The semiconductor wafer chip industry has been in deep recession for recent years, however the a year ago has been particularly bad. Recent reports have revenue down 30 per cent from last year. In an industry with big capital investments, and excruciatingly thin profit margins, this constitutes a disaster.
A semiconductor wafer is a round disk made from silicon dioxide. This is the form where batches of semiconductor chips are made. Depending on the dimensions of the person chip and how big the epi wafer, numerous individual semiconductor chips may be made from a single wafer. More complex chip designs can require greater than 500 process steps. After the wafer has been processed, it will probably be cut into individual die, which die assembled to the chip package. These assemblies are utilized to make build computers, mobile phones, iPods, and other technology products.
Transitions to larger wafer sizes have invariably been a normal evolution in the semiconductor industry. In 1980, a modern day fab used wafers that 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 first 200 mm fab, and also this was the very first time that the increment had been skipped (175 mm).
It is definitely challenging to become an earlier adopter of a new wafer size. The larger surface area can make it more challenging to keep process consistency across the wafer. Often the process tool vendors will likely be late to transition, and lose market share. Lam Research (LRC) grew tremendously in the transition from 125 mm to 150 mm, since their largest competitors at the time, Applied Materials and Tegal, did not 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 pick Lam. LRC quickly grew and permanently acquired the marketplace.
Another factor in the transition to larger wafers is process technology. If the semiconductor industry moves to a new wafer size, the newest process technologies developed by the tool companies will sometimes be offered only on the largest wafer size tools. If a chip company wants to remain on the leading technology edge, it could be harder if it will not manufacture using the newest wafer size.
The very last wafer size increase happened in 2000 using the first 300 mm volume chip production facility. This is built by Infineon in Dresden, Germany. At the time, 200 mm wafers were the typical. It might not seem to be a large change, but wbg semiconductors has 250 percent more area when compared to a 200 mm wafer, and area directly relates to production volume.
In 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. Inside 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 that they spent $1 billion less on 300 mm capacity in 2004 compared to the same capacity might have cost instead by building 200 mm wafer fabs.
The issue is many small and medium size companies do not need the quantity of production which a 300 mm fab generates, plus they may be unable to pay the expense to get a 300 mm fab ($3-4 billion). It is really not reasonable to spend this amount of cash and not fully make use of the fab. Considering that the 300 mm fab is inherently more effective than the smaller diameter wafer fabs, there is certainly pressure for any solution.
For that small and medium size companies, the solution has often been to close their manufacturing facilities, and hire a third party using a 300 mm fab to manufacture their product. This really is what is known going “fabless”, or “fab-light”. The firms that perform the third party manufacturing are called foundries. Most foundries will be in Asia, especially Taiwan.
Ironically, 300 mm was created by Motorola and Infineon at a project called Semiconductor3000 in Dresden, Germany. It was a tiny pilot line which had been not capable of volume production. Those two companies have suffered with their peers from their lack 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 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. 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 a strategy to become free from fabs. Even Intel outsources its newest hot product, the Atom (utilized for “Netbooks”), to your foundry.
More than half from the fabs operational at the beginning of the decade are actually closed. With 20-40 fabs closing each and every year, you will find a glut of used production tools on the market, most selling at bargain basement rates.
Recently three in the largest semiconductor companies, Intel (microprocessors), Samsung (memory), and TSMC (foundry) have been planning a transition to 450 mm wafers. A InAs wafer needs to have approximately the identical advantage over a 300 mm fab, that the 300 mm fab has more than a 200 mm fab. It is undoubtedly a strategic decision to make a situation where other-than-huge companies will be at 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.
In the event the industry consistently progress across the current path, competition will disappear. The biggest memory manufacturer will control memory, the largest microprocessor manufacturer will control microprocessors, and also the foundry business will likely be controlled by one company. These firms curently have features of scale over their competitors, however existing manufacturing advantage will grow significantly.