by James Montgomery, news editor, Solid State Technology
July 16, 2008 – Where to turn for inspiration in a tough year 2008 for semiconductor suppliers? Try Yankee baseball great Yogi Berra and famously underappreciated comic Rodney Dangerfield, according to analyst John Housley of Techcet, in a Wednesday talk about materials forecasts at SEMICON West.
Despite handwringing on the semiconductor equipment side of the industry, materials firms actually are still chugging right along with growth as they have for decades, Housley pointed out, adding that in fact he’s found very little correlation between semiconductor sales and materials sales.
In his southern drawl, Housley invoked favorite and relevant Berra-isms about forecasting (“It’s tough to make predictions, especially about the future”) and market slowdowns (“I’m not in a slump, I’m just not hitting,” which he said is roughly equivalent to materials firms “not being in a downturn, we’re just not selling”). Still, he predicts a $43B market this year, and a 8%-9% CAGR through 2011 to $55B.
Spending per node for resists/ancillaries and interconnect materials. (Source: Techcet)
Among hot topics touched on in his brief (~25min) presentation, Housley countered general industry concerns about shortages of polysilicon, noting that most if not all of the top 10 major polysilicon suppliers plan to double or triple (or more) their capacity in the next five years, and there’s another 16 new players coming into the market — all together that could push Si capacity by 5× by 2011, to feed hungry markets in semiconductors and elsewhere. Solar, for example, is going “berserko, bonkers” to get its hands on silicon, he said, emphasizing his point by asking whom among the roomful of participants are playing in some way in solar — and nearly all raised their hands.
Housley paused briefly to mention 450mm, noting that many significant questions still need to be answered, e.g. how usage of things like photoresists will be reworked. “God help us,” he said, and quickly moved on.
Housley spent several minutes on why the typical “confrontational” style of procurement relationship between chemicals/materials producers, their suppliers, and their IC customers needs to change right now. First, heavy demand means materials suppliers are having to compete with much bigger players (e.g. in aerospace) to provide things like titanium, copper, and tungsten — and other industries who want those materials are less picky about purity or even cost. And second is pricing. Years ago price quotes were good for 30, 60, 90 days, he said — but today, he knows someone who has to call back four hours after a price quote or it’ll be gone. The risk to either of these factors is simple, Housley said — consolidation, citing Air Products and Ashland as examples.
For materials firms, who historically feel they’ve been burdened to shoulder much of the initial cost for new technology development while still getting squeezed on pricing and thus not reaping the benefits, the best defense is to stick to their guns. “Learning to say ‘no’ is something the people in this business need to learn to do,” Housley said. This hard-line stance also opens up opportunities, he said, citing as an example customers’ increasing desire to find softer, greener strip technologies while still pressing suppliers on prices. Look for “a disruptive technology in resist strip and removal” in the next two years, he predicted.
Rushed to close out his short talk, Housley zipped through a few final slides about continued demand for SiC and CMP characterized as “the darling of the materials business.” A pie chart showing regional demand was called out because it showed US demand at 18% — a figure Housley said was “very generous” — down from 30% not too long ago. This is a trend that materials firms need to recognize and adapt to, he said.
Housley also spotlighted efforts from Jenoptik to address customers’ desire to get more silicon for their investment, namely by pulling it out of scribe lines. Their technology essentially uses a laser to put a hot and cold spot on a silicon wafer to cleave off excess for reuse. — J.M.