MARKET WATCH: Chemicals, gases, and handling for IC manufacturing
12/01/1999
Pieter "Pete" Burggraaf, Senior Technical Editor
While the chemicals industry stuffs nearly all molecules into chemicals-market metrics, typically lumping together metals, gases, liquids, etc., the semiconductor industry has traditionally distinguished between gases, wet chemicals, and related markets. It's likely that you will continue to see this classic breakout on market-share charts, but increasingly gas, chemical, and other suppliers are forging mergers, alliances, and acquisitions that target "one-stop shopping" to address the broad scope of "molecule-supply" for IC manufacturers. "We're seeing a kind of 'consolidation and supply scope expansion' in gas-and-chemicals supply to semiconductor manufacturing," says Adrienne Pierce, global marketing director at BOC Edwards.
Gas and chemicals markets
Data from the September 1999 EMCON conference by Rose Associates clearly reveal the health of the semiconductor industry's gas market and the struggle of its chemicals market. Air Products and Chemicals, Air Liquide, and BOC Gases each captured roughly a quarter of $1660 million in 1998 revenues from bulk and specialty wafer fab gases (see figure, part a). These leaders along with Nippon Sanso and Praxair represent 95% of this market. The regional split includes $530 million spent in Japan, $581 million in the Americas, $317 million in Asia Pacific, $230 million in Europe, and $3 million in the ROW. Revenues in 1998 from bulk and specialty gases increased from $1621 million in 1997 and are forecast to grow to $1735 million in 1999.
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FIGURE. 1998 worldwide share — specifically for semiconductor manufacturing by company (i.e., not including microelectronics manufacturing such as FPDs, disk drives, etc.) — of a) bulk and specialty gas revenues (not including ~$220 million from gases used at Asian assembly and packaging plants); and b) process chemicals. (Source: Rose Assoiciates)
Kanto Chemical and Ashland Specialty Chemical each captured roughly a quarter of the $664 million in 1998 revenues from wet chemicals used in semiconductor wafer fabrication (figure, part b). The other half of this market is owned in 10% or less shares by Wako Pure Chemicals, Arch Chemicals, Sumitomo Chemicals, and others. The regional split of this market includes $224 million spent in Japan, $227 million in the Americas, $104 million in Asia-Pacific, $97 million in Europe, and $12 million in the ROW. Revenues from wet chemicals declined from $703 million in 1997 to $664 million in 1998, and are forecast to resume modest growth in 1999 to $680 million.
Dan Rose, president of Rose Associates, tells Solid State Technology, "Next to photomask makers, gas suppliers are probably the most successful semiconductor materials business in terms of steady growth and profitability. Through the last couple of years of downturn they, along with photomask companies, have survived very nicely, while most everyone else was suffering through a collapse in sales and profits."
Rose's data indicate, however, that suppliers of wet chemicals to the semiconductor industry are "experiencing lower growth and less profitability." Rose says, "Among the fundamental differences here is that everyone in the chip industry would love to get rid of wet chemicals if they could figure out how."
Rose measures gases and wet chemicals used in semiconductor manufacturing relative to the industry's consumption of silicon. "Square inches of silicon is growing at an 8-10% compound annual growth rate, gases are 6-8%, and wet chemicals 3-4%. This reveals that there is quite a difference between the two and that they are two distinct markets relative to semiconductor manufacturing," he says.
Addressing the market
While markets are tracked separately, what is changing is the approach taken by major suppliers of molecules to the semiconductor industry. Most serious players are positioning themselves to provide chipmakers with one-stop shopping, to varying degrees (see table), of gases and wet chemicals and related equipment and services, the latter including facilities architectural and engineering (A&E) services. Alliances include Praxair with chemicals supplier Merck, Air Liquide in a cooperative agreement with Arch Chemicals, and Air Products forming a 50/50 joint venture — TRiMEGA — with piping and equipment supplier Kinetics Group, a wholly owned subsidiary of US Filter. Also, BOC Group has merged Edwards High Vacuum with its electronic gases division and bought CHEMFILL systems' manufacturing capability from FSI International to form BOC Edwards.
The Praxair-Merck partnership, for example, will offer Praxair's high-purity process gases, and Merck's wet chemicals, related equipment, and site services. The partnership also folds in R&D efforts to develop new products to meet future semiconductor manufacturing needs and Praxair's Point One fab integration that provides complete gas and chemical system design, construction, integration, process tool connection, and qualification services.
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Many combinations outlined in the table have evolved from in-place gas and chemical management contracts. For example, Air Products reportedly has 63 MEGASYS gas management sites worldwide, put in place over the past 10 years. According to Rose Associates' Electronic Materials Report, Praxair supervises 16 total gas management operations at semiconductor manufacturing sites. Chris Elsmore, global product manager at BOC Edwards, says, "Approximately 60% of semiconductor fabs in the US and Europe already outsource their gas and chemical management. Now this concept is expanding to 'total materials management [TMM]' and is gaining momentum in Taiwan and Singapore." Rose notes, however, that Japan is resisting this trend because IC makers there have traditionally employed staffs of chemists to service in-fab needs.
