BUSINESS TRENDS
09/01/2002
N.A. tool orders, billings continue upward march
North American-based manufacturers of semiconductor equipment posted $1.16 billion in orders in June 2002 and a book-to-bill ratio of 1.28, according to Semiconductor Equipment and Materials International (Semi).
Worldwide billings in June totaled $906 million, 4% above the revised May 2002 level of $869.6 million and 33% below the June 2001 billings level of $1.36 billion.
Bookings in June were 5% above the revised May 2002 level of $1.11 billion and 59% above the $731 million in orders posted in June 2001.
Order strength was primarily driven by frontend wafer fab equipment, while backend assembly, package, and test equipment orders declined sequentially.
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"While there are concerns about the strength of improvements this year, seven months of sequential bookings growth and our recent industry consensus survey support expectations for a market rebound in 2003 and 2004," said Semi President and CEO Stanley Myers.
In other semiconductor industry business news, global chip sales dropped 0.2% to $11.35 billion in June, according to the Semiconductor Industry Association, (SIA) San Jose, CA. Sales in May totaled $11.37 billion.
On a quarter-to-quarter basis, however, the June quarter was up 5.8% from the March quarter.
Frontend capacity utilization also increased, to 87.7% in June, up from 83% in May, according to VLSI Research Inc. That number is projected to grow to 88.7% in July, 89.7% in August, and 95.1% in September, according to VLSI.
IBM, ILS team for e-diag solutions
IBM, White Plains, NY, and ILS Technology, Boca Raton, FL, have begun a strategic alliance to provide e-diagnostics solutions for wafer fabs. The two companies will jointly market and sell ILS' e-Centre and ServiceNet, both part of ILS's e-diagnostics capabilities that are being put into several IBM fabs, including its new 300mm wafer fab in East Fishkill, NY, which is now ramping to production.
e-Centre, built on IBM's DB2, Websphere, and server technologies, enables the on-line, real-time sharing of fab equipment data with the OEM of the equipment; it enables tool suppliers and chipmakers to rapidly deploy effective e-diagnostics solutions based on an open architecture, saving time and money otherwise spent building custom, technically challenged solutions.
"The industry has been waiting for a way to collaborate across the globe in order for [semiconductor manufacturing] equipment companies and IC manufacturers to get a consistent return on [equipment] investment," said Rich Mason, president of ILS. "This is the year that early adopters make their move."
JMAR Technologies Inc. has received a contract for $5.3 million from the US Army Robert Morris Acquisition Center in Adelphi, MD, to finance the completion of the first of its integrated proprietary point-source laser plasma lithography systems.
Brooks-PRI Automation Inc., Chelmsford, MA, has completed the acquisition of HERMOS Informatik GmbH based in Mistelgau, Germany, from its parent, the HERMOS Group.
Cree Inc., Durham, NC, has been awarded government contracts totaling $26.5 million, if fully funded, over a three-year period from the Office of Naval Research and Air Force Research Laboratories for silicon carbide microwave monolithic IC process development.
Microbar Inc., Sunnyvale, CA, and ChemFlow Systems Inc., San Jose, CA, have formed a strategic alliance to develop, integrate, and market chemical and CMP slurry systems using gravity/pressure dispensers as well as mix-and-blend technologies.
Chipmaker STMicroelectronics, Geneva, Switzerland, and Taiwanese chip foundry UMC, Taipei, have extended their manufacturing relationship by signing a multiyear manufacturing agreement, including cooperation on manufacturing science.
Epitaxial equipment supplier AIXTRON AG, Aachen, Germany, has signed a cooperative agreement with the department of electronics engineering at China-based Tsinghua University to increase technology transfer between the partners.
Korea-based Dongbu Group has acquired a 9.7% stake in Anam Semiconductor, a nonmemory chip foundry, in order to form a strategic alliance between the two companies.
Microchip Technology Inc., Chandler, AZ, has signed an agreement to acquire a manufacturing complex in Gresham, OR, from Fujitsu Microelectronics Inc. for $183.5 million in cash. The facility is capable of producing process technologies down to 0.13æm.
