SEMICON WEST REPORT: Do lean principles apply to semi manufacturing?

by Phil LoPiccolo, Editor-in-Chief, Solid State Technology

Delivering the opening keynote address at SEMICON West on Tuesday (July 17), Douglas Grose, AMD’s SVP of technology development, manufacturing, and supply chain, assailed a widely held “faulty belief” in the uniqueness of the semiconductor manufacturing, calling on the industry to adopt highly successful principles and practices of lean manufacturing deployed in other industries.

“There’s an assumption in our industry that the complex and delicate processes of semiconductor fabrication can’t be streamlined,” said Grose, citing worries about risk in tinkering with production lines due to the belief that the relentless technology shrink of transistors and growing wafer sizes are what produce regular productivity enhancements. “But these are faulty beliefs that keep us locked into processes that limit our growth.”

A number of years ago, AMD engineers started thinking about the next step in improving the company’s manufacturing, having already increased output of AMD’s Fab 30 in Dresden, Germany, to levels 50% higher than what the facility was originally designed to produce, according to Grose. They realized they needed to cut rising costs, manage fluctuating profit margins, and deal with other factors that were clearly not limited to chipmaking, and so they began to look for answers beyond the semiconductor industry.

That search led to the automotive industry, “where lean-manufacturing techniques had created kings,” Grose said. Indeed, decades ago, Toyota developed a lean-manufacturing philosophy — credited as largely responsible for the success they enjoy today — that enabled the company to reduce the average development time for a vehicle to 24 months, about half the industry average, he said.

Similarly, when faced with a dire financial picture, Porsche implemented lean practices in an ambitious pursuit of efficiency improvement, Grose added. In five years, the automaker doubled productivity, cut defects in supplier parts by 90%, shortened lead times from six weeks to three days, and cut parts inventory by 90%.

“After we stood back and recognized the significance of the changes that Toyota and Porsche had made,” said Grose, “we sought their advice on how to apply lean manufacturing to AMD’s fab processes.” As a result, the team first looked inside the fab, “where waste lives,” he said.

What AMD found, through industry research and internal data, was that 80% of its cycle time was actually idle time, Grose explained. “Yes, we can always improve the efficiency and throughput of tools and move to bigger wafers,” he said, “but the biggest return on investment is to move to a more streamlined fabrication model.”

Results achieved in 2006 cited by Grose are impressive. By reducing lot sizes at Fab 30 and re-architecting the facility’s transportation and delivery systems, AMD increased production and efficiency, while cutting cycle time, inventory, and overall costs. Wafer starts rose 31%, cycle time/mask layer fell 33%, productivity increased 77%, and overall wafer costs dropped by 26%. “Not only are we better positioned to manage the product mix, we also reduced cost, and increased output,” Grose said. Meanwhile, at its Singapore fab, the chipmaker re-architected backend lines to increase output by 75,000 wafers, shrink the physical footprint of the lines by 25%, and reduce cycle time by 47% — thus gaining the flexibility to expand those operations without acquiring new facilities or adding real estate, he said.

Moving forward, Grose’s goal is to expand lean processes throughout the company’s supply chain and beyond. “This is not a vision only for AMD and its transformation; this is an industry transformation,” he said. “I can tell you that we’re nowhere near close to hitting the wall.” –P.L.


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