Economic Realities Suggest a Long, Slow Road to 450mm
By John Ellis, SEMI
Five years ago, several industry executives foresaw a gap between funding semiconductor R&D and staying on Moore’s Law. A SEMI white paper ("Semiconductor Equipment and Materials: Funding the Future") published in October 2005 outlined this looming problem, predicting that by 2010 the industry would need $10.4B to fund basic technology R&D. The industry bust of 2008-2009 has made the situation worse– only $2.1B of the $10.4B needed for R&D will be available as we look forward to 2010.
With these constraints, the industry has to make hard choices about what will and won’t be funded. Unfortunately, the industry doesn’t operate as one entity, as there are many forces, interests, and objectives at hand, and not all can be satisfied. Companies have to make very smart choices in their investment decisions.
Many semiconductor equipment and materials suppliers are looking to adjacent markets for growth opportunities. These include photovoltaics, the "Smart Grid", high-brightness LEDs, NEMS/MEMS, and flexible and printed electronics and displays. While all are related to semiconductors, each market requires its own investment in market research, needs assessments, and focused R&D that can further complicate a company's strategy.
SEMI's role is to look objectively at the overall market conditions, economic factors, and timing to provide our members with data to make optimal strategic and investment decisions for their own companies. In this vein, we present our perception of the current status of the economics and timing of a 450 mm wafer transition.
There continues to be a pervasive misconception that a wafer-size transition alone can provide a significant cost saving for the industry. Expectations of 30% cost savings have been repeated so often that it may seem that it is a fundamental law of wafer-size transitions. But as was pointed out in SEMI’s Equipment Productivity Work Group’s (EPWG) paper on the Economics of 450 mm, this expectation has not been based on objective analysis. One industry consultant has said,
“We have assumed 450 mm equipment will have similar throughput to 300 mm and cost 1.3× as much.”
This assumption has not been substantiated by objective analysis. The reality is that beam tools– tools whose throughput is a function of the area they can scan in an hour – can only have their speed increased within certain limitations due to basic physics. (The details of our analysis are available in our EPWG report.) The key is that some people assume the same number of wafers per hour processed, thus providing the increased area per hour improvement in speed. But beam tools can handle fewer wafers per hour for an equivalent equipment wafer scale up; the tool can make only so many images per second, regardless of the size of the wafer. That faulty assumption suggests that a multiplier on throughput would be 2.31× (2.25× increased area plus additional gains at the edge), but a beam tool's output multiplier is an average of 1.24×, or almost 50% less (Figure 1). This analysis has been acknowledged by industry groups working with SEMI.
All of the optimistic predictions of cost savings accrued by going to 450 mm wafers assume that 450 mm wafers will cost approximately the same per unit area as do 300 mm wafers. However, there are many technical challenges that must be overcome by wafer manufacturers in order to develop the extremely high quality substrates that will be required; these make this assumption hard to achieve. SUMCO offers a detailed analysis of their investigation. Readers are encouraged to download the EPWG analysis which provides details on our analysis.
It is important to recognize the overall impact on the industry that a transition to 450 mm might have, over and above any potential cost savings in wafer processing. Figure 2 below shows a chart that details the expected cost structure for a 22nm microprocessor. Note that the wafer processing costs make up about 15% of the overall price (to the customer or ASP) of the final product. Even if a reduction of 30% in overall costs were obtained, this would result in a net savings of 5% of the overall part cost, and consumers might see half of this. Our study shows that perhaps 8% of the overall costs would be reduced by a scale-up. This leads to the obvious question – is a projected $25B investment in equipment R&D justified for 8% improvement?
Why Not 300 Prime (or 300 NGF?)
Industry observers have said that 300 mm Prime will not meet its productivity improvement objectives. It is, however, a substantial jump to say that 450 mm, therefore, is necessary. To conclude that 300 mm Prime effort has failed is disingenuous at best, and dangerously misleading at worst. It is our view that the distraction caused by focus on 450 mm, along with the massive downturn experienced in 2008-2009, has diluted any serious, concerted efforts toward re-architecting 300 mm fabs. We prefer to say that 300 mm Prime, or its successor, 300 mm Next Generation Factory, has not yet been given a chance.
