CVD / PECVD deposition (process step)

Step 27 of 56 in the semiconductor flow (FEOL). Prev: Annealing / rapid thermal processing (process step) · Next: Atomic layer deposition (ALD) (process step)

What this step does

Chemical vapour deposition (CVD) grows a thin solid film on the wafer by flowing gas-phase precursors that react and deposit on the hot surface. Plasma-enhanced CVD (PECVD) uses an RF plasma to drive the reaction at lower temperature, which is what makes it usable over heat-sensitive layers in the back end. It is the workhorse that deposits most of the dielectric and many of the conductor films a chip is built from. Sub-processes inside this step:

• Thermal / LPCVD: silicon nitride, polysilicon, doped oxides (often batch furnaces, Kokusai/TEL territory).
• PECVD dielectrics: silane- and TEOS-based oxide, nitride, low-k and the SiCN/SiN barrier and capping layers between metal levels.
• Tungsten and metal CVD: WF6-based tungsten fill for contacts and vias, plus liner/barrier films.
• Hard-mask and patterning films: amorphous carbon, anti-reflective coatings used by litho/etch.

Where it sits and why it matters

Deposition and removal (etch) are the two highest-frequency operations in the fab. A modern logic or 3D-NAND wafer passes through deposition dozens of times, and CVD/PECVD is the largest sub-family of deposition by spend. As devices move to gate-all-around transistors and ever-taller NAND stacks, the number of conformal and gap-fill film steps keeps rising, so deposition intensity grows faster than wafer count. This step feeds directly into Atomic layer deposition (ALD) (process step) (the angstrom-precise complement) and is interleaved with Plasma / dry etch (process step).

Equipment market

Deposition is roughly 20-25% of the ~$140B 2024 wafer-fab-equipment market; Yole puts the deposition equipment segment at about $14B in 2024, growing toward ~$24.5B by 2035 (low-to-high single digit CAGR, call it ~6-7%) [1][3]. CVD is the largest slice of that deposition spend; standalone PECVD systems are estimated at $2.5-4.7B depending on the source and how PVD/ALD are carved out [2]. Treat the report-mill PECVD point estimates as rough; the segment boundary is fuzzy.

Concentration note: the front-end equipment market is an oligopoly. The “Big Five” (ASML, Applied, Lam, TEL, KLA) held nearly 70% of WFE in 2024 [3]. Within deposition, Applied Materials is the clear leader and the top three or four vendors capture the overwhelming majority of spend.

Volumes, revenue, profitability

There is no clean “unit volume” for deposition; the meaningful unit is wafer starts times film steps per wafer, and that product is rising as nodes add layers. Revenue pool: ~$14B/yr equipment + a multi-billion precursor/gas stream tied to the same installed base [1][5]. Margins: Applied Materials ran ~47.5% GAAP gross and ~29% operating in FY2024, with its Semiconductor Systems segment at ~35% operating margin [4]. Lam Research sits in a similar band. The equipment vendors earn the highest margin (proprietary tools, switching cost, service attach); precursor/gas suppliers earn lower gross margins but durable, recurring volume. The fab operator captures the downstream value; the tool and materials suppliers capture the picks-and-shovels margin.

Competitive landscape & value capture

The moat is process know-how and qualification lock-in: a deposition recipe is co-developed with the foundry over years and is painful to re-qualify, so incumbents hold position node over node. Value accrues to (1) the handful of tool OEMs, with Applied Materials dominant, and (2) the recurring precursor/gas oligopoly (Merck, Entegris, Air Liquide, Linde). Europe is present but not dominant: ASML is litho not deposition; relevant EU deposition names are AIXTRON (MOCVD, Germany), Oxford Instruments Plasma Technology (specialty PECVD/R&D, UK) and SPTS (KLA, UK). These are mostly listed or owned, not seed.

• Drivers
• Deposition intensity outgrows wafer count. The move to sub-5nm and gate-all-around adds roughly 30-50% more CVD/ALD process steps per wafer vs 7nm, so tool and precursor consumption rise even when output is flat [9]. TSMC put GAA into production at N2 in 2025; GAA plus backside power at A16 adds more conformal film steps again [10].
• 3D NAND vertical scaling. Stacks now exceed 300 layers, with ~1,000 layers projected by 2030; every added layer is more conformal dielectric and metal deposition [10][11].
• AI/memory capex. SEMI sees WFE up ~9% in 2026 and ~7% in 2027 to a record ~$156B in equipment sales by 2027, with NAND WFE +35% and DRAM/HBM +18% in 2026 pulling deposition-heavy memory spend [12].
• Advanced packaging. Hybrid-bonding equipment is forecast at ~21% CAGR 2025-2030; the SiCN/oxide bonding dielectric and TSV passivation are PECVD/CVD steps, opening a packaging-side demand pool on top of front-end [13].

