SEMICON West panelists see globalization as growth opportunity

July 14, 2005 – A panel of leading executives from the semiconductor equipment and materials industry engaged in a spirited debate over the future direction of the industry on the opening day of SEMICON West Tuesday night. Among the questions addressed is whether the center of the industry will inevitably shift away from North America toward Asia, reflecting the growing size and importance of the Asia-Pacific market.

Panel moderator George Scalise, president of the Semiconductor Industry Association (SIA), said there is no question that a major migration of chip manufacturing activities toward Asia is under way. “More than two-thirds of all the state-of-the-art chip making facilities now under construction are being built in Asia,” said Scalise. “This trend reflects both the rapid growth of electronics manufacturing in Asia and the effectiveness of tax incentives and other assistance programs offered to attract high-tech investment in the region.”

Scalise said one of the top priorities of the SIA is to improve the investment climate for high-tech manufacturing and R&D and design centers in the US.

The panel responded on the issue of globalization and a number of other growth topics:

— Mary Puma, chairman and CEO of Axcelis Technologies, Beverly, MA, said, “A good analogy for Moore’s Law is to think of it as an evolutionary process, and frankly I’m not sure that we can slow down evolution. There is zero likelihood of us slowing down the pace of development to benefit the economic health of the industry. As long as the electronics industry benefits in terms of functionality with shrinks, the shrinks will occur. At the end of the day, those of us who will survive are those who have better, leaned-out, efficient business models.”

— Michael Wright, president and COO of Entegris in Chaska, MN, argued that “With few exceptions, customers are opting for economic solutions that are shorter term in payback and sustainable cost reductions in the longer term. They buy if the benefit is traceable and tangible. If co-locating delivers this, suppliers are compelled to follow.” Wright explained how the challenges of delivering the quality, delivery, and cost levels that customers demand can only be met by those suppliers with the global and market efficiencies expected not only of a mature market, but any market in the new business norm.

— Ray Thompson, CEO and chairman of the board of Semitool, Kalispell, MT, expressed difficulty in viewing the industry as “maturing,” stating that “now more than ever, this industry infuses itself into new applications. To me, industry forefather Bob Graham’s description of this business is still true: ‘an industry characterized by an unlimited amount of insurmountable opportunities.’ As new opportunities, based on new enabling products, continue to present themselves, some will go to Asia and some will encourage growth right here at home in the US, for example, Texas Instrument’s new 300mm fab and the latest buzzword: in-sourcing.”

— Sven Lofquist, president and CEO of Sweden-based Micronic Laser Systems, noted, “We all know the business is moving to Asia, and there’s no question suppliers will follow. Although the opportunities China holds for this industry are great, the supplier community must not lose sight of other important regions: Taiwan, Korea, and Japan. Moreover, it’s not only a question of cost. Suppliers still must be able to deliver the technology.”

Other panelists included Martin van den Brink, executive VP, marketing & technology, ASML, in the Netherlands, and Rick Hazard, co-founder, president and CEO of Lightwind in San Francisco, who spoke about new process-driven opportunities, noted that “Material changes are being driven by design rules falling below 0.1 micron. This creates a great opportunity for advanced process control to help address the resulting pressure on yields.”

Recent market forecasts from the SIA see a slowing of the chip industry’s compound annual growth rate to 10%, down from the 17% CAGR the industry had enjoyed in recent decades.

“This lower growth rate reflects both the maturation of the industry and a much larger base for future growth. After all, a 10% compound annual growth rate for a $213 billion industry offers huge opportunities for innovative companies,” Scalise said. “The big challenge is how chipmakers and suppliers will pay for advances in technology without bankrupting each other. New materials, new device structures and new assembly methods will require both evolutionary and revolutionary changes in our industry. The wafer fab of 2020 is unlikely to look anything like the fab of 2005.”

The panel discussion was sponsored by Loomis Group during the semiconductor equipment and materials industry’s annual SEMICON West trade show.

POST A COMMENT

Easily post a comment below using your Linkedin, Twitter, Google or Facebook account. Comments won't automatically be posted to your social media accounts unless you select to share.