The semiconductor wafer chip industry has been in deep economic downturn for recent years, but the a year ago has been particularly bad. Recent reports have revenue down 30 % from last year. Within an industry with massive 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 in which batches of semiconductor chips are manufactured. Depending on the scale of the person chip and the dimensions of the InGaAs, hundreds of individual semiconductor chips may be made from a single wafer. More complicated chip designs can require a lot more than 500 process steps. Following the wafer has become processed, it will be cut into individual die, and these die assembled into the chip package. These assemblies are used to make build computers, cell phones, iPods, and other technology products.
Transitions to larger wafer sizes have always been a normal evolution of the semiconductor industry. In 1980, a contemporary fab used wafers that were 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 very first 200 mm fab, and also this was the very first time an increment was skipped (175 mm).
It has long been challenging to be a young adopter of a new wafer size. The bigger surface area causes it to be more challenging to keep process consistency over the wafer. Often 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 at the time, Applied Materials and Tegal, did not offer tools at the new wafer size. Intel and AMD were the very 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 marketplace.
Another element in the transition to larger wafers is process technology. If the semiconductor industry moves to a different wafer size, the newest process technologies developed by the tool companies will sometimes be offered only on the largest wafer size tools. When a chip company desires to remain on the leading technology edge, it could be more challenging when it will not manufacture with the newest wafer size.
The very last wafer size increase occurred in 2000 with the first 300 mm volume chip production facility. This was built by Infineon in Dresden, Germany. During the time, 200 mm wafers were the typical. It may possibly not seem to be a large change, but compound semiconductors has 250 percent more area than a 200 mm wafer, and surface directly pertains to production volume.
At the end of 2008, worldwide, there were 84 operating 300 mm fabs, with 14 more fabs expected online at 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 more affordable when compared to a 200 mm fab for the very same capacity of chip production. Intel estimates which they spent $1 billion less on 300 mm capacity in 2004 compared to the same capacity might have cost instead because they build 200 mm wafer fabs.
The problem is many small and medium size companies do not need the quantity of production which a 300 mm fab generates, and they may be unable to afford the expense for any 300 mm fab ($3-4 billion). It is far from reasonable to spend this amount of money and never fully use the fab. Considering that the 300 mm fab is inherently more efficient compared to smaller diameter wafer fabs, there is pressure for any solution.
For that small, and medium size companies, the answer has often gone to close their manufacturing facilities, and hire a 3rd party using a 300 mm fab to produce their product. This can be what is known going “fabless”, or “fab-light”. The companies that carry out the third party manufacturing are known as foundries. Most foundries are in Asia, especially Taiwan.
Ironically, 300 mm was created by Motorola and Infineon at a project called Semiconductor3000 in Dresden, Germany. This was a little pilot line which had been not able to volume production. These two companies have suffered making use of their peers from their lack 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 in to a company called Freescale that now operates just 6 fabs. Infineon divested their manufacturing in to a company call Qimonda. Qimonda has declared bankruptcy.
Businesses like AT&T (Lucent), LSI Logic, Hewlett-Packard and Xilinx already have eliminated chip manufacturing. Companies 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 be free of fabs. Even Intel outsources its newest hot product, the Atom (utilized for “Netbooks”), to your foundry.
More than half of the fabs in operation at the outset of the decade are actually closed. With 20-40 fabs closing each year, you will find a glut of used production tools on the market, most selling at bargain basement rates.
Recently three of the largest semiconductor companies, Intel (microprocessors), Samsung (memory), and TSMC (foundry) happen to be planning a transition to 450 mm wafers. A InP wafer must have approximately the identical edge over a 300 mm fab, that the 300 mm fab has spanning a 200 mm fab. It really is undoubtedly a strategic decision to make a situation where other-than-huge companies will be in 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.
If the industry will continue to progress along 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 likely be controlled by one company. These businesses already have features of scale over their competitors, however existing manufacturing advantage will grow significantly.