Originally, the industry had targeted the transition to 450 mm for the 32nm node, but this has now slipped to the 22nm node for production. At the Industry Strategy Symposium held by SEMI in January 2010, some analysts, e.g. Bob Johnson from Gartner, were predicting that the transition would most likely be 11nm, if it happens at all. This is more consistent with the announcement of 22nm processors occurring in 2011 by Paul Otellini, CEO of Intel. It is also consistent with supplier statements that they cannot afford to develop process technology on two platforms at the same time – the cost is prohibitive, and the overall market not big enough to justify the investment.
It is interesting to note that even with Intel’s announcement, ISMI has announced its continued plans for a 450 mm demonstration program at 32nm and pilot lines at 22nm.
There are potential benefits in setting 11nm as a target for 450 mm introduction. This delay may provide time to wring out the serious technology issues equipment manufacturers must resolve in the non-trivial scale-up to 450 mm. Recent presentations at the 450 mm Workshop at SEMICON Europe 2009, organized by Fraunhofer Institute, show that for most tools there will be unforeseen technical impacts that have to be analyzed and dealt with. Funding for research on these difficult areas is strongly encouraged, and SEMI applauds the European Commission for providing a program to help suppliers in these efforts.
However, there are a lot of technology challenges to be overcome at 16nm unrelated to the transition to 450 mm. These include: double patterning, EUV lithography, new materials, and complex levels of process integration beyond the capabilities of most equipment suppliers. Knowing that our big lever is feature size reduction, and that there may not be enough R&D funding to do everything, the question is what would we give up, as an industry, if we had to?
What happens at 11nm? There have been implications that new materials, perhaps even a new substrate, will be required. In an extreme case, but unlikely case, we might see that 450 mm is a one-node solution.
Now to the hard part that not even SEMI has fully analyzed. Several analysts have estimated the R&D investment required for suppliers at $25B to $30B (VLSI Research and IC Knowledge). SEMI’s investigations support this number. However, no one has looked at how this effort will be funded. In the 300 mm transition, it is generally agreed that suppliers funded the bulk of the R&D required for equipment. It is a more controversial issue to determine whether the suppliers have ever recouped their costs. Forgoing this discussion, we'll jump into a simple, high-level analysis on whether the supplier community is equipped to fund the R&D needed for 450 mm.
In our R&D Funding the Future white paper, SEMI found that suppliers have been able to spend about 14 to 15% of their overall revenue on R&D activities. Recent analysis by SEMI continues to substantiate this amount. Of this total, about 10% is spent on research. The balance of the funding goes toward many activities, including equipment support and continuous improvement. Of course, this funding goes toward all R&D – including technology, e-manufacturing, new business (PV), etc. SEMI’s current estimate for revenue for the equipment industry for 2009 is approximately $14.1B, growing by over 47% in 2010 to $20.74B. If the full 15% of the supplier R&D budget for 2010 was applied toward 450 mm, there would be $3.11B available for a 22nm node transition, with slightly more available for a 16nm node transition. Most of this funding is already committed toward funding technology advancements, including process technology, 3D TSV technology, and materials. This amount falls far short of the estimated $25B required for 450 mm.
Even if there were substantial cost savings by moving toward 450 mm wafers, the timing and funding issues are serious concerns. A transition to 450 mm will be a very difficult undertaking and will require a coordinated effort across the entire supply chain. Only three chipmakers (those with serious capital equipment budgets) have announced support for 450 mm, so a coordinated effort seems difficult at this point.
It is not SEMI’s role to encourage or discourage a particular industry decision. That is ultimately left up to the market. In fact, the SEMI Standards program is actively pursuing development of standards that are 450 mm wafer-size specific. If the industry is going to be ready for a transition at some point in the future, these standards are absolutely necessary in order to reduce overall development costs.
Since the supplier industry clearly does not have sufficient funding to tackle the issues surrounding 450 mm and keep other technologies on-track, we are supportive of government funding to look into key research issues. We are particularly supportive of funding that can be channeled toward ‘dual-use’ technology improvements that may benefit 300 mm now while being applicable toward 450 mm later.
A true collaboration from industry, where key stakeholders have contributed substantial funding toward supplier R&D efforts, would be a key sign that the proponents of 450 mm are very serious about moving it forward with some “skin in the game”. We have not seen this in any significant way.
In the meantime, SEMI will continue to work with industry in evaluating the economic, technology, timing, and funding issues so that our members have as a large set of data upon which to base individual company strategic decisions.
John Ellis is VP of Standards and technology at SEMI. This is an excerpt on an article which first appeared in Solid State Technology, March 2010
March 2, 2010