Multiple strategies for a bifurcated industry

by Debra Vogler, Senior Technical Editor

Some industry observers figure that the industry will probably have only a handful of major players in the form of IDMs, alliances, top foundries, and some fab-lite companies. Tokyo Electron America’s president, Harvey Frye, on the other hand, thinks there is probably room for at least 10 companies globally that could remain IDMs in some form, and listed likely candidates and working strategies in a Monday morning panel discussion at the ConFab.

Frye noted that an example of one IDM strategy is the collaboration at Elpida, which has invested heavily in DRAM but still has a relationship with Powerchip. The partners have to work out control of processes, and who benefits from successful products, he said. His list of likely global IDM survivors also includes companies such as Samsung or Intel, and he expects there will be IDMs and/or foundries in emerging markets such as China where government policy is aimed at control and presence with a front-end capability that is country-centric (he cited Intel’s announcement earlier this year of a 300mm fab in China as a case in point). Another strategy would be to have two partners invest jointly in a fab, and work with one another, albeit with one partner taking the lead and the other being more passive.

Many chipmakers have chosen a bifurcated strategy in which they do some manufacturing internally, either with current capacity or a combination of using current capacity in a joint venture, Frye said. He pointed out, however, that joint ventures don’t always result in long-term, lasting relationships, so there has been a trend for chipmakers to move to a heavier foundry strategy for newer and more expensive investments. TI is a very good example of this trend, and many of the mid- to larger-size companies will tend to move that way over time, he said.

One issue in partnerships is intellectual property (IP), stressed Frye. Some IP is offered to the collaborators without complex legal restrictions to speed development, but other IP is used as a differentiator. In this case, Frye said, the legal issues must be clear to all collaborators to avoid disputes.

Another trend Frye expects going forward, especially with the increase in the number of new materials needed at advanced nodes, is that equipment suppliers will continue to expand how they work with complementary companies. These partners can include materials suppliers, consortia, or other alliance partners and chipmakers. Equipment suppliers will also have to work with providers of robotics, material moving systems, software, and metrology, and those that integrate metrology into capital equipment, Frye noted. — D.V.


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