News roundup: Asian financial woes affect 300-mm plans
05/01/1998
News roundup: Asian financial woes affect 300-mm plans
Peter N. Dunn, Senior Editor
The Asian financial crisis is evolving on several fronts. The advent of 300-mm technology is proceeding more slowly than had been anticipated earlier in the year, and analysts from a variety of organizations expect semiconductor capital spending plans in Japan and South Korea to come under heavy pressure. Japanese firms are expected to cut about 10% from their budgets; Korea`s chip companies are seen slashing their 1998 spending by 50-60% off 1997 levels. As a result, there is a possibility that the world market for semiconductor equipment could contract during the new year, despite generally strong spending in the US, Europe, and Taiwan.
Equipment evaluation slows
Evaluations at the Selete consortium of Japanese companies are falling behind schedule, and consortium members are disclosing somewhat less aggressive wafer fab construction plans.
Selete`s executive VP and general manager Hiroyoshi Komiya said, "Evaluation of 300-mm equipment is behind schedule, so the top runners of the 300-mm manufacturing race will have to select some equipment at their own risk. This is because equipment suppliers` development and offering of equipment to Selete has been delayed. Selete hopes equipment suppliers will develop the 300-mm equipment as scheduled and install it in Selete as initially promised."
Last November, Selete finished evaluation of one piece of equipment (an oxide etching system, reportedly from Tokyo Electron Ltd.), and returned it to the supplier. The consortium is now evaluating 23 pieces of equipment-two resist coater/developers, two ashers, an oxide etcher, a gate polycide etcher, a metal etcher, three oxidation furnaces, two LPCVD units, two dielectric PECVD units, two APCVD/spin-on glass coaters, a sputtering system, four wet clean tools, and two wafer transfer systems.
Selete was planning to evaluate a cumulative total of 41 units as of the end of last fiscal year, 68 units by the end of calendar 1998, and 77 units in the middle of 1999. In a follow-up to an earlier survey, Selete asked its 11 member companies (the Top Ten Japanese firms plus Samsung in South Korea) about their 300-mm wafer fab plans as of November 1997. The general time frame for expected 300-mm volume production has shifted slightly later (Table 1), and two companies moved their planned pilot line equipment installation into 1999 from 1998. The results indicate a somewhat more conservative adoption schedule, although two firms expect 300-mm equipment by the third quarter of 1998.
 |
Many Japanese chipmakers and equipment suppliers do not see demand for 300-mm equipment rising until after FY99, according to a recent equipment sales survey by the Semiconductor Equipment Association of Japan (SEAJ), and the finding correlates with chipmakers` plans to continue aggressive efforts to shrink device features as a short-term alternative to early 300-mm adoption. The SEAJ said these firms also see an end to the region`s DRAM recession on the horizon, perhaps as early as this fiscal year.
It should come as no surprise, then, that the SEAJ survey forecasts equipment purchases by Japanese chipmakers dipping slightly in FY97 and increasing in this fiscal year. Equipment sales within Japan will drop 1.7% in FY97 and, when imports are included, the figure falls 1.9% from FY96, to 750.8 billion yen ($5.65 billion), the SEAJ said.
This is the first time in five years the yen-based Japanese market sales figure has decreased, said the SEAJ, and the dip is indicative of the moves being made by many of Japan`s leading chipmakers to make significant cuts to their equipment and fab spending plans.
Chipmakers feel the pinch
Several Japanese chip companies announced postponements and cancellations of new fab projects, and some are cutting capital spending.
NEC will postpone its 300-mm pilot lines, and stretch out for at least a year the establishment of its trial facility at Sagamihara, Kanagawa Prefecture, as it shifts its development focus to geometry shrinks rather than wafer size increases. NEC is also planning cuts this fiscal year.
Fujitsu recently disclosed that it would delay by a year or more the advent of its 300-mm line. According to the Asahi Shimbun newspaper, the company is considering a reduction in semiconductor plant and equipment investment by 40% in FY97. Recent estimates from VLSI Research, San Jose, CA, had pegged Fujitsu as the capital spending leader in Japan, investing about $1.7 billion in calendar 1996, an estimated $2.2 billion in calendar 1997, and a forecast $2.6 billion in calendar 1998.
Toshiba announced that it will postpone construction of its 150 billion yen fab in Oita, Kyushu, until 2000, and is freezing plans for a 130 billion yen ($979 million) new fab at its subsidiary Iwate Toshiba Electronics. According to reports in the Nihon Keizai Shimbun newspaper, the company is also eyeing a fiscal 1999 capital spending cut of up to 40%. Meanwhile, Hitachi is seeing a one-year delay on construction of its 300-mm fab in Hitachinaka city in Ibaraki Prefecture.
Worldwide repercussions
The Asian financial turmoil, as well as DRAM overcapacity, contribute to chipmakers` decision to substantially back off on their plans for 300-mm adoption in 1998. Last year, the International 300mm Initiative (I300I) faced a slower-than-hoped pace of equipment demonstrations, but an increase of demonstrations is seen in 1998. Selete, I300I`s counterpart in Japan, has had difficulty getting evaluation units from toolmakers, causing a strain of resources at I300I. "There are a lot more suppliers knocking on our door than we have resources to do demos for," noted I300I VP Frank Robertson.
Equipment makers are balancing the ever-changing market picture with the drive to get tools out and evaluated, and in some cases have slowed shipment schedules. "Certainly, we were not able to do as many demos in 1997 as we wanted. We did all that could be done," said Robertson. By the end of the year, 90% of a full 300-mm fab equipment set will have been evaluated, with the remaining tools available and demonstrated by early 1999.
