The semiconductor wafer chip industry has been in deep economic downturn for the last few years, but the last year has been especially bad. Research studies have revenue down 30 percent from last year. Within an industry with big capital investments, and extremely thin profits, this constitutes a disaster.
A semiconductor wafer is actually a round disk produced from silicon dioxide. This is the form where batches of semiconductor chips are manufactured. Depending on the size of the individual chip and how big the epi wafer, numerous individual semiconductor chips could be made from a single wafer. More complex chip designs can require greater than 500 process steps. After the wafer continues to be processed, it will probably be cut into individual die, and these die assembled in to 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 been a normal evolution from 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 very first 200 mm fab, and also this was the 1st time that the increment was skipped (175 mm).
It has always been difficult to be an early adopter of any new wafer size. The bigger surface causes it to be more challenging to maintain process consistency over 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, did not 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 select Lam. LRC quickly grew and permanently acquired the market.
Another aspect in the transition to larger wafers is process technology. If the semiconductor industry moves to an alternative wafer size, the latest process technologies designed by the tool companies will often be offered only on the largest wafer size tools. In case a chip company would like to remain on the leading technology edge, it may be more difficult when it will not manufacture with all 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 standard. It may possibly not seem to be a large change, but wbg semiconductors has 250 percent more surface than a 200 mm wafer, and surface area directly relates to production volume.
At the end of 2008, worldwide, there was 84 operating 300 mm fabs, with 14 more fabs expected online in the end of 2009. Fab is short for “fabrication”, and is also 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 more affordable 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 compared to 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 quantity of production that a 300 mm fab generates, plus they may be unable to afford the expense to get a 300 mm fab ($3-4 billion). It is far from reasonable to spend this sum of money and never fully make use of the fab. Considering that the 300 mm fab is inherently better compared to smaller diameter wafer fabs, there is certainly pressure for any solution.
For your small, and medium size companies, the solution has often gone to close their manufacturing facilities, and hire a third party having a 300 mm fab to produce their product. This can be what is known going “fabless”, or “fab-light”. The companies that perform the third party manufacturing are known as foundries. Most foundries have been in Asia, especially Taiwan.
Ironically, 300 mm was made by Motorola and Infineon at a project called Semiconductor3000 in Dresden, Germany. This is a small pilot line which had been not competent at volume production. These two companies have suffered using their peers off 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 into 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 already have eliminated chip manufacturing. Businesses 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 be free from fabs. Even Intel outsources its newest hot product, the Atom (utilized for “Netbooks”), to your foundry.
Over half of the fabs operational at the start of the decade are actually closed. With 20-40 fabs closing each year, there is a glut of used production tools on the market, most selling at bargain basement rates.
Recently three from 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 exactly the same advantage over a 300 mm fab, which a 300 mm fab has more than a 200 mm fab. It is actually undoubtedly a strategic decision to make a situation where other-than-huge companies will likely 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.
If the industry consistently progress over the current path, competition will disappear. The greatest memory manufacturer will control memory, the largest microprocessor manufacturer will control microprocessors, as well as the foundry business will be controlled by one company. These firms have features of scale over their competitors, but their existing manufacturing advantage will grow significantly.