, as stacking and packaging become more technical and important to increasing performance, greater investment will be needed to automate that stage of the process. By 2027, back-end solutions should account for 20% to 30% of Daifuku’s cleanroom sales. If back-end production becomes fully automated, it may be just as profitable for Daifuku as the front end, with operating margins of 10% and higher.
The other source of growth for Daifuku is a shift in where chip production takes place, as governments such as the US and Japan try to bring key tech manufacturing closer to home. The Semiconductor Industry Association (SIA) projects that wafer starts per month in the US will more than triple by 2032, taking the country’s share of global chip-fabrication capacity from 10% to 14%. Consequently, manufacturers will have to contend with higher labor costs and a shortage of skilled workers. This increases the need for automation, including at the back end as the focus shifts to packaging.
*Others include Malaysia, Singapore, India, and the rest of the world.
All values shown in 12-inch equivalents.
Source: Semiconductor Industry Association, BCG.
The US currently has only a small share of the US$95 billion assembly, test, and packaging market. But it wouldn’t make much sense to bring front-end chip-production work to the US only to have to ship components to Asia for the final steps. Therefore, the CHIPS and Science Act, passed in 2022, includes US$3 billion to build the country’s capabilities in advanced packaging. According to the SIA, companies such as Amkor Technology, Intel, Samsung, and SK Hynix are already planning packaging-related investments for facilities in Arizona, New Mexico, Indiana, and Texas.
These changes to the supply chain and chipmaking process, along with the broader advances being made in computing, are all favorable long-term trends for Daifuku.