Axcelis Technologies Inc., Beverly, MA, has signed an agreement in principle to acquire the semiconductor equipment division of Tritek International, one of China's capital equipment distribution and support firms.
Special Semicon West Show Report:Searching for hope
Semicon West 2002 wasn't a typical show for several reasons. Not only was the schedule discombobulated, with the backend of the show starting one week and the frontend following the next, but there was also a cautious sense of hopefulness permeating the booths, presentations, and parties.
Stuck in the middle of one of the worst downturns in recent memory, industry members were keeping a lookout for any positive signs at all - anything to bolster previous expectations that the upswing may come late this year.
Instead, however, West opened in San Jose to tempered, conservative remarks by top company executives and Semiconductor Equipment and Materials International (Semi) leadership, with an agreement that while the recovery was underway, it would be a slow, moderate one.
 One small part of the San Francisco show floor; exhibit space at Semicon West was down from last year. |
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At a press conference kicking off the backend show, Ultratech Stepper CEO Art Zafiropoulo, the new chairman of Semi's board of directors, noted that while a gradual recovery has begun, he didn't expect a sharp recovery until the end of 2003. Alex Oscilowski, president of Kulicke & Soffa, said that this recovery will be reminiscent of the gradual, bumpy recoveries of the late 1980s, and that tech buys will remain key for some time. "We don't see a need for capacity until 2003," he reported.
Regardless, both ends of the show had interesting developments. New packaging techniques and trends abounded in San Jose, with bumping and ball-bonding getting a lot of attention, while in San Francisco the industry got to mull Veeco's recently announced acquisition of FEI, discuss the limits of optical lithography, and continue to marvel at the promise of Asia - China in particular.
The middle days of each show saw healthy traffic circulating among the booths, and many companies reported that actual sales leads were being generated. At least one chipmaker - Tower Semi conductor - was at the show looking to buy equipment. Other days, however, the aisles were depressingly vacant - even for an industry that came to the show with fairly low expectations. Roughly 60,000 attendees pre-registered for both halves of the show, compared to about 45,000 last year. While exhibit space was down from last year (375,917 ft.2 compared to 365,433 ft.2 this year), the number of exhibitors was up, from 1467 last year to 1522 this year.
An analytical view from the analysts
How tough is an analyst's job in a severe downturn? Not very, as MKS Instruments' Paul Blackborow joked at the beginning of his company's analyst meeting, "It's a good year for forecasts. It's easy to predict zero."
Several groups, from Semi's in-house forecasters to Gartner Dataquest and Semico Research, held sessions over the course of the show to present their thoughts on the recovery - when, if, and how big.
Semi noted overall equipment orders are strongly up for 2Q. And market researchers still think fundamental end-market semiconductor demand looks reasonably healthy.
For the short-run, the end-market demand for semiconductors continues to look reasonably healthy. "We think there's more blue sky than storm ahead," predicted Jim Feldhan, president of Semico Research. "There's the potential for 12% growth this year, with a stronger second half." VLSI Research is still projecting an even more optimistic 17% growth in the chip market in 2002.
Feldhan noted at the market briefing that forecasters still expected respectable 2-3% growth in gross domestic product this year, as housing and auto sales remain strong. Semico's own index of leading indicators, predicting chip sales six to eight months in the future, is pointing strongly up. The indicator jumped in March, and remained high in April and May, suggesting strong growth in chip sales in late 2002 to 2003. The indicator is driven by monthly chip sales, current inventory levels, and Semico's end market data.
While there's no one big application driving the market, there are lots of little things, from automotive collision prevention systems to GPS units to wireless networks. Also contributing to chip market growth is the depletion of inventories at last. "We think the inventory problem is really behind us," says Feldhan. "By now most chips left in inventory were designed back in 1998 to 1999. Anything left over will be three years old. So the inventory problem is over."
"Chip inventories are depleted," concurs Risto Puhakka, VLSI VP of operations, "so any order goes directly to production."
