Special Industry Machinery, NEC

SIC 3559

Companies in this industry

Industry report:

This classification covers establishments primarily engaged in manufacturing special industry machinery, not elsewhere classified, such as equipment for smelting and refining, cement making, clay working, glass making, incandescent lamp making, leather working, paint making, printed circuit boards, semiconductors, rubber working, cigar and cigarette making, tobacco working, shoe making, stone working machinery, industrial sewing machines, and automotive maintenance machinery and equipment. In the past, cotton ginning machinery was also included. Under the new NAICS codes, farm equipment and machinery (SIC 3523) is included in this classification. Cotton ginning machines are not included in that subclassificiation.

Industry Snapshot

The miscellaneous special industry machinery classification was comprised of companies that manufactured a wide variety of miscellaneous machines used to produce goods in other industries. Numerous product offerings ranged from broom-making contraptions to zipper makers, although semiconductor manufacturing equipment accounted for the largest portion of the classification's output. According to the Semiconductor Industry Association (SIA), worldwide semiconductor sales in 2009 reached $226.3 billion, with personal computers and cell phones accounting for 60 percent of semiconductor consumption.

Organization and Structure

The special industry machinery industry encompasses a plethora of devices, including tire retreading machinery, stone tumblers, tile-making equipment, automotive frame straighteners, lumber drying kilns, cork cutters, brick makers, shoe repair equipment, leather-working devices, and plastic molding machines. Semiconductor manufacturing equipment has been the leading segment in this industry since the 1990s, when it saw spectacular growth. For example, in 1987, shipments from this segment were valued at just $1.0 billion, but by 1992, they had more than doubled to $2.2 billion. The total continued to increase by leaps and bounds, from $6.8 billion in 1995, to $11.2 billion in 1997, to $14.8 billion in 2008.

Other groups that fall into this category include plastics and rubber industry manufacturing, power boiler and heat exchange manufacturing, other commercial and service industry machinery, and all other industrial machinery.

Semiconductor equipment remained the largest and fastest growing sector of the industry throughout the 2000s. Semiconductor production involves a sequence of more than 200 steps using numerous machines. Although the manufacturing process varies depending on the type of chip produced, four basic functions are typically performed to complete a semiconductor wafer, or circuit: (1) deposition of thin film on the (usually silicon) wafer; (2) impurity doping, when selected impurities are introduced that controlled conductivity; (3) lithographic patterning, which determines the geometric features and layout of the circuit; and (4) etching, which removes coating material to reveal the structure patterned in the lithographic process. These steps are repeated sequentially until the semiconductor wafer is complete. After the semiconductor is created using front-end fabrication equipment, back-end machines are used to test and assemble the chips. Back-end devices include three categories of machines: material handling, process diagnostics and testing, and assembly.

Background and Development

The history of miscellaneous special industry machinery varied by product group. One of the earliest and most renowned machines in this industry was the cotton gin, which Eli Whitney invented in 1793. The gin removed seed from cotton by pulling the fiber through a set of wire teeth mounted on a revolving cylinder. Because the device could be powered by man, animal, or water, it received immediate and widespread acceptance and made cotton a staple of nineteenth century southern life.

The development and widespread dissemination of electric power during the late nineteenth and early twentieth centuries resulted in the introduction of a multitude of machinery for miscellaneous industries. Likewise, postwar U.S. economic expansion propelled product introductions and sales throughout the mid-1900s. A pivotal breakthrough was Bell Laboratories' introduction in 1947 of the solid-state transistor, which utilized semiconductors. By the 1960s, a market for semiconductor manufacturing equipment began to emerge.

Spurred by important chip advances such as Intel Corp.'s 1971 introduction of the memory integrated circuit, U.S. producers took the early lead in producing semiconductor manufacturing equipment. The mass production of chips allowed by these high-tech machines resulted in dramatic semiconductor price reductions. As a result, the demand for chips surged as semiconductors were integrated into all types of electronic consumer and business devices. Importantly, the use of semiconductors in personal computers caused chip manufacturing equipment sales to balloon during much of the 1980s.

The number and production volume of machines classified in this industry increased substantially during the industrial revolution, particularly after World War II. By the early 1980s, about $5.0 billion in annual U.S. machinery sales were attributed to this SIC. Although overall U.S. industrial machinery sales growth slowed during the 1980s, a surging demand for high-tech semiconductor manufacturing equipment doubled industry revenues to about $10.0 billion in 1989.

The 1980s.
Although domestic manufacturers took the early lead, Japanese semiconductor machinery makers successfully captured much of the global market during the 1980s. The Japanese particularly excelled at delivering equipment for high-volume commodity chips. To combat Japanese strengths, U.S. semiconductor producers restructured, increased their manufacturing efficiency, and concentrated on developing new technologies during the mid-1980s. As the U.S. chip industry made a transition from commodity to proprietary chip production, it ceded a 45 percent share of the global semiconductor equipment market to Japanese producers.