Connections

Semiconductor Materials & Equipment · Deposition Materials Process Market · Annealing / rapid thermal processing (process step) · Atomic layer deposition (ALD) (process step) · Plasma / dry etch (process step)

Sources

1. Yole, Status of the WFE Industry / deposition segment (~$14B 2024 to ~$24.5B 2035): https://www.yolegroup.com/product/report/status-of-the-wafer-fab-equipment-industry-2024/
2. Verified Market Reports, PECVD Systems Market ($2.5B 2024) / Semiconductor PECVD ($4.7B 2023): https://www.verifiedmarketreports.com/product/plasma-enhanced-chemical-vapor-deposition-pecvd-systems-market/
3. Yole, WFE market to hit $184B by 2030; $140B 2024, Big Five ~70%: https://www.yolegroup.com/press-release/wafer-fab-equipment-wfe-market-to-hit-184-billion-by-2030-for-equipment-and-services-driven-by-specialized-segment-growth-and-global-manufacturing-shifts/
4. Yole, semiconductor equipment market-share reshuffle (vendor shares, deposition ~26-27% of WFE): https://www.yolegroup.com/strategy-insights/semiconductor-equipment-market-share-reshuffles-amid-memory-demand-decline/
5. Verified Market Reports, Semiconductor Silicon Precursor Market ($3.2B 2025, 7.5% CAGR; supplier oligopoly): https://www.verifiedmarketreports.com/product/semiconductor-silicon-precursor-market/
6. Applied Materials FY2024 results (47.5% GAAP GM, ~29% OM, Semi Systems ~35% OM): https://www.globenewswire.com/news-release/2024/11/14/2981573/0/en/Applied-Materials-Announces-Fourth-Quarter-and-Fiscal-Year-2024-Results.html
7. Lam Research FY2024 (system revenue incl. deposition/etch/clean): https://www.statista.com/statistics/1374835/lam-research-revenue-by-segment/
8. Oxford Instruments Plasma Technology / AIXTRON (EU specialty CVD/PECVD/MOCVD): https://plasma.oxinst.com/
9. OpenPR / Research Nester, CVD equipment market to ~$11.7B by 2036 (GAA + sub-5nm add 30-50% more CVD steps per wafer vs 7nm): https://www.openpr.com/news/4494410/semiconductor-chemical-vapor-deposition-cvd-equipment
10. SemiAnalysis, GAA + backside power at 2nm; imec 3D NAND >300 layers, ~1,000 by 2030 (deposition complexity): https://newsletter.semianalysis.com/p/clash-of-the-foundries
11. imec / Electronic Design, z-pitch scaling for next-gen 3D NAND (layer scaling, conformal deposition challenge): https://www.electronicdesign.com/technologies/embedded/article/55307984/imec-unlocking-z-pitch-scaling-for-next-generation-3d-nand-flash
12. SEMI, global equipment sales to record ~$156B by 2027; WFE +9% 2026 / +7.3% 2027; NAND WFE +35%, DRAM +18% 2026: https://www.semi.org/en/semi-press-release/global-semiconductor-equipment-sales-projected-to-reach-a-record-of-156-billion-dollars-in-2027-semi-reports
13. Lam Research ALTUS Halo Mo-ALD (Feb 2025) + Mo-replaces-W removes barrier/adhesion steps; hybrid bonding ~21% CAGR 2025-30, SiCN/oxide via PECVD: https://newsroom.lamresearch.com/2025-02-19-Lam-Research-Ushers-in-New-Era-of-Semiconductor-Metallization-with-ALTUS-R-Halo-for-Molybdenum-Atomic-Layer-Deposition
14. Tom’s Hardware, China domestic deposition localisation (Piotech ~doubles 9-mo 2025 rev to ~$617M; foreign suppliers sidelined; AMEC/Naura record revenue): https://www.tomshardware.com/tech-industry/semiconductors/smic-founder-and-amec-ceo-urge-chinese-fabs-to-test-domestic-chip-tools-on-production-lines