TMM contracts can cost $2-3 million annually depending on a fab's size and level of coverage, but the value added is significantly increased by providing high-quality, flexible service that changes with market conditions and the life of the fab.
Beneath the broader announcements outlined above, detailed analysis of the "consolidation and supply scope expansion" reveals how the traditional facilities supply chain to IC manufacturers is changing dramatically. For example, behind the Air Products-Kinetics joint venture are, over the past two years, Air Products' acquisition of Solkatronics (dopants), formation of electronics-chemicals and utility-systems businesses, and an increase in its shareholding position in Hangyang Technology in Korea (equipment manufacturing). Kinetics formed a water management division and acquired MEGA Systems (CMP slurry delivery), Insync (gas delivery), Unit Instruments (MFCs), and Spectra, JB Rodgers, and Faeth & Fullman (design and construction firms).
Interestingly, this trend to address TMM for semiconductor manufacturing is also being pursued by at least one traditional A&E firm. M+W Zander is broadening its project management and construction expertise to include ongoing fab services.
Rose notes that today's one-stop shopping approach is the current manifestation of evolving trends in gases and chemicals for semiconductor manufacturing that we have seen over the last 20 years. "Initially in-house process engineers managed chemicals and gases in each semiconductor fab. This evolved to two different supplier teams (gases and chemicals), which was obvious throughout the 1990s," says Rose. "But more recently, semiconductor manufacturers have come to realize that in addition to off-loading all elements of manufacturing that do not contribute to added value and profitability, there is greater simplification in combining gas and chemical support in one team," he says. Rose notes that perhaps the milestone event here was in 1997 when Texas Instruments unloaded its massive internal chemicals operation to its gas supplier Air Liquide, forming the latter's ALCHEM wet chemical business unit. Then, over the past few years, some suppliers have taken this concept to a higher level by also incorporating facilities design and installation capabilities for gases and chemicals in a fab, with efforts like Air Products' TRiMEGA joint venture and Praxair's Point One getting into the fab design business.
"The demand for gas management, our MEGASYS effort, goes back to 1988 when Dr. Ohmi's thoughts were in vogue," says Joe Stockunas, worldwide marketing manager at Air Products' Electronics Division. "Once this was an accepted approach, some of our customers requested that we manage their chemicals as well. So, at first, the demand was customer driven at the gas and chemical level." Stockunas notes that the market drivers today from IC manufacturers include reducing costs and a recognition that out sourcing leaves certain aspects of the operation up to the experts. In addition, there is improvement in capacity demand ratios, a simplification of the supply chain, single source accountability, and global consistency from multinational corporations.
"This new approach to facilities supply and management takes a substantial amount of capital off their plate," says Stockunas. "Our estimates show we would participate in about a third of the capital in the facilitation of a fab, not including the tools. The bottom line is that we feel we can provide, on a net present value basis, about a 25% advantage compared to having customers do this themselves."
(While not the same thing as TMM, another manifestation of one-stop molecule shopping is seen in recent announcements of "process integration" by traditional materials and equipment suppliers. For example, both Allied Signal and FSI International have opened process integration centers that address IC interconnect processing technology — spin-on dielectrics, thin metal film deposition, barrier layer technology, etc. Shipley has put together what it calls metallization and organic solutions for advanced ICs (MOSAIC), setting itself up as a single source for all interconnect materials required in electroplated copper deposition, chemical mechanical planarization, spin-on dielectric deposition, and related lithography chemistries, etchants, and cleaners. Also, ATMI is focused on providing integrated materials solutions for next-generation processes, adding in its unique environmental solutions. Shipley's marketing manager Mark Thrisk says, "This differs from chemical management since the materials choice is driven from process and technology needs. Still, however, the end-user benefits include reduced costs through the application and integration expertise of a supplier.")
Proving the concept
Pierce notes that because of the industry's cyclical nature, semiconductor manufacturers have a limited time to maximize their profits. Economic drivers for additional capacity are often strongest at facility start-up. Therefore, costs from delays, disorganization, and lack of personnel are very high at this point in the product or fab life cycle. Then, after start-up, continuous cost improvement programs add value and must be structured to provide tangible results. "A single vendor can reduce complexity by integrating services and providing one point of contact for simplified billing. However, this can be a challenge for loosely structured alliances or for first projects and often improves with experience. Services that provide integrated, rapid start-up, and are sympathetic to industry down-turns will offer the most value to the customer," Pierce says.
With the expansion of the scope of gas and chemicals supply in semiconductor manufacturing, Rose notes, "The really interesting thing is that all of these new alliances and expansion concepts have yet to be tested as to whether they are financially viable for suppliers. So there is still an element of uncertainty."
Acknowledgments
MEGASYS is a registered trademark of Air Products. CHEMFILL is a registered trademark of BOC Edwards.