Despite a loss of market share, chip machinery makers increased sales substantially during the 1980s. However, most other special industry machinery producers suffered. Capital spending on new equipment by other industries declined or grew at a slow pace in comparison to pre-1980 expenditures. Spending on new equipment by the transportation industry stagnated, for example, as did equipment purchases by the important petroleum and coal sector. Nevertheless, growth of semiconductor equipment demand helped double industry revenues to more than $10 billion by 1990.

The 1990s.
While the U.S. recession in the early 1990s depressed many industrial machinery segments, semiconductor machine sales continued to grow. Renewed U.S. competitiveness in high-tech equipment manufacturing allowed domestic competitors to thwart their Japanese rivals. In addition, increased semiconductor demand from industries such as telecommunications augmented growth. Output expanded throughout the mid- to late 1990s, though the cyclical nature of the industry did drive output down in 1997, causing a "tech recession" that continued into the early 2000s.

Strategies adopted by U.S. semiconductor manufacturers in the 1980s began to pay off in the early 1990s. Aided by a weak dollar and a recession in Japan, U.S. producers boosted revenues to $5.8 billion in 1991. Although sales dropped 3 percent in 1992, shipments climbed an impressive 18 percent in 1993 to about $6.0 billion. Assisted by a technological lead in growing product segments and newfound productivity, U.S. manufacturers were able to recover a 4 percent share of the global market from Japan. In 1993, they held 51 percent, compared to 41 percent controlled by Japan.

Despite being affected by business cycles in the chip-making industry, the long-term prospects for semiconductor equipment manufacturing appeared strong. A global increase in PC sales drove increased demand for semiconductors of all kinds, plus new chips being produced required more memory. For example, Intel's first Pentium chip required at least 16 megabytes of memory, almost double that of 486-based PCs. Also, the rapid growth of telecommunications and the use of electronics in automobiles increased semiconductor sales. The lightning-fast changes in the computer industry have rendered the first Pentium chip something of a dinosaur even to casual computer users, and there seemed to be little evidence that changes would not continue on their rapid course.

Also boosting U.S. semiconductor equipment competitiveness was the development of SEMATECH, a joint private sector/government funded research and development consortium. SEMATECH was formed in 1987 to combat increasingly competitive Japanese semiconductor producers. In addition, industry participants on both sides of the Pacific benefited from technology exchanges and partnerships with foreign and domestic competitors. Indeed, U.S. firms learned from the Japanese that traditional methods of developing and producing manufacturing technology in isolation from competitors were no longer feasible. While government funding for SEMATECH was reduced sharply in the mid-1990s, the organization restructured, increased dues, and remained a viable organization.

The group launched International SEMATECH in April 1998, which included the 10 U.S. companies, plus two from Asia and three from Europe. It dropped the "International" from its name in 2004 but continued to be an important force for research and development in the semiconductor equipment manufacturing industry. In 2004, SEMATECH joined with the State of Texas and the University of Texas to create the Advanced Materials Research Center (AMRC) to promote research and commercialization of new materials and nanostructures.

Front-end equipment sales led industry growth in the mid-1990s. Most importantly, shipments of deposition equipment rose 17 percent in 1993. U.S. producers held the lead in deposition technology and benefited from a proliferating trend toward smaller, more integrated chips that required more complex deposition. A shift toward the production of high-profit, application-specific, integrated circuits (ASIC) also boosted sales of U.S. front-end manufacturing devices. In contrast, sales of lithographic machinery, of which the U.S. supplied only a 16 percent global share in 1993, plummeted in the 1990s.

Back-end equipment sales also rose at a steady clip. Global shipments of test equipment gained 14 percent in 1993, and sales of material handling and diagnostic machines increased about 13 percent. Production of assembly devices, of which the U.S. made 30 percent globally, jumped 15 percent.

The market for semiconductors has traditionally been very cyclical, and as a result, the market for semiconductor equipment is cyclical as well. For example, in 1994 and 1995, semiconductor equipment firms enjoyed a booming market. A study conducted by VLSI Research on the 10 largest global semiconductor equipment suppliers showed that they sold $14.2 billion of equipment in 1995, a 74.4 percent increase over their net sales for 1994. However, in 1996, this strong growth rate slowed to 12.0 percent and semiconductor manufacturing equipment suppliers such as Applied Materials Inc., Lam Research Corp., and Varian Associates Inc. cut back on production and laid off workers. Conditions worsened in 1997 and 1998, but the industry turned around in 1999.

