The semiconductor wafer chip industry has been in deep economic downturn for the recent years, but the last year has been particularly bad. Research studies have revenue down 30 % from last year. In an industry with huge capital investments, and extremely thin profits, this constitutes a disaster.
A semiconductor wafer is a round disk produced from silicon dioxide. This is the form by which batches of semiconductor chips are made. Depending on the dimensions of the person chip and the size of the epi wafer, hundreds of individual semiconductor chips might be made from just one wafer. More complicated chip designs can require more than 500 process steps. Right after the wafer has become processed, it will likely be cut into individual die, which die assembled in to the chip package. These assemblies are used to make build computers, cell phones, iPods, and other technology products.
Transitions to larger wafer sizes have invariably been a normal evolution from the semiconductor industry. In 1980, a contemporary fab used wafers that have been 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, and this was the 1st time that an increment had been skipped (175 mm).
It is definitely a challenge to be an early adopter of any new wafer size. The greater area can make it more difficult 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 that time, Applied Materials and Tegal, did not offer tools on 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 aspect in the transition to larger wafers is process technology. Once the semiconductor industry moves to a different wafer size, the most recent process technologies developed by the tool companies will often be offered only on the largest wafer size tools. If a chip company wants to remain on the leading technology edge, it could be more difficult when it does not manufacture using the newest wafer size.
The final wafer size increase occurred in 2000 with the first 300 mm volume chip production facility. It 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 compound semiconductors has 250 percent more area compared to a 200 mm wafer, and surface area directly concerns production volume.
In the end of 2008, worldwide, there were 84 operating 300 mm fabs, with 14 more fabs expected online in the end of 2009. Fab is short for “fabrication”, and it is 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 compared to a 200 mm fab for the very 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 by building 200 mm wafer fabs.
The problem is many small and medium size companies do not need the quantity of production that a 300 mm fab generates, and they also may be unable to afford the expense for a 300 mm fab ($3-4 billion). It is far from reasonable to spend this amount of money and not fully make use of 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 remedy has often been to close their manufacturing facilities, and hire a 3rd party using a 300 mm fab to manufacture their product. This is what is known going “fabless”, or “fab-light”. The companies that carry out the third party manufacturing are known as foundries. Most foundries will be in Asia, especially Taiwan.
Ironically, 300 mm was created by Motorola and Infineon in a project called Semiconductor3000 in Dresden, Germany. It was a little pilot line which had been not competent at volume production. Both of these companies have suffered using their peers off their absence of fore-sight. In 2000, Motorola operated 18 fabs and was the 5th largest semiconductor company on earth. Today, Motorola has divested their manufacturing into a company called Freescale that now operates just 6 fabs. Infineon divested their manufacturing right into a company call Qimonda. Qimonda has declared bankruptcy.
Businesses like AT&T (Lucent), LSI Logic, Hewlett-Packard and Xilinx have previously eliminated chip manufacturing. Brands like Texas Instruments and Cypress Semiconductor have set paths for the eventual reduction 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 from fabs. Even Intel outsources its newest hot product, the Atom (utilized for “Netbooks”), to some foundry.
Over half from the fabs operational at the beginning 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 in the largest semiconductor companies, Intel (microprocessors), Samsung (memory), and TSMC (foundry) happen to be planning a transition to 450 mm wafers. A InAs wafer must have approximately the identical advantage over a 300 mm fab, which a 300 mm fab has over a 200 mm fab. It is actually undoubtedly a strategic decision to make a situation where other-than-huge companies will likely be with a competitive disadvantage. Intel had $12 billion within the bank after 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 greatest memory manufacturer will control memory, the greatest microprocessor manufacturer will control microprocessors, and the foundry business will be controlled by one company. These businesses have features of scale over their competitors, however existing manufacturing advantage will grow significantly.