Japans chipmakers still struggling with the difficulties of the 1990s

05/01/1997

Japan`s chipmakers still struggling with the difficulties of the 1990s

Peter N. Dunn, WaferNews, Nashua, New Hampshire

Japan`s semiconductor industry has had a difficult time during the 1990s. The collapse of the bubble economy in the early part of the decade brought fab building and expansion to a virtual halt, giving competitors elsewhere in Asia an opportunity to attack in DRAM production. Chipmakers and their suppliers got back on their feet in 1994 and 1995, only to run headlong into the unexpectedly sharp declines in DRAM prices that arrived in 1996.

Statistics from the Semiconductor Equipment Association of Japan (SEAJ) indicate that after declining in both fiscal 1996 and 1997, Japanese purchases of semiconductor manufacturing equipment are expected to resume growth in 1998 and 1999. The SEAJ survey (Table 1) suggest that Japan`s equipment makers will see a similar pattern, with domestic and export sales both heating up in fiscal 1998.

One bright spot, however, is the raw silicon market, where Japanese vendors are hastening to add capacity and expect to see export sales rise substantially in the new FY, with some gains coming domestically. Other positive signs include aggressive fab expansion plans by consumer electronics giants Matsushita and Sony. Sony intends to be among the early adopters of 300-mm wafer technology in Japan, with plans to build a facility in Nagasaki.

Equipment market soft in `97 and `98

The DRAM recession is blamed as the prime culprit in declining Japanese equipment sales for fiscal 1996 and 1997; despite diversification over the last decade, many Japanese firms are still heavily dependent on memories. According to figures from market researcher Dataquest, Oki, Hitachi, Mitsubishi, and NEC all derive more than 40% of their total semiconductor revenues from DRAMs, and Fujitsu and Toshiba are not far behind.

Japan`s share of the overall equipment market is declining, as Asia-Pacific nations maintain their aggressive investments and Japanese firms shift production abroad because of high operating costs at home. VLSI Research sees the Japanese share of the world equipment market dropping from an estimated 29% in 1996 to 28% this year and 25% in 1998.

Other interesting points laid out in the SEAJ survey include:

? Japan`s slashing of capital spending in 1991 and 1992 was remarkably deep and long-lasting. Purchases in 1992 were almost 44% below those in 1990; this was a crucial reason for the DRAM supply shortage in 1994 and 1995. Purchases did not match 1990 levels until 1995.

? Japanese equipment makers also suffered during that period, but to a lesser extent because of their ability to sell into growth markets.

? Equipment exports from Japan have been a bright spot,increasing 3.6% during the current FY96 to 519.9 billion yen ($US4.178 billion). A decline of just 3.1% to 503.7 billion yen is forecast for the coming FY, with growth of 9.4% predicted in FY98 and 15.3% in FY99, when sales are expected to hit 635.7 billion yen.

Silicon - ramping to meet demand

Taking advantage of the calm between the DRAM storms, Japanese silicon producers will hasten to rebuild their inventories of polysilicon and single-crystal silicon ingots in the coming year. Silicon sales exceeded production in each of the last three years; last year`s semiconductor downturn is seen by observers as having helped avert what might have been a painful supply shortage.

A report from the Japan Society of New Metals (JSNM) projects that polysilicon production will grow 22% in 1997, to 5000 tons, while production of single-crystal silicon will grow 12% to 4500 tons (Table 2). These growth rates are quite close to 1996 levels, which saw poly production of just over 4100 tons and single-crystal production of 4030 tons.

Materials analyst Dan Rose of Rose Associates, Los Altos, CA, recently estimated that poly production capacity at seven of the top suppliers (four of them Japanese) would reach twice the 1995 level by 2000, when 300-mm wafer sales are expected to begin in earnest. Because 300-mm ingot production will be less efficient than today`s 200-mm ingots, extra capacity will be needed to produce the same wafer area.

On the sales side, exports have been the major growth area for Japanese suppliers as domestic fabs have continued to see slow growth during the 1990s. In 1996, for the first time, more than 33% of Japanese single-crystal silicon was sold for export. As recently as 1991, exports were <16% of total sales; offshore sales have surged each year since. The trend is expected to continue in 1997.

The price drop in DRAMs in the second half of 1996 had a substantial impact on Japanese silicon sales. Sales were up 22.6% year-to-year for the first half of 1996 (17% domestically, 36% for exports), but in the second half they dipped to 6% below 1995 levels with domestic sales slipping 9.5% as exports rose 2.3%. The JSNM expects full-scale 64-Mbit DRAM production to start in the second half of 1997, will likely spur wafer demand as yields drop during the ramp-up of new process flows.

Sony, Matsushita fab projects

Sony and Matsushita, leaders in the consumer electronics markets, are set to make hefty capital investments in new fabrication lines. In addition, Sony also has plans to turn an employee parking lot into a 300-mm wafer fab.

