The next 40 years
05/01/1997
The next 40 years
Arthur W. Zafiropoulo, Ultratech Stepper Inc., San Jose, California
It`s always hazardous to predict the future. Who, 40 years ago in 1957, would have predicted that a quiet California valley, covered with orchards, would be the center of a technology revolution that has affected a sizable proportion of the world`s population? At that time, most electronics ran on vacuum tubes; television was black and white; transistors were small, multicolored cylinders that could be seen with the naked eye; and a single computer filled a room. Today, vacuum tubes are virtually a thing of the past; television has gone color and digital; it takes a microscope to see the millions of transistors resident on a chip; and we have single rooms filled with multiple computers that are networked around the world. Semiconductors not only run computers, but help operate household appliances, automobiles, and spacecraft. In fact, a recent article in the San Jose Mercury News chronicled research being conducted on connecting semiconductors to the human nervous system.
All things considered, the incredible advances of the past 40 years can in no way prepare us to predict the industry`s growth or how it will affect us in the future.
It is possible, however, to take a look at some of the factors that will continue to shape our industry and to make some predictions about their effects. Shrinking geometries and increasing functionality will continue to drive up production costs. At the same time, as semiconductors become ubiquitous in consumer products, economic forces will drive down semiconductor prices. Communications advances, driven by progress in semiconductor and networking technology, will continue to fuel the growth of a truly global economy. In addition, the rate of technological change will almost certainly continue to accelerate. These factors will present challenges that companies must overcome if they expect to be players in the market 40 years from now.
Rising production costs, coupled with declining semiconductor prices, are already a reality and will only become a greater challenge over the next two generations. We can expect to see their effects in a variety of ways. For semiconductor equipment companies, the emphasis will be on producing tools that increase productivity and yield, while reducing cost of ownership. Strategies such as mix-and-match, which allow the semiconductor manufacturer to reduce cost of ownership while still using leading-edge production technologies, will continue to grow in popularity and necessity. R&D spending will increase as companies attempt to reduce the time it takes to introduce the leading-edge products that maintain margins. This circumstance, in turn, will fuel the trend toward corporate consolidation, resulting in a smaller number of players in the market. Only those companies with deep enough pockets to allocate significant resources to R&D will be able to survive in what will become an increasingly competitive industry.
Historically, much of the growth in high technology has come from small, nimble companies capable of entering markets more quickly than larger, established corporations. It will be harder for such small companies to succeed, however, because increasing R&D costs will pose a considerable barrier to entry. If the US is to maintain its technology leadership position, such small companies must be able to grow and survive. While the idea may not be popular in an era pushing for smaller government, innovation is an area where government must play an increasingly vital role. It must provide research funding and economic incentives to nurture small companies with promising new technologies until they are capable of competing with their larger, more established brethren. Still, while government must support research and technology development, it must be careful not to control the directions research takes. Technology development should be left to the scientists and engineers, not be controlled by bureaucrats.
Government support for the semiconductor industry will become increasingly important as we move into a true global economy. If other countries subsidize their technology industries and we do not, the US will, inevitably, be left behind.
The continued development of the global economy will present its own challenges, beyond those of cultural, time zone, and language differences. Semiconductor companies, whether equipment or chip manufacturers, will need to maintain a strong presence in all global markets served, not just in their home countries. For large companies, this will mean investing in a global infrastructure capable of supporting customers regardless of their location. For smaller companies, it will mean building relationships with local companies in their key regional markets. We are already seeing these trends and they will only accelerate in the future.
The rate of technological change will also continue to accelerate, although here, there may be limits. Product cycles for chip manufacturers are already down to six months. It`s questionable how much further they can be compressed, but undoubtedly the pressure to do so will continue and those companies that succeed will emerge as big winners.
As the semiconductor market grows, its economic ups and downs will have a noticeable effect on both the national and world economies. By 2010, many economic experts predict we will be a trillion dollar industry. That growth results from widespread use of semiconductors in a variety of products. Crises in the semiconductor industry, such as the current concern over silicon shortages, or the epoxy resin shortage of a few years ago, could, 40 years from now, have economic ramifications as far reaching as those of the oil crisis in the 1970s.
During the next 40 years, the semiconductor industry will play a more vital role in both global and national economies, as we continue to enable new products and applications in the electronics market. Growth in both markets will help build a robust world economy with resultant benefits for its citizens. With that growth comes a new challenge, however. In the last 40 years, we pursued technology for technology`s sake, assuming that the new productivity tools we were introducing would inevitably improve quality of life and increase leisure time. In many cases, however, the opposite has occurred. Despite all our productivity tools and labor-saving devices, people seem to have less time, more work, and higher stress levels. There are warnings that people in society may be dividing into technological "haves" and "have-nots." In the next 40 years, we in the semiconductor industry will have an increasing responsibility as we develop new technology: to help society successfully integrate the opportunities created by our advances.
ARTHUR W. ZAFIROPOULO received his MS degree in physics. He has held numerous executive positions in the semiconductor industry, including president of Kayex Corp., president and CEO of Drytek Inc., and president of General Signal`s Semiconductor Equipment Group International. He is presently chairman and CEO of Ultratech Stepper Inc., a company he founded. He holds several US and foreign patents, including one for a cluster processing tool used in advanced plasma etching. Ultratech Stepper Inc., 3050 Zanker Rd., San Jose, CA 95134; ph 408/577-3009, fax 408/577-3376.