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The semiconductor wafer chip industry has been in deep economic downturn for the last few years, however the last year has been particularly bad. Recent reports have revenue down 30 % from last year. In an industry with massive capital investments, and extremely thin profit margins, this constitutes a disaster.
A semiconductor wafer is really a round disk produced from silicon dioxide. This is the form in which batches of semiconductor chips are made. Depending on the size of the person chip and how big the epi wafer, numerous individual semiconductor chips could be made from just one wafer. More complicated chip designs can require more than 500 process steps. After the wafer has been processed, it will probably be cut into individual die, and those die assembled to the chip package. These assemblies are used to make build computers, mobile phones, iPods, as well as other technology products.
Transitions to larger wafer sizes have invariably been an ordinary evolution in the semiconductor industry. In 1980, a modern day fab used wafers that have been 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 first 200 mm fab, which was the first time that the increment was skipped (175 mm).
It is definitely difficult to be an earlier adopter of any new wafer size. The bigger surface area can make it more challenging to keep up process consistency throughout the wafer. Frequently the process tool vendors will likely be late to transition, and lose market share. Lam Research (LRC) grew tremendously on 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 initial 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. If the semiconductor industry moves to an alternative wafer size, the newest process technologies created by the tool companies will sometimes be offered only on the largest wafer size tools. In case a chip company desires to remain on the leading technology edge, it can be more difficult if this fails to manufacture with all the newest wafer size.
The last wafer size increase occurred in 2000 with all the first 300 mm volume chip production facility. It was built by Infineon in Dresden, Germany. During the time, 200 mm wafers were the typical. It may not seem like a large change, but compound semiconductors has 250 percent more surface area compared to a 200 mm wafer, and surface area directly concerns production volume.
At the end of 2008, worldwide, there was 84 operating 300 mm fabs, with 14 more fabs expected online at the end of 2009. Fab is short for “fabrication”, and is also 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 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 compared to the 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 volume of production that a 300 mm fab generates, plus they may not be able to afford the expense for a 300 mm fab ($3-4 billion). It is far from reasonable to spend this sum of money and not fully utilize the fab. Considering that the 300 mm fab is inherently better compared to the smaller diameter wafer fabs, there exists pressure for any solution.
For the 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 businesses that carry out the third party manufacturing are classified 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 was a small pilot line which was not able to volume production. These two companies have suffered using their peers from their absence 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 in to a company call Qimonda. Qimonda has filed for bankruptcy.
Brands like AT&T (Lucent), LSI Logic, Hewlett-Packard and Xilinx have previously eliminated chip manufacturing. Companies like Texas Instruments and Cypress Semiconductor have set paths for the eventual removal of most kgbapu their fabs. AMD (GlobalFoundries) and Motorola (Freescale Semiconductor) have separated their manufacturing divisions into independent companies, and profess a plan to become without any fabs. Even Intel outsources its newest hot product, the Atom (employed for “Netbooks”), to your foundry.
More than half from the fabs in operation at the outset of the decade are closed. With 20-40 fabs closing every year, you will find 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) have already been organising a transition to 450 mm wafers. A InAs wafer needs to have approximately the same advantage over a 300 mm fab, that a 300 mm fab has spanning a 200 mm fab. It is undoubtedly a strategic decision to create a situation where other-than-huge companies will be with a competitive disadvantage. Intel had $12 billion inside the bank at the conclusion of 2008. Can AMD (GlobalFoundries), or comparably sized companies, afford a 450 mm fab ($6-10 billion)? No.
When the industry continues to progress across the current path, competition will disappear. The greatest memory manufacturer will control memory, the biggest microprocessor manufacturer will control microprocessors, as well as the foundry business is going to be controlled by one company. These companies curently have advantages of scale over their competitors, however their existing manufacturing advantage will grow significantly.