Some industry observers had predicted an upsurge in sales of semiconductor manufacturing equipment during 1997 due to a major change in the manufacturing process for dynamic random access memory (DRAM) chips. As manufacturers moved to produce higher memory chips (for example, from 16MB DRAM to 64MB DRAM), it was expected that they would change from using 200 mm wafers to 300 mm wafers. This would have created the need for a major retooling of manufacturing capacity. However, release of the 300 mm chip was delayed when industry changes made it impossible to make the 300 mm chip available before the end of the decade. By the late 2000s, the largest semiconductor companies were preparing to transition to 450 mm wafers.

Markets for other kinds of equipment in this industry were down in 1996. For example, total shipments of domestically produced plastic injection molding machinery decreased by about 15 percent in 1996 after strong growth in 1995. Capital investment in equipment was expected to decline throughout all of 1996 due to the decline in injection molding resin sales.

The 2000s.
The early 2000s saw a market rebound for the semiconductor segment, primarily due to increased consumer spending on electronics in addition to increased business demand for IT solutions. With the upswing in market conditions, manufacturers were spending more time and money on research and development. The industry focused on new era innovations to manufacture high-speed chips using low k film developed by industry leader Applied Materials. The newest chips were designed not only to enhance speed but also to be more energy efficient for premium performance in everything from supercomputers to cell phones.

Plastics manufacturing also began to rebound from the slump begun in the mid-1990s. The trends in manufacturing toward automation and reduction of costs were both positive indicators that plastics were set to come back. In 2004, projections were for increased demand for polypropylene (PP) and polyvinyl chloride (PVC). PP in particular was seeing an upswing because of its lower prices and perceived cost value.

To remain competitive, manufacturers started to buy more of their resin materials from overseas markets. Asian products were cheaper than domestic products, particularly in the ABS market. According to Plastics News, more than 20 percent of ABS processed domestically came from foreign markets in 2002. There was also a trend toward consolidations and mergers in 2003, especially in the highly fragmented noncaptive injection molding segment, which is that part of the industry that supplies other companies rather than manufacturing products for their own use.

Current Conditions

According to the SIA, in 2010, semiconductors had been the number-one export industry in the United States since 2005, with international sales averaging $48 billion per year. In mid-2010, the SIA announced a goal of doubling chip exports to $76 billion by 2014. According to SIA president George Scalise in June 2010, "Projected growth of the global semiconductor market will drive U.S. semiconductor exports to $56 billion in 2014 if we merely maintain our current market share....To achieve the goal of doubling total exports, we will have to grow our market share and increase activity in the U.S. Doubling exports will require strengthening the competitiveness of U.S.-based companies and adopting policies to encourage investment in research and manufacturing in America."

Industry Leaders

In the early 2010s, the world leader in the special machinery industry was Applied Materials Inc. of Santa Clara, California, with more than $5.0 billion in sales and 13,032 employees. In 2006, the firm purchased Applied Films and entered the market for equipment used in making solar power cells. About two-thirds of Applied Material's sales were from Asia, especially Taiwan. Other important companies included Downer Groves, Illinois-based Dover Corp., which had four manufacturing divisions and overall 2009 sales of $5.7 billion with 29,300 employees; and Novellus Systems Inc. of San Jose, California, with $639.1 million in 2009 sales and 2,544 employees. The leader in the plastic molding machinery segment, Husky Injection Molding Systems, was based in Canada but had four locations in the United States as well as Mexico. The U.S. leaders in the semiconductor segment of the industry were Intel, T1, Qualcomm, and AMD.

America and the World

Of the top 10 semiconductor equipment manufacturers in the late 2000s, four were based in the United States, three in Japan, one in South Korea, one in Taiwan, and one in Europe. The rivalry between the United States and Japan continued, but a growing level of cooperation, spurred in part by market softness in the late twentieth century, was viewed as beneficial, as illustrated by the change in membership at SEMATECH to include companies from around the world.

Research and Technology

Semiconductor equipment manufacturers were heavily dependent on research and technology to sustain competitiveness. Applied Materials, for example, injected about 10 percent of its total revenues into capital investments in the early 1990s. In comparison, the average capital investment for all U.S. manufacturers was closer to 4 percent of gross sales. In contrast, capital spending by other firms in the special industry machinery industry were much lower than even the national average.

U.S. semiconductor machinery makers invested heavily in productivity, quality, customer service programs, and new plants and equipment during the late twentieth and early twenty-first century. Most importantly, though, research and development outlays allowed them to sharpen their competitive edge in the development of high-tech, value-added machinery.

The mid-2000s saw the introduction of a semiconductor innovation known as "low k." Marketed by Applied Materials as "Black Diamond," low k was touted as state-of-the art, next-generation technology that would allow chips to use less energy and send signals faster. Packing a one-two-three punch, low k also reduced manufacturing costs.

