The semiconductor wafer chip industry has been in deep economic downturn for recent years, but the a year ago has been particularly bad. Research studies have revenue down 30 percent from last year. In an industry with big capital investments, and excruciatingly thin profit margins, this constitutes a disaster.
A semiconductor wafer is a round disk made from silicon dioxide. Here is the form by which batches of semiconductor chips are made. Depending on the dimensions of the person chip and the dimensions of the epi wafer, numerous individual semiconductor chips may be made from a single wafer. More complicated chip designs can require greater than 500 process steps. After the wafer continues to be processed, it will probably be cut into individual die, which die assembled in to the chip package. These assemblies are utilized to make build computers, cell phones, iPods, as well as other technology products.
Transitions to larger wafer sizes have always been an ordinary 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 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 always been a challenge to get a young adopter of the new wafer size. The bigger surface area causes it to be more challenging to keep process consistency across the wafer. Usually the process tool vendors will likely 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 the time, Applied Materials and Tegal, did not offer tools on 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 select 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 latest process technologies developed by the tool companies will sometimes be offered only on the largest wafer size tools. When a chip company wants to remain on the leading technology edge, it can be more difficult if it does not manufacture with 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. At the time, 200 mm wafers were the typical. It may possibly not seem to be a large change, but wide bandgap materials has 250 percent more area than a 200 mm wafer, and area directly relates to production volume.
At the end of 2008, worldwide, there have been 84 operating 300 mm fabs, with 14 more fabs expected online in the end of 2009. Fab is short for “fabrication”, and is just what the semiconductor industry calls their factories. In 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 compared to a 200 mm fab for the similar capacity of chip production. Intel estimates that they spent $1 billion less on 300 mm capacity in 2004 compared to 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 volume of production which a 300 mm fab generates, plus they may not be able to pay the expense for a 300 mm fab ($3-4 billion). It is really not reasonable to invest this sum of money rather than fully use the fab. Since the 300 mm fab is inherently better than the smaller diameter wafer fabs, there is pressure for any solution.
For that small and medium size companies, the remedy has often gone to close their manufacturing facilities, and hire a third party with a 300 mm fab to produce their product. This really is what is known as going “fabless”, or “fab-light”. The businesses that perform 3rd party manufacturing are classified as foundries. Most foundries will be in Asia, especially Taiwan.
Ironically, 300 mm was created by Motorola and Infineon with a project called Semiconductor3000 in Dresden, Germany. This was a small pilot line that was not competent at volume production. Both of these companies have suffered making use of their peers off 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 into a company call Qimonda. Qimonda has filed for bankruptcy.
Companies 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 that eventual removal of most kgbapu their fabs. AMD (GlobalFoundries) and Motorola (Freescale Semiconductor) have separated their manufacturing divisions into independent companies, and profess an idea to get without any fabs. Even Intel outsources its newest hot product, the Atom (employed for “Netbooks”), to some foundry.
Over half of the fabs in operation at the beginning of the decade are actually closed. With 20-40 fabs closing each and every year, there exists 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 organising a transition to 450 mm wafers. A InP wafer should have approximately the same edge over a 300 mm fab, that the 300 mm fab has over a 200 mm fab. It really is undoubtedly a strategic decision to produce a situation where other-than-huge companies is going to be at a competitive disadvantage. Intel had $12 billion inside the bank after 2008. Can AMD (GlobalFoundries), or comparably sized companies, afford a 450 mm fab ($6-10 billion)? No.
When the industry continues to progress over the current path, competition will disappear. The biggest memory manufacturer will control memory, the biggest microprocessor manufacturer will control microprocessors, as well as the foundry business will be controlled by one company. These businesses curently have features of scale over their competitors, however existing manufacturing advantage will grow significantly.