Then there's the growing distribution system to fill. "In Phoenix you can buy a cell phone at the local convenience store," notes Feldhan. "If you're going to come out with a new product next year, you have to start getting it into the distribution pipeline now."
Dataquest, however, feels that the demand recovery will be slow and lumbering until corporate spending returns. The latter is not anticipated to happen in earnest until 4Q02. "Corporate spending budgets are set on an annual basis and it takes a miracle to change them to the upside," says chief analyst Klaus Rinnen. "Today's environment is clearly not conducive for such a miracle. Furthermore, it would be rather understandable if corporations are actually under-spending their budgets, given the uncertainty in the market."
Asian markets remain the bright spot
While the recovery may not be quite as soon as expected for the industry as a whole, Asian markets continue to see healthy growth. The Semiconductor Industry Association (SIA) projects the Asian semiconductor market will be up 27%, to $51 billion, in 2002. Semi figures equipment shipments to China will be up 82%, to $2.4 billion this year.
Though backing off on spending a bit recently, Taiwan companies continue to ramp 300mm more aggressively than most of the rest of the world. And even in the dismal Japanese market, folks are starting to talk about changes that may revitalize the sector.
"In the US, WorldCom overshadows everything, but there are bright spots elsewhere in the world," said George C. T. Lin, president of Semi Asia Pacific, at Solid State Technology's Asian Market Outlook.
So far this year, companies in the Asia Pacific region, outside of Japan, have accounted for 36% of semiconductor production equipment purchases, up from 30% for all of 2001. That still lags the region's 40% market share in 2000, though, when Taiwan added major capacity.
China: A sign of hope
Though it's still not clear when anyone will make money, it is increasingly clear that China is actually starting to become a significant market for equipment with startling speed. If the equipment market in China really reaches $2.4 billion this year as Semi projects, it will be bigger than the Korean market last year - and as big as the US market for the first five months of this year. Lin expects a major IDM to announce a new China fab shortly.
"The situation is really moving very fast," said Rong Ling Chen, deputy GM of Applied Materials China. He noted China now has 58 major packaging and testing companies, 250 design houses, and 400,000 graduate students, a big percentage of them working on advanced degrees in engineering. Just a year or two ago, the typical manager in the Chinese semiconductor industry was a bureaucrat assigned by the government, and the entire sector employed perhaps 125 overseas managers and technical experts in total. Now there are 700 managers and engineers from Taiwan, the US, and Europe working at SMIC, 200 at Grace, 10 at ASMC, and whole teams to come from UMC and TSMC.
Chen said 20 fabs, or $40 billion in investment, are planned in the Shanghai area over the next two to three years, another 5-10 in Beijing, and a couple near Hong Kong - and then development will move inland along the Yangtze River to other areas of China. The Shanghai government, with its "if we build it they will come" philosophy, plans to invest $9 billion in the IC industry, including $1 billion in the Shanghai Microelectronics Park, targeting 10-15 production lines in five years, and 30 200mm lines by 2015.
Applied Materials now employs 250 and did $300 million in business in China in 2001. Chen showed a graph forecasting Applied's revenues from China would double in 2002, and double again by 2004.
Another executive with long experience in Asia told Solid State Technology he thought the Chinese fabs would quickly grow big, but partly for the wrong reason - with the government's huge push for developing the industry, companies weren't so concerned about making a profit, potentially changing the economics of the whole industry for the worse.
"So far," said FSI International CEO Donald Mitchell, "They're only buying used equipment and asking for big discounts. No one is making margins there yet, though that will all change in five years."
But, if the industry wants a sign of hope, it seems that China remains it. Craig Barrett, Intel's president and CEO, predicted earlier this year (Intel China's e-business forum in Shanghai) that China is expected to become the third largest online market in the Asia Pacific region by 2003.
He expects this growth to fuel new services from communications to commerce. But to take advantage of the potential upside, companies must be in China.
 China remains a sign of hope for the industry. |
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Japan: Solutions moving slow
News from Japan continued in a grim vein, but at least people were talking about solutions for recovery. "In a word, the situation is pitiful," said Nikkei Microdevices editor-in-chief Yosuke Mochizuki. Japan's five major chipmakers are investing a combined total of only about $2.1 billion this year. "None of them are investing enough to build a fab," noted Mochizuki. "Most are not even investing enough to make changes to a fab."
