The semiconductor wafer chip industry has been in deep economic downturn for the recent years, however the this past year has been especially bad. Research studies have revenue down 30 per cent from last year. Within an industry with big capital investments, and excruciatingly thin profit margins, this constitutes a disaster.
A semiconductor wafer is actually a round disk created from silicon dioxide. This is the form by which batches of semiconductor chips are manufactured. Depending on the scale of the person chip and the dimensions of the InGaAs, hundreds of individual semiconductor chips may be made from a single wafer. More complicated chip designs can require more than 500 process steps. Following the wafer has become processed, it will likely be cut into individual die, and these die assembled into the chip package. These assemblies are used to make build computers, cell phones, iPods, along with other technology products.
Transitions to larger wafer sizes have been a typical evolution of the semiconductor industry. In 1980, a modern fab used wafers which were only 100 mm in diameter (1 inch = 25.4 mm). The transitions within the 1980s were in increments of 25 mm. Motorola MOS 11 in Austin (1990) was the initial 200 mm fab, and this was the very first time that an increment had been skipped (175 mm).
It is definitely a challenge to get an earlier adopter of any new wafer size. The larger surface can make it more challenging to keep up process consistency throughout the wafer. Usually 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 at 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 pick Lam. LRC quickly grew and permanently acquired the market.
Another factor in the transition to larger wafers is process technology. If the semiconductor industry moves to a different wafer size, the newest process technologies developed by the tool companies will often be offered only on the largest wafer size tools. If a chip company would like to remain on the leading technology edge, it may be more difficult if this does not manufacture with the newest wafer size.
The very last wafer size increase took place 2000 with the first 300 mm volume chip production facility. This was built by Infineon in Dresden, Germany. During the time, 200 mm wafers were the standard. It might not seem like a large change, but wide bandgap materials has 250 percent more area than a 200 mm wafer, and surface area directly concerns production volume.
By the end of 2008, worldwide, there have been 84 operating 300 mm fabs, with 14 more fabs expected online at the end of 2009. Fab is short for “fabrication”, and is also exactly what the semiconductor industry calls their factories. Within the second quarter of 2008, 300 mm wafers fabs passed 200 mm wafers fabs in production volume.
A 300 mm fab is substantially more affordable than a 200 mm fab for the similar capacity of chip production. Intel estimates they spent $1 billion less on 300 mm capacity in 2004 compared to the same capacity could have cost instead because they build 200 mm wafer fabs.
The problem is many small and medium size companies do not require the quantity of production that the 300 mm fab generates, and they may struggle to pay the expense for a 300 mm fab ($3-4 billion). It is far from reasonable to shell out this amount of money and not fully utilize the fab. Considering that the 300 mm fab is inherently more efficient than the smaller diameter wafer fabs, there is certainly pressure for any solution.
For that small and medium size companies, the remedy has often been to close their manufacturing facilities, and hire a 3rd party with a 300 mm fab to manufacture their product. This really is what is known going “fabless”, or “fab-light”. The firms that perform the 3rd party manufacturing are classified as foundries. Most foundries will be in Asia, especially Taiwan.
Ironically, 300 mm was created by Motorola and Infineon with a project called Semiconductor3000 in Dresden, Germany. This is a little pilot line which was not competent at volume production. Those two companies have suffered with their peers using their lack of fore-sight. In 2000, Motorola operated 18 fabs and was the 5th largest semiconductor company on the planet. Today, Motorola has divested their manufacturing right 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 already have eliminated chip manufacturing. Companies like Texas Instruments and Cypress Semiconductor have set paths for your eventual elimination 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 without any fabs. Even Intel outsources its newest hot product, the Atom (used for “Netbooks”), to some foundry.
Over half of the fabs functioning at the outset of the decade are closed. With 20-40 fabs closing every 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) happen to be planning for a transition to 450 mm wafers. A InAs wafer needs to have approximately the same edge over a 300 mm fab, that the 300 mm fab has spanning a 200 mm fab. It is actually undoubtedly a strategic decision to produce a situation where other-than-huge companies will likely be in a competitive disadvantage. Intel had $12 billion within the bank at the conclusion of 2008. Can AMD (GlobalFoundries), or comparably sized companies, afford a 450 mm fab ($6-10 billion)? No.
If the industry will continue to progress over the current path, competition will disappear. The biggest memory manufacturer will control memory, the biggest microprocessor manufacturer will control microprocessors, and also the foundry business will be controlled by one company. These businesses already have features of scale over their competitors, but their existing manufacturing advantage will grow significantly.