In light of the Paris climate talks going on this week, I’m delighted to turn this blog over to a guest blogger, Mike Czerniak. Mike is the Environmental Solutions Business Development Manager at Edwards, and has been working in the semiconductor industry for more than 30 years. In 2014, he received SEMI’s Merit Award for his work on the Energy Saving Equipment Communication Task Force responsible for developing new standards designed to help reduce energy consumption in production equipment.

The First Degree – Ominous Threshold Reached as World Leaders Meet in Paris to Discuss Global Warming – Again

By Mike Czerniak, Environmental Solutions Business Development Manager, Edwards

The Met Office, the UK’s official office of meteorology, recently announced that, based on data acquired over the first 9 months of the year, 2015 is likely to be the first year in which the average global temperature exceeds by more than 1°Celcius (C), the average temperature for preindustrial years before we began to burn significant amounts of fossil fuels. Although the annual average temperature will fluctuate from year to year, the overall upward trend is well established and +1°C average temperatures are likely to become the norm. This is halfway to the 2°C threshold — at which most scientists agree damaging consequences are likely to occur, including the possibility of runaway warming in which no amount of reduction in industrial emissions would be able to reverse the trend. 2014 was the warmest year on record and 2015 looks to be even warmer. Reaching this ominous threshold should give new impetus to world leaders meeting this month (COP21) in Paris to attempt, once again, to reach an agreement on how best to address the issue of global warming.

It has been nearly 20 years since the signing of the Kyoto Protocol in which 192 countries committed to a real effort to reduce the industrial emission of greenhouse gases (GHG), which the protocol explicitly acknowledged as the cause of global warming. It was not until 2010 that the same group of nations recognized the 2°C threshold as the maximum acceptable increase in global temperature. The meeting in Copenhagen the previous year, where there was an attempt to force limits on individual countries, was largely a failure. At this year’s meeting in Paris the focus has shifted to securing voluntary reduction commitments from participants. Unfortunately, a UN analysis of commitments submitted prior to the meeting concluded that they would result in an unacceptable increase of 2.7°C. Still, there is room for optimism. The political climate has shifted significantly in favor of emission limits, particularly in the world’s two largest emitters, the US and China. Also, technological advances have significantly reduced the cost of renewable energy sources, such as solar and wind.

Our own industry, semiconductor manufacturing has shouldered its share of the responsibility. While we are not a major contributor to overall GHG emissions, we have made good progress in limiting our emissions of perfluorocarbon (PFC) gases, particularly powerful GHGs. In 1999, the World Semiconductor Council (WSC) agreed to reduce PFC emissions by at least 10% by the end of 2010. In actuality, we far surpassed this goal, achieving a reduction of 32% for the period. In 2011, the WSC announced a new voluntary PFC agreement for the next 10 years. The goals of the new program include an additional 30% reduction by 2020 in the normalized emission rate expressed as kilograms of carbon dioxide equivalent (CO2e) per square centimeter of processed silicon.

At Edwards, we are committed to playing a leadership role in the field of vacuum pumping and abatement by applying technology, products and services to benefit the environment for future generations. Over our products’ lifecycle we are in fact carbon equivalent negative. In a typical year our own operations, our supply chain’s and our customers’ operation of our equipment might generate 2 million tons of CO2e. In that same year, our abatement equipment will remove 6 million tons of CO2e. The net result is the removal of 4 million tons of CO2e from the environment. We strive constantly to reduce the energy intensity of our manufacturing operations and the energy consumption of our products. We have programs in place to reduce waste, both by eliminating landfill waste and by promoting the reuse of our products through service and remanufacture, and to reduce our own consumption of electricity by the increasing use of energy-efficient LED lighting in our facilities. And we seek every opportunity to reduce water usage.

We are extremely proud of our record of successful and conscientious environmental stewardship and it will continue to receive the highest priority at all levels of our organization.

Mike Czerniak, Edwards

Scott McGregor, President and CEO of Broadcom, sees some major changes for the semiconductor industry moving forward, brought about by rising design and manufacturing costs.

Speaking at the SEMI Industry Strategy Symposium (ISS) in January, McGregor said the cost per transistor was rising after the 28nm, which he described as “one of the most significant challenges we as an industry have faced.”

He said that in the past, it was a “no brainer” for a design company to move its entire set of products always forward to the next generation. “Every generation would be better than the previous one. It would be faster, it would be lower power, it would be more cost effective,” he said.  “We think we’re now seeing this come to a bottom.” The reason for increasing transistor cost is the complexity of the devices, and the cost of the equipment required to produce them. McGregor said these costs are going up exponentially. “Those exponential factors are now starting to drive the cost forward. This is going to drive some change,” McGregor predicted.

Chip design cost is also increasing exponentially. McGregor showed a chart with dramatically increasing cost for each process node for such things as software, prototyping, validation, verification and IP qualification per process node.

McGregor also pointed out that the semiconductor industry as a whole is maturing. He said we have moved from a new market phase with double digit growth into an evolving market with high single digit growth to now a stabilizing market with mid-single digit growth year-on-year.

Although mature, the industry will still see some volatility, although less than in the past. “supply is easily overridden and it takes a long time to build some of these devices like scanners so that’s going to create volatility,” he said.

He also predicted that SoCs would become even more pervasive. He used a set top boxes as an example, noting that they used to be full of boards crammed with lots of discrete parts. “Today, if you open up a set top box, you’ll see a relatively small circuit board inside with a large chip that integrates almost all the functionality,” he said. “The box is still the same size because consumers perceive value in the size of the box, but it’s mostly air inside.”

McGregor said the tapeout costs to do a single device are very high. “You have to put $100 million into a semiconductor startup today to be able to get to productization.” This means that big companies will be getting bigger. “There will still be some small companies – but I think the mid-sized company in our industry, in devices, is going to dramatically go away because of the scale and other things required,” he said.

A big impact of these changes is that the process node selection is going to change. “Instead of immediately going to the next node, you’re going to stay in nodes longer. That means, for example, that 28nm is going to be a very long-lived node. There are a lot of things that probably will not make sense to move beyond 28nm for a long time. It will not automatically mean you should go to 16 or 14nm, or 10nm. There will be relatively few devices that economically make sense to do that,” he said.

He noted that Broadcom crossed the threshold where software engineers outnumbered software engineers a number of years ago and now has “significantly more” software engineers than hardware engineers. “That’s an interesting transition because we’re now delivering systems instead of just chips. The value just doesn’t come from the transistors — It comes from all the other pieces put together. One of the challenges for us as an industry is getting paid for that. Unfortunately, for many of us, the software is the ‘gift wrap” for the chip rather than something we can monetize,” he said.