The semiconductor wafer chip industry has been in deep recession for the recent years, but the last year has been especially bad. Research studies have revenue down 30 per cent from last year. In an industry with huge capital investments, and extremely thin profits, this constitutes a disaster.
A semiconductor wafer is actually a round disk made from silicon dioxide. This is the form by which batches of semiconductor chips are made. Depending on the dimensions of the individual chip and the dimensions of the InGaAs, countless individual semiconductor chips could be made from one wafer. More complicated chip designs can require greater than 500 process steps. After the wafer continues to be processed, it will be cut into individual die, which die assembled into the chip package. These assemblies are utilized to make build computers, mobile phones, iPods, as well as other technology products.
Transitions to larger wafer sizes have been a typical evolution from the semiconductor industry. In 1980, a modern fab used wafers which 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 very first time an increment was skipped (175 mm).
It is definitely difficult to become an early adopter of the new wafer size. The greater area can make it 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 on the transition from 125 mm to 150 mm, since their largest competitors at that time, Applied Materials and Tegal, did not offer tools at 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 select Lam. LRC quickly grew and permanently acquired the marketplace.
Another factor in the transition to larger wafers is process technology. Once the semiconductor industry moves to a new wafer size, the newest process technologies developed by the tool companies will sometimes be offered only on the largest wafer size tools. In case a chip company wants to remain on the leading technology edge, it may be more challenging if this does not manufacture with the newest wafer size.
The final wafer size increase occurred in 2000 with all the first 300 mm volume chip production facility. This was built by Infineon in Dresden, Germany. At that time, 200 mm wafers were the typical. It might not seem like a large change, but compound semiconductors has 250 percent more surface than a 200 mm wafer, and surface area directly concerns production volume.
In 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 what the semiconductor industry calls their factories. Within 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 they spent $1 billion less on 300 mm capacity in 2004 compared to same capacity could have cost instead because they build 200 mm wafer fabs.
The thing is many small and medium size companies do not need the quantity of production that a 300 mm fab generates, plus they may not be able to pay for the expense for a 300 mm fab ($3-4 billion). It is not reasonable to shell out this sum of money and never fully use the fab. Considering that the 300 mm fab is inherently better than the smaller diameter wafer fabs, there exists pressure to get a solution.
For your small and medium size companies, the remedy has often gone to close their manufacturing facilities, and hire a 3rd party with a 300 mm fab to manufacture their product. This really is what is known going “fabless”, or “fab-light”. The companies that carry out the 3rd party manufacturing are called foundries. Most foundries will be in Asia, especially Taiwan.
Ironically, 300 mm was made by Motorola and Infineon with a project called Semiconductor3000 in Dresden, Germany. This is a small pilot line which had been not able to volume production. Both of these companies have suffered with 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 right into a company called Freescale that now operates just 6 fabs. Infineon divested their manufacturing right into a company call Qimonda. Qimonda has declared bankruptcy.
Businesses 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 the 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 get free from fabs. Even Intel outsources its newest hot product, the Atom (employed for “Netbooks”), to a foundry.
Over fifty percent from the fabs functioning at the beginning of the decade are now 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 in the largest semiconductor companies, Intel (microprocessors), Samsung (memory), and TSMC (foundry) have already been organising a transition to 450 mm wafers. A InP wafer should have approximately exactly the same advantage over a 300 mm fab, which a 300 mm fab has spanning a 200 mm fab. It is actually 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 at the end 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 over the current path, competition will disappear. The greatest memory manufacturer will control memory, the biggest microprocessor manufacturer will control microprocessors, as well as the foundry business will likely be controlled by one company. These firms curently have advantages of scale over their competitors, however existing manufacturing advantage will grow significantly.