The semiconductor wafer chip industry has been in deep recession for the recent years, but the this past year has been particularly bad. Research studies have revenue down 30 per cent from last year. In an industry with huge capital investments, and excruciatingly thin profit margins, this constitutes a disaster.
A semiconductor wafer is actually a round disk created from silicon dioxide. Here is the form in which batches of semiconductor chips are made. Depending on the size of the person chip and the size of the epi wafer, countless individual semiconductor chips might be made from just one wafer. More complex chip designs can require greater than 500 process steps. After the wafer has become processed, it will likely be cut into individual die, and these die assembled in to the chip package. These assemblies are utilized to make build computers, mobile phones, iPods, as well as other technology products.
Transitions to larger wafer sizes have always been a typical 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 very first 200 mm fab, and also this was the first time an increment have been skipped (175 mm).
It has long been challenging to get an earlier adopter of the new wafer size. The bigger surface makes it harder to keep process consistency throughout the wafer. Frequently the process tool vendors is going to 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 during the time, Applied Materials and Tegal, failed to offer tools in the new wafer size. Intel and AMD were the first two chip companies with 150 mm fabs, and both companies had little choice but to choose Lam. LRC quickly grew and permanently acquired the market.
Another factor in the transition to larger wafers is process technology. When the semiconductor industry moves to a new wafer size, the newest process technologies created by the tool companies will sometimes be offered only on the largest wafer size tools. When a chip company wants to remain on the leading technology edge, it can be more challenging if this does not manufacture with the newest wafer size.
The very last wafer size increase happened in 2000 using the first 300 mm volume chip production facility. This was built by Infineon in Dresden, Germany. At that time, 200 mm wafers were the conventional. It may not sound like a large change, but wbg semiconductors has 250 percent more surface area than a 200 mm wafer, and surface directly relates to production volume.
At the end of 2008, worldwide, there have been 84 operating 300 mm fabs, with 14 more fabs expected online in the end of 2009. Fab is short for “fabrication”, and is also exactly 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 compared to a 200 mm fab for the same capacity of chip production. Intel estimates that they spent $1 billion less on 300 mm capacity in 2004 than the same capacity might 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, plus they may not be able to pay the expense for a 300 mm fab ($3-4 billion). It is not reasonable to spend this sum of money rather than fully use the fab. Considering that the 300 mm fab is inherently more effective compared to the smaller diameter wafer fabs, there is pressure to get a solution.
For that small and medium size companies, the answer has often gone to close their manufacturing facilities, and hire a third party with a 300 mm fab to manufacture their product. This really is what is known as going “fabless”, or “fab-light”. The businesses that perform third party manufacturing are called foundries. Most foundries have been in Asia, especially Taiwan.
Ironically, 300 mm was made by Motorola and Infineon in a project called Semiconductor3000 in Dresden, Germany. It was a little pilot line which had been not able to volume production. Both of these companies have suffered with their peers from their insufficient fore-sight. In 2000, Motorola operated 18 fabs and was the 5th largest semiconductor company on the planet. Today, Motorola has divested their manufacturing into a company called Freescale that now operates just 6 fabs. Infineon divested their manufacturing into a company call Qimonda. Qimonda has declared bankruptcy.
Brands 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 your 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 be free from fabs. Even Intel outsources its newest hot product, the Atom (used for “Netbooks”), to your foundry.
Over fifty percent from the fabs in operation at the outset of the decade are actually closed. With 20-40 fabs closing each year, there exists 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 InP wafer needs to have approximately the identical edge over a 300 mm fab, that a 300 mm fab has over a 200 mm fab. It is actually undoubtedly a strategic decision to produce a situation where other-than-huge companies is going to be with a competitive disadvantage. Intel had $12 billion inside 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 continues to progress over the current path, competition will disappear. The largest memory manufacturer will control memory, the greatest microprocessor manufacturer will control microprocessors, and also the foundry business is going to be controlled by one company. These companies have advantages of scale over their competitors, but their existing manufacturing advantage will grow significantly.