The semiconductor wafer chip industry has been in deep recession for recent years, but the last year has been especially bad. Research studies have revenue down 30 percent from last year. Within an industry with huge capital investments, and excruciatingly thin profit margins, this constitutes a disaster.
A semiconductor wafer is really a round disk made from silicon dioxide. This is the form in which batches of semiconductor chips are made. Depending on the size of the individual chip and the size of 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. Right after the wafer continues to be processed, it will likely be cut into individual die, and those die assembled into 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 contemporary fab used wafers that were only 100 mm in diameter (1 inch = 25.4 mm). The transitions in 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 a challenge to be an earlier adopter of the new wafer size. The bigger area causes it to be more difficult to maintain process consistency over the wafer. Usually the process tool vendors will 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, did not 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 choose Lam. LRC quickly grew and permanently acquired the market.
Another element in the transition to larger wafers is process technology. If the semiconductor industry moves to a different wafer size, the latest process technologies developed by the tool companies will often be offered only on the largest wafer size tools. If a chip company would like to remain on the leading technology edge, it can be more difficult when it will not manufacture with the newest wafer size.
The final wafer size increase occurred in 2000 using the first 300 mm volume chip production facility. This is built by Infineon in Dresden, Germany. During the time, 200 mm wafers were the conventional. It may not seem to be a large change, but wide bandgap materials has 250 percent more surface compared to a 200 mm wafer, and surface directly relates to production volume.
At the end of 2008, worldwide, there was 84 operating 300 mm fabs, with 14 more fabs expected online in the end of 2009. Fab is short for “fabrication”, and it is 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 than 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 than the same capacity would have cost instead because they build 200 mm wafer fabs.
The thing is many small and medium size companies do not require the amount of production which a 300 mm fab generates, and they also may struggle to pay the expense for any 300 mm fab ($3-4 billion). It is far from reasonable to shell out this amount of cash and not fully utilize the fab. Since the 300 mm fab is inherently better compared to smaller diameter wafer fabs, there exists pressure for any solution.
For that small and medium size companies, the answer has often gone to close their manufacturing facilities, and hire a third party with a 300 mm fab to produce their product. This can be what is known going “fabless”, or “fab-light”. The companies that perform the third party manufacturing are classified as foundries. Most foundries will be 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 that was not capable of volume production. Those two companies have suffered making use of their peers using their lack of fore-sight. In 2000, Motorola operated 18 fabs and was the 5th largest semiconductor company in the world. Today, Motorola has divested their manufacturing in to a company called Freescale that now operates just 6 fabs. Infineon divested their manufacturing right into a company call Qimonda. Qimonda has declared bankruptcy.
Brands like AT&T (Lucent), LSI Logic, Hewlett-Packard and Xilinx have already eliminated chip manufacturing. Businesses 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 plan to be without any fabs. Even Intel outsources its newest hot product, the Atom (used for “Netbooks”), to a foundry.
Over fifty percent from the fabs in operation at the outset of the decade are actually closed. With 20-40 fabs closing each and every year, there is 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) have been planning for a transition to 450 mm wafers. A InP wafer needs to have approximately the same edge over a 300 mm fab, that the 300 mm fab has over a 200 mm fab. It is actually undoubtedly a strategic decision to make a situation where other-than-huge companies will be with a competitive disadvantage. Intel had $12 billion within the bank at the end 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 over the current path, competition will disappear. The greatest memory manufacturer will control memory, the largest microprocessor manufacturer will control microprocessors, and also the foundry business will be controlled by one company. These companies have advantages of scale over their competitors, however existing manufacturing advantage will grow significantly.