The semiconductor wafer chip industry has been in deep economic downturn for the recent years, however the last year has been particularly bad. Research studies have revenue down 30 percent from last year. Within an industry with huge capital investments, and excruciatingly thin profits, this constitutes a disaster.
A semiconductor wafer is actually a round disk produced from silicon dioxide. Here is the form where batches of semiconductor chips are produced. Depending on the scale of the person chip and the size of the InGaAs, hundreds of individual semiconductor chips could be made from a single wafer. More complicated chip designs can require a lot more than 500 process steps. After the wafer has become processed, it will likely be cut into individual die, which die assembled into the chip package. These assemblies are employed to make build computers, cellular phones, iPods, as well as other technology products.
Transitions to larger wafer sizes have invariably been an ordinary evolution in the semiconductor industry. In 1980, a modern fab used wafers which were only 100 mm in diameter (1 inch = 25.4 mm). The transitions in the 1980s were in increments of 25 mm. Motorola MOS 11 in Austin (1990) was the initial 200 mm fab, which was the 1st time that the increment had been skipped (175 mm).
It has always been a challenge to become a young adopter of a new wafer size. The larger surface makes it harder to maintain process consistency throughout the wafer. Usually the process tool vendors will be late to transition, and lose market share. Lam Research (LRC) grew tremendously at the transition from 125 mm to 150 mm, since their largest competitors at the time, Applied Materials and Tegal, failed to offer tools in the new wafer size. Intel and AMD were the initial two chip companies with 150 mm fabs, and both companies had little choice but to select Lam. LRC quickly grew and permanently acquired the current market.
Another element in the transition to larger wafers is process technology. If the semiconductor industry moves to an alternative wafer size, the most recent process technologies developed by the tool companies will sometimes be offered only on the largest wafer size tools. In case a chip company desires to remain on the leading technology edge, it could be harder if it does not manufacture with the newest wafer size.
The very last wafer size increase occurred in 2000 with the first 300 mm volume chip production facility. This is built by Infineon in Dresden, Germany. At the time, 200 mm wafers were the standard. It may possibly not sound like a large change, but wbg semiconductors has 250 percent more surface when compared to a 200 mm wafer, and surface area directly concerns production volume.
At the end of 2008, worldwide, there was 84 operating 300 mm fabs, with 14 more fabs expected online by the end of 2009. Fab is short for “fabrication”, and is also what the semiconductor industry calls their factories. In the second quarter of 2008, 300 mm wafers fabs passed 200 mm wafers fabs in production volume.
A 300 mm fab is substantially cheaper than a 200 mm fab for the same capacity of chip production. Intel estimates they spent $1 billion less on 300 mm capacity in 2004 compared to the same capacity would have cost instead because they build 200 mm wafer fabs.
The issue is many small, and medium size companies do not require the amount of production which a 300 mm fab generates, and they also may be unable to afford the expense to get a 300 mm fab ($3-4 billion). It is not reasonable to invest this amount of money and never fully utilize the fab. Considering that the 300 mm fab is inherently more efficient compared to the smaller diameter wafer fabs, there is certainly pressure to get a solution.
For your small and medium size companies, the answer has often gone to close their manufacturing facilities, and hire a third party having a 300 mm fab to manufacture their product. This really is what is known going “fabless”, or “fab-light”. The businesses that carry out the alternative party manufacturing are called foundries. Most foundries will be in Asia, especially Taiwan.
Ironically, 300 mm was developed by Motorola and Infineon with a project called Semiconductor3000 in Dresden, Germany. It was a tiny pilot line that was not able to volume production. Those two companies have suffered with their peers using their absence of fore-sight. In 2000, Motorola operated 18 fabs and was the 5th largest semiconductor company in the world. Today, Motorola has divested their manufacturing in to a company called Freescale that now operates just 6 fabs. Infineon divested their manufacturing in to a company call Qimonda. Qimonda has filed for bankruptcy.
Companies like AT&T (Lucent), LSI Logic, Hewlett-Packard and Xilinx have previously eliminated chip manufacturing. Businesses like Texas Instruments and Cypress Semiconductor have set paths for that eventual removal of most kgbapu their fabs. AMD (GlobalFoundries) and Motorola (Freescale Semiconductor) have separated their manufacturing divisions into independent companies, and profess an idea to become free of fabs. Even Intel outsources its newest hot product, the Atom (used for “Netbooks”), to some foundry.
Over half of the fabs in operation at the beginning of the decade are closed. With 20-40 fabs closing each year, you will find a glut of used production tools on the market, most selling at bargain basement rates.
Recently three of the largest semiconductor companies, Intel (microprocessors), Samsung (memory), and TSMC (foundry) have been planning a transition to 450 mm wafers. A InAs wafer should have approximately the same edge on a 300 mm fab, which a 300 mm fab has spanning a 200 mm fab. It is undoubtedly a strategic decision to make a situation where other-than-huge companies is going to be at a competitive disadvantage. Intel had $12 billion within the bank at the end of 2008. Can AMD (GlobalFoundries), or comparably sized companies, afford a 450 mm fab ($6-10 billion)? No.
When the industry consistently progress across the current path, competition will disappear. The largest memory manufacturer will control memory, the biggest microprocessor manufacturer will control microprocessors, and the foundry business is going to be controlled by one company. These businesses curently have advantages of scale over their competitors, however existing manufacturing advantage will grow significantly.