The semiconductor wafer chip industry has been in deep recession for the last few years, however the last year has been particularly bad. Research studies have revenue down 30 % from last year. In an industry with massive capital investments, and excruciatingly thin profits, this constitutes a disaster.
A semiconductor wafer is a round disk created from silicon dioxide. Here is the form by which batches of semiconductor chips are manufactured. Depending on the dimensions of the person chip and the dimensions of the epi wafer, hundreds of individual semiconductor chips might be made from a single wafer. More complicated chip designs can require greater than 500 process steps. Following the wafer has become processed, it will likely be cut into individual die, and those die assembled into the chip package. These assemblies are employed to make build computers, mobile phones, iPods, and other technology products.
Transitions to larger wafer sizes have always been an ordinary evolution from 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 within the 1980s were in increments of 25 mm. Motorola MOS 11 in Austin (1990) was the first 200 mm fab, which was the very first time that an increment was skipped (175 mm).
It is definitely difficult to become a young adopter of the new wafer size. The larger area causes it to be more challenging to keep process consistency over the wafer. Usually 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 that time, Applied Materials and Tegal, failed to 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 choose Lam. LRC quickly grew and permanently acquired the marketplace.
Another aspect in the transition to larger wafers is process technology. Once the semiconductor industry moves to an alternative wafer size, the latest process technologies created 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 may be more difficult if this does not manufacture with all the newest wafer size.
The last wafer size increase happened in 2000 with the first 300 mm volume chip production facility. This 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 compound semiconductors has 250 percent more area than a 200 mm wafer, and surface directly relates to production volume.
By the end of 2008, worldwide, there have been 84 operating 300 mm fabs, with 14 more fabs expected online by the end of 2009. Fab is short for “fabrication”, and it is 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 more affordable when compared to a 200 mm fab for the very same capacity of chip production. Intel estimates 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 quantity of production that a 300 mm fab generates, and 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 and not fully use the fab. Because the 300 mm fab is inherently more effective compared to the smaller diameter wafer fabs, there exists pressure to get a solution.
For the 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 manufacture their product. This is what is known as going “fabless”, or “fab-light”. The companies that carry out the 3rd party manufacturing are known as foundries. Most foundries will be in Asia, especially Taiwan.
Ironically, 300 mm was developed by Motorola and Infineon at a project called Semiconductor3000 in Dresden, Germany. This is a small pilot line that was not competent at volume production. Both of these companies have suffered using their peers off their insufficient fore-sight. In 2000, Motorola operated 18 fabs and was the 5th largest semiconductor company on earth. 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 filed for bankruptcy.
Companies 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 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 some foundry.
More than half in the fabs operational at the start of the decade are actually closed. With 20-40 fabs closing every 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) have already been planning a transition to 450 mm wafers. A InSb wafer needs to have approximately exactly the same edge on a 300 mm fab, that a 300 mm fab has over a 200 mm fab. It is actually undoubtedly a strategic decision to produce a situation where other-than-huge companies will likely be in a competitive disadvantage. Intel had $12 billion within the bank at the conclusion of 2008. Can AMD (GlobalFoundries), or comparably sized companies, afford a 450 mm fab ($6-10 billion)? No.
In the event the industry consistently progress across the current path, competition will disappear. The largest memory manufacturer will control memory, the largest microprocessor manufacturer will control microprocessors, and the foundry business is going to be controlled by one company. These companies have features of scale over their competitors, but their existing manufacturing advantage will grow significantly.