According to the current timetable, initial production at Sony`s 300-mm fab will begin in 1999. The Tokyo-based company has already purchased land adjacent to its subsidiary in Nagasaki Prefecture for the project, and is now using the site as a parking area for its employees. While Sony is not generally seen as being one of the most advanced chipmakers, the company has taken an aggressive stance on 300-mm. "I was surprised at the level of interest (Sony) had in 300-mm," commented Frank Robertson, general manager of the International 300-mm Initiative (I300I). He noted that Sony and Fujitsu, alone among Japanese companies, had attended two preliminary I300I meetings. Neither joined the organization; the top Japanese semiconductor firms have all agreed to take part in the SELETE and J300 development organizations, and political considerations likely argued against participation in I300I. "It looks like 1999 will be the year of (300-mm) manufacturing facility startups," added Robertson.

Despite a fairly difficult year for its semiconductor operation, Sony is currently riding high on a favorable yen-dollar exchange rate and good sales of its Playstation video game and Minidisc audio discs.

This year, Sony will install equipment worth a total of some 50 billion yen (about $US403 million) on a new fab line for 0.25-?m devices at Sony Kokubu, its LSI manufacturing subsidiary in Kagoshima Prefecture. The new line, located at Sony`s former bipolar LSI manufacturing site, will start operation in 1998 with a capacity of 10,000, 200-mm wafers/month. It will be housed on the second floor of Sony Kokubu`s sixth building, where a Class 1 cleanroom is already in place. Using 0.25-?m design rules developed by both Sony and Oki Electric, the new lines will produce system LSIs for digital video and audio signal processing used in Sony products, such as Playstations and Minidisc players.

In a similar move, Osaka-based Matsushita Electronics, a subsidiary of Matsushita Electric (producer of Panasonic products), will introduce new 0.25-?m fab lines at its Tonami Plant in Toyama Prefecture this April and at its Washington State plant in October.

About a year ago, the parent company entered the DRAM business with a new wafer processing facility at the Tonami plant. This year, Matsushita Electric is renewing its commitment to the semiconductor business. Beginning in April, at the start of Matsushita`s fiscal year, the company will establish two new departments and add a third to Matsushita Electronics, its manufacturing subsidiary. In addition, more than 500 semiconductor engineers are expected to be transferred within the Matsushita Group at the beginning of the fiscal year.

Top company officials have said the firm will continue to make 100 billion yen/year (about $805 million) investments through the year 2000. Newly formed departments include semiconductor development and semiconductor marketing groups under Matsushita Electric. The former will develop system LSIs, high-speed DRAMs, and high performance microcomputers; the latter is an DRAMs, and high performance microcomputers; the latter is an expanded sector once incorporated into the company`s Industry Marketing Group. A process development center will be established as a department under Matsushita Electronics and will be responsible for manufacturing processes.

CMP processes emerging

A new report on the use of chemical mechanical planarization found only four out of Japan`s top 10 semiconductor manufacturers using the high-profile process in their facilities. Of the six other firms surveyed, five are evaluating CMP in pilot phases or development lines and one company is still in the research stage.

In the report, "Survey on CMP utilization in Japanese volume production lines and their future plans," the majority of manufacturers said several issues related to CMP use still need fine-tuning, including pattern dependency, wafer cleaning, and polishing reproducibility.

Despite those issues, the survey participants did find good reason to employ the CMP process, a business that grew 20% last year, and is expected to be a $900 million business in 2001, according to market researcher Dataquest.

In the survey, all 10 companies ranked the benefits of planarization as the number one incentive for using CMP. Some firms offered other reasons, such as better cost of ownership, higher yield and throughput, and fewer process steps.

The majority of companies said they prefer having CMP systems installed in the same cleanrooms with other equipment. However, some of those manufacturers said they have separate air circulation systems in the cleanroom or isolate CMP equipment with walls within the cleanroom.

CMP was chosen by all companies for use on logic ICs, but many also said they would use the process on DRAMs, SRAMs, and microprocessors. Similarly, all companies said the CMP process is being used on undoped TEOS-oxide layers, and most said CMP is being used on tungsten, BPSG, copper, poly-silicon, and aluminum.

While manufacturers could agree on these questions of CMP use, few shared the same expectations of equipment and the CMP process itself. For example, while one manufacturer said it expected a throughput of 20 wafers/hr, another demanded 100/hr. The same applied to polishing speed: two manufacturers were content with 250 nm/min, but another two wanted at least 500 nm/min. Six manufacturers said they expected a 3% uniformity between lots; the remaining were split between 5 and 10%. For uniformity within a single wafer, four manufacturers expected at least 3%; another four said 5% would do.

The report, published by Science Forum, is available only in Japanese. For more details, contact Takeshi Hattori, editor; fax 81-46-2305572, e-mail [email protected].

PETER N. DUNN is the editor and publisher of WaferNews, the semiconductor manufacturing industry`s premier weekly news publication. For more information, check the WaferNews web site, http://www.wafernews.com, fax 603/891-0597, e-mail [email protected].