"But I still believe Japan will start recovering," he added. "It's been doing poorly because of lack of management, and now new frameworks are being created." Mochizuki expects some of Japan's electronics conglomerates to get out of the semiconductor business, and restructure their chip units into new companies specializing in particular markets, like RF chips or nonvolatile memory, or in particular functions, such as foundry production or design.
"I think the five major chip companies will form a foundry within a year," said Mochizuki. Japan's newest ASPLA project, sometimes referred to as the all-Japan foundry, aims to develop and verify process technology, which Japanese chipmakers will then copy exactly at their own production lines, or on new volume production lines they will build in China.
Tool orders in Japan have recently been improving month-on-month, but from dismally low levels, and largely on buying by the consumer electronics makers, and by the national consortia. The CEO of one major toolmaker said his only Japanese customers buying were Sony and Matsushita, and he in fact expected these two consumer giants, and maybe one other of the chipmakers, to be the only three Japanese semiconductor makers to survive.
Taiwan: Building for recovery
While much of the rest of the world debates over whether the recent uptick was the start of recovery or merely a hiccup, Taiwan is clearly building for recovery, despite the recently announced cuts in capex. Semi's Lin noted that TSMC and UMC plan to hire some 6500 new employees this year.
TSMC is sold out of 0.13æm capacity, and UMC is spending 33% of its 2002 budget on 0.13?m. TSMC was running at 80% capacity in May, UMC at 70%, and, said Lin, "That picked up five to eight points in June."
He noted that Asia is taking the lead in 300mm production. Pushed by the government's decision that companies must have 300mm in mass production in Taiwan before they are permitted to invest in 200mm plants in China, Lin said, "Taiwan has five to six 300mm fabs ramping, more than all other places combined." UMC plans to triple output of its Tainan 300mm fab by year's end; TSMC is ramping its Hsinchu and Tainan lines; and Chartered is installing its 300mm tools in Fab 7 in 4Q for pilot production by 3Q03.
Tool sales in Taiwan were $1.1 billion in the first five months of 2002, close to half the $2.26 billion sold in the US. "The Taiwan market may vie with Japan again for number two this year," said Elizabeth Schumann, Semi's senior director, marketing and research.
Not to be outdone by the Chinese government efforts to build its semiconductor industry, Taiwan officials were touting their country's inducements at Semicon West as well. Taiwan aims to expand its $22 billion (in 2000) IC industry to $45 billion by 2006, and its $3.2 billion LCD industry to $39 billion by then, said Yung-Hsiang Chen, director of the commercial division of the Taipei Economic and Culture Office in Los Angeles, in a presentation. And the goal is that these sectors should be "domestically self-sufficient."
San Jose: Bumps, balls, and wire bonding
New developments in bump packaging for litho, reflow, and bonding were among a wide array of new technology bowing at the Semicon West backend exhibition in San Jose.
A third player entered the wafer bumping lithography field at West, as Tamarack Scientific Co. Inc., Corona, CA, offered a scanning projection litho system for wafer bump imaging of 300mm wafers. Already serving this growing market is Ultratech Stepper, with steppers, and Suss Microtech, with proximity aligners.
Higher throughput for high-volume chips, such as DRAMS and microprocessors, is the advantage offered by the model 336 Scanner, according to Dan Constantinide, director of marketing for Tamarack. Two of the scanning projection systems are already under beta test at a large foundry, he said. It offers full-field, 14-in.2 masks, like an aligner, but the mask is separated from the wafer by about 200mm, rather than being in proximity. The scanner has dual FOUP load parts with a wafer-handling robot and storage for up to 15 masks. It has a mercury arc lamp and a broadband projection lens, with selective filters that can match the wavelength to a specific resist. A catadioptric, large DOF lens can image patterns on this resist and solder or gold bump masks on thick resists.