George Lee, director of SEMI`s 300mm Initiative, expected in February to see only one or two pilot lines set up this year, down from a prediction of five earlier in the year. He expects just seven pilot lines in 1999, instead of the 13 forecast in January, and broad full-flow manufacturing coming online in 2001 instead of 2000. Only the government-backed Siemens-Motorola line in Dresden, Germany, is a "solid go," according to Lee. "A lot will depend on the Asian financial crisis. The financial stability of Korean manufacturers will have an impact on orders."
 |
Fab workers hold a conference at Taiwan Semiconductor Manufacturing Co. TSMC`s Rick Tsai says the company does not expect to feel a major impact from the current Asian finacial crisis. (Photo courtesy of TSMC)
Robert Abbe, president of metrology supplier ADE Corp., Westwood, MA, foresees an even later time frame. "Six months ago, the top-tier wafer suppliers were looking at having their pilot lines in the fall of 1998, with the second tier waiting until the spring of 1999. But the device companies are insisting that (wafer makers) supply wafers from a pilot line, not a lab." Abbe`s current prediction is that 300-mm wafer production will see a serious ramp in 2003 or 2004, rather than the 2001-02 time frame that had been expected when chipmakers were taking a more aggressive stance.
The uncertainty over when 300-mm wafer fabs will appear has created challenges for ADE. "The wafer makers, Komatsu, Mitsubishi, Sumitomo, SEH-they`re all in their budget processes now," Abbe says. "We know what the process engineers have put in for, but at a policy level we won`t know what they`re actually going to allocate until (the start of the fiscal year)."
Despite problems, some are confident
The Asian financial crisis apparently isn`t hindering some regional companies` plans. Taiwan Semiconductor Manufacturing Co. (TSMC) will continue its aggressive capital spending in coming years. According to the company`s executive VP for operations Rick Tsai, TSMC does not expect to see a major impact from the current Asian financial crisis because its customer base is centered in the US and Europe.
Tsai said that TSMC "intends to be one of the earlier companies to have a 300-mm fab." The company is reportedly scheduled to break ground on its first 300-mm wafer fab in 2Q98, following in line with plans the company announced last year to build a manufacturing center in the Tainan Science-based Industrial Park. The 300-mm fab has a price tag of more than $2 billion, according to reports by Taiwan`s Central News Agency.
 |
Komatsu will spend about 25 billion yen ($189 million) to build its proposed Nagasaki facility (shown above) for volume production of 300-mm wafers. (Photo courtesy of Komatsu Electronic Metals Co. Ltd.)
In Japan, Komatsu Electronic Metals Co., Hiratsuka, is ramping 300-mm wafer production at its Nagasaki plant, Ohmura, Nagasaki Prefecture, and will spend about 25 billion yen ($189 million) to build a new facility there for volume production of the wafers.
Earlier this year, Komatsu began pilot production of 300-mm wafers at its Miyazaki Plant. However, because space is limited at Miyazaki, the Nagasaki plant will house full production. Komatsu expects final capacity of 100,000 wafers/month at Nagasaki; the current R&D line there will increase production from 3000 wafers/month to 20,000 wafers/month by the first half of 1999. Komatsu expects its volume production line operational in the second half of 1999, with an initial production capacity of several tens of thousands of wafers/month.
Komatsu`s total investment in the 300-mm development is in the range of 35 billion to 45 billion yen ($265 million to $341 million). The company said the Nagasaki facility will have full process capabilities, including single crystal growth, cutting, polishing, and epi growth.
In Kanagawa, Selete`s research consortium has installed a 300-mm RTP system from Applied Materials. The tool is based on Applied`s 200-mm RTP XE Centura. Yoichi Akasaka, president of Applied Materials Japan, said Selete represents most of the firm`s Japanese customers, and the work is expected to help them guide their technology and purchasing decisions for 300-mm equipment.
What will the future hold?
Industry forecasters offer varying views about the future. Texas Instruments chief economist Vladi Catto, a generally bullish observer, said 1998 "may turn out to be a decent year" but with many risks. Among these, he said, is the possibility of a financial system collapse in Japan. In the event of a continued devaluation of the yen, and government mishandling of money policy, the US and Western Europe could be pulled into trade wars and broad downturns. Catto put a 25% probability on the US being pulled into recession by Japan.
One of the factors destabilizing Japan`s finances is the debt crisis in South Korea. Catto and other observers agreed that the nation, and Asia in general, are unlikely to be derailed in the long term, but Catto commented, "Companies like Samsung, Hyundai, and LG will find it extremely difficult to borrow at any price during 1998 and possibly 1999." Sales executives said Korean companies slashed orders, and that the Big Three chipmakers requested free or low-cost R&D tooling.
The SEAJ offers a glimmer of hope for Japan. The trade association forecasts an average 10% annual growth in Japan`s chip equipment sector through FY00, and overall FY97 should have been a successful year for Japan`s chipmakers (Table 2). Sales of Japan-made semiconductor equipment should have reached a record 1.26 trillion yen ($9.49 billion) in FY97, up 5.4% from FY96, with much of that growth a result of a 12.4% rise year-over-year in exports, particularly to the US and Taiwan.
 |
The SEAJ forecasts that sales will increase 7.8% in this fiscal year and 12.2% in FY99. After 1999, the SEAJ said domestic demand for 300-mm equipment will contribute to the forecast sales increases, and by 2000 sees tool sales in the Japan market totaling 1.01 trillion yen.
Including both exports and domestic sales, Japan`s equipment sales are expected to rise 7.8% to 1.36 trillion yen ($10.2 billion) in this fiscal year and increase to 1.74 trillion yen ($13.1 billion) by FY00, according to SEAJ figures.