The semiconductor wafer chip industry has been in deep economic downturn for the recent years, however the this past year has been particularly bad. Recent reports have revenue down 30 percent from last year. Within an industry with big capital investments, and extremely thin profit margins, this constitutes a disaster.
A semiconductor wafer is a round disk made from silicon dioxide. Here is the form where batches of semiconductor chips are produced. Depending on the scale of the individual chip and how big the InGaAs, countless individual semiconductor chips might be made from just one wafer. More complex chip designs can require a lot more than 500 process steps. After the wafer has been processed, it will likely be cut into individual die, and these die assembled to the chip package. These assemblies are used to make build computers, cellular phones, iPods, along with other technology products.
Transitions to larger wafer sizes have invariably been a typical evolution of the semiconductor industry. In 1980, a modern fab used wafers that have been only 100 mm in diameter (1 inch = 25.4 mm). The transitions inside 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 1st time that an increment was skipped (175 mm).
It has long been difficult to become an early adopter of any new wafer size. The greater surface area makes it more difficult to keep 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 in the transition from 125 mm to 150 mm, since their largest competitors at that 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 aspect in the transition to larger wafers is process technology. If the semiconductor industry moves to a different wafer size, the latest process technologies designed by the tool companies will sometimes be offered only on the largest wafer size tools. When a chip company would like to remain on the leading technology edge, it could be more difficult when it will not manufacture with the newest wafer size.
The very last wafer size increase happened in 2000 with all the first 300 mm volume chip production facility. It was built by Infineon in Dresden, Germany. At the time, 200 mm wafers were the standard. It may possibly not seem like a large change, but wbg semiconductors has 250 percent more surface when compared to 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 at the end of 2009. Fab is short for “fabrication”, and is also just 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 less expensive when 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 than the same capacity would have cost instead by building 200 mm wafer fabs.
The issue is many small and medium size companies do not need the volume of production which a 300 mm fab generates, and they may struggle to pay the expense for a 300 mm fab ($3-4 billion). It is really not reasonable to spend this amount of cash rather than fully make use of the fab. Since the 300 mm fab is inherently better compared to the smaller diameter wafer fabs, there exists pressure for any solution.
For your 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 produce their product. This can be what is known as going “fabless”, or “fab-light”. The firms that perform the 3rd party manufacturing are known as foundries. Most foundries are in Asia, especially Taiwan.
Ironically, 300 mm was created by Motorola and Infineon in a project called Semiconductor3000 in Dresden, Germany. This was a tiny pilot line which was not capable of volume production. These two companies have suffered with 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 right into a company called Freescale that now operates just 6 fabs. Infineon divested their manufacturing in to a company call Qimonda. Qimonda has declared bankruptcy.
Brands like AT&T (Lucent), LSI Logic, Hewlett-Packard and Xilinx have already 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 a plan to become without any fabs. Even Intel outsources its newest hot product, the Atom (used for “Netbooks”), to a foundry.
Over half from the fabs in operation at the start of the decade are now 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 already been planning a transition to 450 mm wafers. A InAs wafer must have approximately the identical edge over a 300 mm fab, which a 300 mm fab has over a 200 mm fab. It is undoubtedly a strategic decision to produce a situation where other-than-huge companies will likely be with a competitive disadvantage. Intel had $12 billion in 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 will continue to progress across the current path, competition will disappear. The greatest memory manufacturer will control memory, the greatest microprocessor manufacturer will control microprocessors, as well as the foundry business is going to be controlled by one company. These businesses have features of scale over their competitors, but their existing manufacturing advantage will grow significantly.