Recessions: a potent time for R&D
01/01/2009
Pete Singer Editor-in-Chief
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Writing anything about the economy these days is like trying to hit a moving target (a quickly dropping target I might add) so let me first say “thank you” to the many forecasters, analysts, and company executives who had the gumption to provide their perspectives for this forecast issue.
At press time (December 18th), the latest news to cross my desk was a global survey of semiconductor company executives conducted by KPMG LLP, a U.S. audit, tax, and advisory firm. “As economic conditions and consumer spending continue to deteriorate, semiconductor executives offer views on 2009 revenue growth that continue to turn more pessimistic, and anticipate a steep decline in profitability over the next 12 to 18 months,” according to the survey. “In addition, the majority of executives see R&D and cap ex investment decreasing significantly next year, and see significant workforce contraction in a period where the need for critical workforce skills is high.” Tough times, indeed.
What struck me as I read the perspectives from executives across the semiconductor manufacturing supply chain, however???all of which we’ve posted on-line at www.solid-state.com, and which I’ve summarized in this issue’s cover story???is how optimistic they all are about two things: first, the semiconductor industry’s need to continue to innovate, even during a recession; and second, the inevitable upturn.
Indeed, the silver lining of this downcycle-combined-with-unprecedented-global-financial-crisis is that it provides a time to regroup, rethink and, yes, even invest. Arthur W. Zafiropoulo, Chairman & CEO, Ultratech, Inc., San Jose, CA, perhaps said it best: “Chip companies will not buy tools to increase capacity,” he said. “Instead…companies will spend money on breakthrough technology that enables them to manufacture devices at advanced nodes when the recovery arrives.”
In Ultratech’s case, that breakthrough technology is laser spike annealing, but other companies see potential in their own technologies, philosophies, and services, whether it be photoresist stripping, combinatorial methodologies and knowledge management systems, yield management strategies, manufacturing for design, or simple outsourcing.
The same is true of other industries. A recent report from Greentech Media and the Prometheus Institute, titled Photovoltaics Innovation in North America, notes that tightening credit markets and the higher costs of capital will slow demand for PV installations in established markets. “Recessions, however, historically are potent times for research, development, and innovation, which require little in the way of project finance. North America’s small, entrepreneur-driven PV companies stand to emerge well-positioned globally following the resetting of credit markets in 18-24 months.”
The worst thing a company could do during these difficult times is “batten down the hatches,” as I hear so often. Instead, companies should be looking for ways to innovate and continue R&D so that when the recovery comes???and yes it will come???they will be in a strong competitive position. It is a time to find ways to more closely collaborate with customers and other companies to conduct R&D in the most cost-effective manner, improve efficiency and, of course, reduce costs.
Bill Bintz, SVP of Product Marketing, Axcelis Technologies, Inc., Beverly, MA, adds that technical support, while always important, becomes increasingly essential at times like this when chip makers are looking to keep existing equipment in production longer. “Not surprisingly, we’re seeing strong interest in upgrades to extend the performance and life of already installed systems,” he said. “Operational improvements can also help to reduce costs during these difficult times. Thus, equipment makers would do well to rethink their business models for manufacturing and assembly, while continuing to streamline, improve quality control and speed delivery times.”
Another issue is where to focus during a downturn. Larry Dulmage, co-founder, VP sales and marketing, Crossing Automation, Mountain View, CA, notes: “Currently, the major activity in the industry falls into three categories: process technology, 300mm Prime/productivity, and the 450mm transition. From our perspective, the fastest way to ramp back into a productive market will be to focus on the developing process technology and increasing 300mm productivity, move forward with an outsourcing strategy, while delaying 450mm, which has the longest path to revenue.”
When will the upturn come? Optimists say it could be as soon as mid-2009, but realistically, my guess is sometime in 2010. In the meantime, there are definitely hot spots of opportunity: high-brightness LEDs, 3D integration and through-silicon-vias and, of course, solar. Sign up for our new magazine, Photovoltaics World, at www.pvworld.com.