Yield at any cost
02/01/2008
Roy White RAVE LLC, Delray Beach, Florida, USA
Photomask costs are a painfully visible issue in today’s competitive semiconductor market. This puts substantial pressure on the profitability of photomask makers. Firms typically combat eroding profit margins by increasing price or market share, reducing costs, or pursuing new markets.
Photomask unit volume is steady and forecast to remain so-a sure sign of a mature market. To gain share in a mature market you have to take it from another supplier, which is a long, difficult, and capital intensive proposition-and often leads to consolidation. The buying power of large semiconductor companies precludes any significant price increase, and new markets hold little promise to drive unit growth. Cost reduction is left as the only reasonable path to improved operating results.
The primary drivers of mask cost are capital equipment cost and yield. A next-generation equipment line costs more than $100M. These rising fixed costs drive the need for increased production output per site to achieve ROI (another factor in consolidation). While photomask equipment suppliers make every effort to control these fixed costs, recent papers (Hector, Lercel, et. al.) have illustrated the challenges for the photomask equipment supplier. These challenges are compounded by soaring demand (and thus skyrocketing prices) for raw materials like copper, stainless steel, and nickel. Attacking the variable costs is therefore the best approach; that’s where photomask repair comes in.
Repair converts scrap to product, directly enhancing the bottom line. Despite this, repair capability is often purchased 1-2 years (or more) after the rest of the next-generation equipment line, with mask shops accepting lower yields as a result. But, given the predictability of the ramp and high product costs, does this make sense?
RAVE built a model to answer that question. The model shows that by improving repair yield from 30% to just 60% on a high-end product, a company with a10% market exceeds a 40% rate of return for Year 1 (5-year straight line depreciation) and payback in less than two years on a $7.0M repair tool. Opportunity costs, increased capacity, and having improved repair processes in place when the ramp accelerates strengthen this argument and make it reasonable for market shares as low as 4%.
Many mask shops, however, indicate they do not want to invest in mask repair; they prefer to spend money developing defect-free processes. Over 60% of masks produced today require some form of repair. So, even if mask shops invest large sums of money in defect-free manufacturing, it will take several years to make significant inroads. Also, defects have consistently accounted for ~50% of rejects each year since industry Pareto charts were first published, despite existing defect reduction efforts.
Worse, both defect densities and the relative force of adhesion of particles on a surface increase exponentially as particle size decreases. So unless you can alter the laws of physics, repair will become an increasingly important element in a profitable mask shop.
Repair has proven to be the fastest, lowest risk method to reduce mask costs. Recent publications call out improved repair capability as a main factor keeping mask costs well below the alarmist predictions of the not-too-distant past. Photomask and semiconductor suppliers would thus benefit from purchase of improved repair tools, and close partnerships with a supplier fully dedicated to the mask repair business.
Acknowledgment
The author thanks David Brinkley for valuable discussions in creating the model and assistance with edits. For the unabridged version of this opinion column, go to www.solid-state.com/featurearticles.
Contact Roy White, director of operations, at RAVE LLC, Suite 7, 430 South Congress Ave., Delray Beach, FL 33445 USA; ph 561/330-0411, ext. 287, e-mail [email protected].