Development efforts emphasized, among other technologies, machinery for advanced multichip modules (MCM), which mounted multiple integrated circuits on one unit. The Advanced Research Projects Agency (ARPA), a high-tech consortium, already provided funding for this research in the early 1990s. Equipment for manufacturing liquid crystal displays (LCDs) was also a priority. LCDs were used for flat-panel displays on portable computers and were manufactured using a process similar to that used to make chips. The U.S. Display Consortium (USDC), which included ARPA and several equipment and display providers, was formed in 1993 to further LCD manufacturing technology. By the late 2000s, the group was working with technology involving organic light emitting diodes (OLEDs) and flexible substrate processing, which accounted for 43 percent and 41 percent, respectively, of USDC's research budget. Other USDC projects included laser cutting tools and self-aligned imprint lithography (SAIL).

Integrating lithography equipment into chip manufacturing had become a key issue in the early 2000s, and SEMATECH sponsored a series of workshops to look into the solution for this industry. The lithography equipment imprints the silicon wafers from which chips are cut. Because the immersion process allows for the production of smaller features, this process offers better quality resolution than other lithographic techniques. Another lithography technology known as extreme ultraviolet (EUV) was also being investigated but was not yet ready for use by the end of the first decade of the twenty-first century. In 2009, major companies such as Intel and AMD were preparing to use immersion lithography for the 32 nm (nanometer) and 22 nm nodes.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

News and information about Special Industry Machinery, NEC

Research and Markets Offers Report: Plastics and Rubber Industry Machinery Manufacturing Industry in the U.S. and its International Trade
Manufacturing Close-Up; October 30, 2011; 562 words
...Manufacturing Subsector (333), and the Manufacturing Sector (31- 33). Its SIC equivalent code is: 3559 - Special Industry Machinery, NEC (rubber and plastics manufacturing machinery). The industry's revenue for the year 2010 was approximately...
Research and Markets Adds Report: 'Power Boiler and Heat Exchanger Manufacturing Industry in the U.S. and its International Trade [2010 Edition]'
Manufacturing Close-Up; August 13, 2010; 590 words
...codes are: 3443 - Fabricated Plate Work (Boiler Shops) (power boilers and heat exchangers); and 3559 - Special Industry Machinery, NEC (nuclear control rod drive mechanisms). Revenue, Profitability & Foreign Trade Preview The industry...
Research and Markets Adds Report: 'Farm Machinery and Equipment Manufacturing Industry in the U.S. and its International Trade [2010 Edition]'
Manufacturing Close-Up; August 13, 2010; 608 words
...corrals, stalls, holding gates, hand clippers for animals, and farm conveyors/elevators); and 3559 - Special Industry Machinery, NEC (cotton ginning machinery). Revenue, Profitability & Foreign Trade Preview The industry's revenue for...
Newly certified 8(a)s.
Set-Aside Alert; January 9, 2004; 700+ words
...45371 Leendert A. Bosma NAICS: 333298--Special Industry Machinery, NEC Dynotec Inc. 1925 E. Dublin-Granville...74133 Venkatesan Prabhu NAICS: 333319--Special Industry Machinery, NEC Richard's Stainless & Sheet Metal Service...
Research and Markets: Semiconductor Machinery Manufacturing Industry in the U.S. and its International Trade
Manufacturing Close-Up; January 21, 2010; 363 words
...Manufacturing Subsector (333), and the Manufacturing Sector (31- 33). Its SIC equivalent code is: 3559 - Special Industry Machinery, NEC (semiconductor machinery manufacturing). The industry's revenue for the year 2008 was approximately...
Research and Markets Adds Report: Plastics and Rubber Industry Machinery Manufacturing Industry in the U.S. and its International Trade [Q4 2009 Edition]
Manufacturing Close-Up; December 22, 2009; 700+ words
...Manufacturing Subsector (333), and the Manufacturing Sector (31- 33). Its SIC equivalent code is: 3559 - Special Industry Machinery, NEC (rubber and plastics manufacturing machinery). The industry's revenue for the year 2008 was approximately...
Research and Markets Offers Report: Plastics and Rubber Industry Machinery Manufacturing Industry in the U.S. and its International Trade.(Report)
Health & Beauty Close-Up; December 27, 2009; 700+ words
...Manufacturing Subsector (333), and the Manufacturing Sector (31-33). Its SIC equivalent code is: 3559 - Special Industry Machinery, NEC (rubber and plastics manufacturing machinery). The industry's revenue for the year 2008 was approximately...
Research and Markets Offers Report: Plastics and Rubber Industry Machinery Manufacturing Industry in the U.S. and its International Trade
Manufacturing Close-Up; October 30, 2011; 562 words
...and Rubber Industry Machinery Manufacturing...3559 - Special Industry Machinery, NEC (rubber...Industry Machinery Manufacturing Industry report provides...research on the industry. Its scope...downstream industries, and trade...

Search all articles about Special Industry Machinery, NEC