The scanner throughput of 60 wph compares to 40-50 wph for both steppers and aligners. The masks are more costly than for a stepper, which would be more suitable for multiproject wafers, according to Constantinide.
Flux-free wafer-bump reflow within a high-purity hydrogen atmosphere (up to 95%) was introduced by BTU International, N. Billerica, MA, at West. The TCAS furnace handles either 200- or 300mm wafers with maximum temperature of 800°C and temperature uniformity of ñ2°C across belts up to 36 in. wide.
Hot gas curtains define a tightly controlled reflow zone, according to Fred Dimock, senior process engineer for BTU. Gas under pressure is fed up and down through small orifices in upper and lower tubes to create the gas curtains, he explained. The reflow zone must be carefully purged using hydrogen to eliminate any potential contaminants, particularly oxygen, before doing reflow of flux-free bumps. For gallium arsenide (GaAs) and indium phosphide (InP) chips used for RF and optolelectronics applications, gold bumps are used on wafers or chips, rather than the golden bumps that contact aluminum pads on silicon chips.
The current leading edge of wire bonding i&#aelig; for 45æm pad pitch at the 130nm technology node. Here, advanced wire bonders can still provide formation and control of small gold balls and superior loop-shape capability. But at Semicon West, Kulicke & Soffa and others were already exhibiting innovative process solutions beyond this node. For example, shrinking pad pitch dictates use of smaller wire diameter and an increased vulnerability to bonding wires being "swept" away during subsequent modeling operations. The exhibited K&S solution is "no sweep" - the injection of a special polymer between first and second bonds while the IC is still on the wire bonder. Belani says, "From our view, wire bonding technology is clearly extendable to the 25æm pad pitch and we have concepts on board, which are two years out, that include the ability to use 12æm, wire bonding at 18 wires/second."
The application of wire bonding even extends into the bumping side of technology. Palomar Technologies, Vista, CA, was showing its Gold Connection, an integrated solution that produces bumps from one-mil gold wire. "Our method creates a planarized, tailless bump - using a special tool motion - in a consistent, repeatable, single-step process without a separate coining step and with up to 5æm placement accuracy," says Michael Fabel, Palomar's process development supervisor. The Palomar bumping technology is particularly applicable to optoelectronics and high-frequency wireless packaging applications.
A few Semicon superlatives
Semicon West always has its unique features and moments. Below is an unsystematic list of some of the most outrageous:
Best Toys: It's a toss-up between ST Assembly Test Services' light-up pens, Corzan Industrial System's red-LED-flashing bouncy balls, Advanced Energy's handy messenger bags, Mykrolis' PDAs, and Entegris' MP3 players. (The last two weren't really giveaways; they were making regular drawings to pick winners of the electronic must-haves.)
Most Underutilized Essential Facility: Axcelis Corp. sponsored a free oxygen bar at its booth. Ninety-five percent pure oxygen was bubbled through one of eight aroma-producing liquids and delivered to patrons through disposable nose-pieces. At a normal Semicon West, participants generally need oxygen late in the day. This year, the whole industry seemed to need extra oxygen, but few turned up at the Axcelis booth to inhale, preferring to rely on the less concentrated atmosphere inside the Moscone Center.
Most Amazing Sight: Ken Schroeder, president and CEO of KLA-Tencor, gave back $409,000 to Bob Helms of International Sematech at the KLA Yield Management Seminar. This check was the first royalty payment to Sematech under a contract that funded the R&D on the 5xx (Terastar) series of reticle inspection tools at a time when the industry did not seem to need such tools. The DUV-based 5XX tools are not yet being used in production, according to one knowledgeable source, but KLA-Tencor decided to pay royalties anyway.
Biggest Understatement: "Things that we have trouble imagining working may not work." John Bruning of Tropel/Corning discussing next-generation lithographies.
Best Giveaway: Free Guinness stout on draught (along with Sam Adams Boston Lager in bottles) at the XSILENABLE booth. The two-year-old Irish company was attracting attention to its laser wafer-dicing and micromachining system. Using a 355nm pulsed laser, the XISE 200 can automatically slice a wafer into chips of different size or cut vias for 3-D packaging. The operators, presumably, can go for a pint!
