Time to get serious about business?

By Paula Doe

WaferNews Contributing Editor

It’s just possible that things may be getting so bad that the industry may be forced into rethinking long-standing practices and come up with some better ways of doing business.

Executives at SEMI’s recent Microelectronics Materials Strategy Symposium were at least starting to talk seriously about a whole range of ways to reduce costs by doing things more intelligently, not just e-business and vendor-managed supply chains, but everything from standard equipment and materials, to lower purities and shorter qualification times, to even down payments on equipment and sanctions for canceling orders.

“This industry has always been run too much by engineers who are at heart really most interested in new technology for technology’s sake and tend not to think enough about the business side of things,” said one executive.

Some big users might be starting to be more receptive to less custom products, if they do the job for less money, despite fab engineers’ tendency to always want their own special versions. “Standards will save both suppliers and users money,” stressed Peng-Heng Chang, senior director of materials management at Taiwan Semiconductor Manufacturing Co. (TSMC). TSMC is stuck with tons of its own special formula stripper in inventory because no one else in the world uses it. Chang noted that TSMC ordered only tools with one common spec from one big equipment supplier because it got a discount for doing so. “If it’s cheaper, the fab will use it,” he said.

Silicon suppliers point out that standards for even a few simple wafer characteristics would allow them to significantly cut production costs and make more wafers with current capacity. MEMC’s Jim Highfill, VP and GM of external relations, noted that there are, for example, 64 different types of laser marks for 200mm wafers demanded by his customers, all of which require separate handling in the manufacturing flow. All those setups for custom orders take time that limits equipment utilization, so plants can’t run at more than 80% or so of nominal capacity. And with their high fixed costs, wafer makers start making money only at about 80% utilization. Worse, utilization really plummets in a downturn because all those custom batches get even smaller. Four big users did get together and set standards for 20 some criteria for silicon wafers, said Highfill, “But then none of them actually ordered to the standard.”

“There’s plenty of room in gas and chemicals to simplify standards,” agreed Liz Cathers, National Semiconductor’s senior manager of supplier quality. “There are thousands of standards, but only a handful of major users.”

Also increasingly on users’ radar is reducing qualification times. “The driving force is that technology is changing too rapidly to keep long qualifying times,” said Linton Salmon, AMD’s director of technology. “Or we can’t meet time to market.”

“Materials qualification is a major problem,” agreed TSMC’s Chang. “It takes six to nine months to requalify if the material just comes from a plant in another country.” TSMC is working out agreements with some customers for shorter qualification times, though Japanese customers remain reluctant. He noted that it’s mostly an issue of re-educating people. Though each of TSMC’s fabs uses NF3 from a different supplier, and insists on using NF3 from that supplier only, during last year’s shortage, he said, “they took it from whatever supplier they could get it from, and it was fine. The hard thing is to change mindset and habits.”

Similarly, users may be willing to settle for lower purity materials. Chang noted that when NF3 was in short supply some TSMC fabs had to use two-nines instead of four-nines purity NF3, and while yields probably went down some, it didn’t seem to have made all that much difference. “In many cases fab engineers are ignorant of the real effects,” concured Cathers. “They think five nines just has to be better than four nines, but if you can show them how it can save money and get the same results they’ll accept that.” Both stressed that having the engineering data is critical, though.

People were even suggesting customers start bearing some of the costs of double and triple bookings and order cancellations. Moshe Handlesman, president of Advanced Forecasting, asserted companies needed to insist on more accurate forecasts from their clients and a reduction of overbooking, by enforcing penalties for cancellations. He suggested suppliers should take clients who cancel big orders to court. “If everybody does it,” said Handlesman, “then forecasts would be more accurate and the cycles would be less.”

“Chip makers shifted all the risk to suppliers for 300mm,” said Bob Bachrach, director of technology at Applied Materials. “Downpayments made with equipment orders would help. They’re talking about it in ITRS [International Technology Roadmap for Semiconductors].”



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