Most Elegant Performance: For the second year, Nikon sponsored acrobatic performances by a limber young lady hanging above the booth on a cloth curtain. This year, she had a male partner. He stayed on the ground, doing lifts and keeping the curtain straight.
Least Elegant Display:Yoko Ono's videotape of 365 naked British bottoms shown on the fourth floor of the S.F. MOMA during the Loomis Group Reception. The images perhaps symbolized the hope that our industry is indeed at a bottom and will begin to turn up.
 Ken Schroeder handing the royalty check to Bob Helms |
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300mm tool ramp on track, says Applied's Maydan
by Dan Maydan
While some toolmakers have expressed concern about whether the transition from 200 to 300mm wafer fabs is going fast enough to cover high development costs, the changeover to 300mm tool orders at Applied Materials is tracking right along with history, said its president, Dan Maydan, at Semicon West.
"We compared our transition to 200mm wafer processing equipment to the present 300mm migration, and they match almost exactly," Maydan commented. In the last quarter, he said, about 25-35% of the tools shipped were 300mm, but orders for new tools were 35-50% for 300mm. At the same time, he pointed out that there are major differences with this wafer size transition.
"This is the first time wafer fab equipment comes with a full solution," he said, enabling new fabs to start up more quickly. But he pointed out that there are some tough problems. The beginning of the shift to 300mm was delayed in the 1990s, so toolmakers who had developed tools for insertion at 180nm had to redesign them for the 130nm generation instead, he said. That's one reason why Applied's R&D investment has doubled since 1998, according to Maydan, reaching $1.2 billion in 2001 and maintaining about the same level in 2002. Because of all the work on 130nm, he believes the transition to 90nm will be much smoother.
The technology is becoming much more complex for this migration, with copper and low-k dielectrics and eventually high-k materials for the gate oxide and other new materials for the gate stack at the 65nm node. New processes like CMP are also involved, which is very important with more layers of interconnect that must be extremely flat because of shrinking depth-of-focus latitude in lithography. He feels that while tools have become much more complex, improved discrete technologies are coming along at the same rate as in previous generations. But the problem now is integrating a set of tools into 250 or more process steps and orchestrating the entire ensemble across the entire fab line. Much less process variation is needed, and the interaction of variations from one step to the next must be considered to avoid cumulative errors, with closed-loop adjustments made at each step via both feedback and feed-forward control. A tool company like Applied must continue to develop new processing technologies, Maydan said, but it also must be much more concerned with the management of fab lines using software to make systems smart.
Applied's approach is to develop process modules, a small number of tools that are not actually connected, but are linked by software and integrated metrology. In this way, feedback adjustments can be made if the distribution across a run begins to drift, and any variations can be compensated for at the next step through feedforward control. The CMP system at the Semicon West booth, for example, was being monitored via a link to the plant in Santa Clara to reduce variation across a run, he explained.
The consumerization of the chip industry creates new challenges for toolmakers, Maydan said. Time to market and effective utilization of capital have become key criteria. Deliveries must be faster; fab lines must get up to yield faster; and uptime must be better, requiring more effective troubleshooting and rapid repairs.
Low cost is also critical for consumer ICs, even though high performance is demanded by buyers. How can that be achieved when prices for more complex tools are escalating? Maydan pointed out that the productivity achieved for new 300mm tools makes the unit costs for devices like 256M DRAMs and advanced microprocessors a fraction of what they used to be. "A leading-edge 300mm logic fab in 2003 will be able to produce 140 times more transistors per week," he said.
Still, with the price of a toolset for a major new fab reaching about $2 billion, only a few large IDMs and foundries can afford to build new fabs. But many small companies with innovative designs still can use foundries, he pointed out.
More effective information technology systems are having a tremendous impact on productivity in the overall economy, Maydan believes. He cited the rate of productivity increase in the US rising from 1.5% in the early '90s to 2.4%/year by the late '90s. He attributes a large part of this productivity improvement to semiconductor-based technology.