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200MM Puts Industry In a Tight Spot

By Nanochip Staff

When Dan Hutcheson, CEO of market research firm VLSIresearch, remarked that "200 is the new 450," he was not just poking fun at the nearly stillborn wafer size transition. "200[mm] is hot," he explained, noting that it is attracting more of the industry’s energies toward innovations ranging from new process chambers to advanced automation techniques.

G. Dan Hutcheson, CEO, VLSIresearch

However, the industry is at a crossroads, due to the tight supply of 200mm used tools. When logic and memory manufacturers moved to 300mm fabs, manufacturers using 200mm "were able to buy up a mother lode of cheap 200mm equipment," Hutcheson said. "Then a year or so ago, all of a sudden there was no supply left. Almost all the used tools had been bought."

Hutcheson noted that most makers of power, analog, RF, and other devices simply don’t have the billions of dollars required to switch operations to a 300mm fab.

"The problem now is that the 200mm wafer fab guys are coming in with McDonald’s-level pricing expectations for tools. They want Chez Panisse cuisine at the price of a Big Mac," Hutcheson said, referring to the popular Berkeley, California, restaurant.

"The device makers are screaming that there are not enough tools. They are going to have to pay a fair price for new tools. Up to now they had a fair price for used tools that few people wanted. Now, if they want new 200mm technologies like those Applied offers, they are going to have to change their mindset," said Hutcheson.

"What they are saying now is that they want it, but they are not willing to pay for it,” he continued. "When you think about that, what they are basically saying is it doesn’t have value to them."

John Cummings, who directs marketing and business development for legacy equipment at Applied Materials, agreed there is a severe shortage of used 200mm tools. "With China investing public funds in chip manufacturing, five to seven 200mm fabs may open in China in the next few years. Europe has a strong 200mm base, and several customers in the United States are planning to open 200mm fab as well," he said.

SEMI recently forecast that 300–400k wafer starts will be added to the 200mm total over the next three years, to 5.4 million starts in 2019. Cummings said that net capacity addition will almost certainly place even greater pressure on tool suppliers to find enough used tools to meet demand.

Florent Ducrot, marketing director in Applied's service operation, said that over the years most 200mm customers have been significantly reducing costs. "They have learned where to second-source everything they can, to repair everything they can. Now, they cannot go further with that approach. It has become very hard to find the next 5% of savings, so they are coming back to us looking for ways to improve the performance of the tools they have."

Five Buyers For Each Tool

Emerald Greig, executive vice president at SurplusGLOBAL (Phoenix), has two views of the current 200mm equipment market, which at fi rst sound contradictory.

One is that the market is "bleak" because revenues for 200mm used tools dropped in 2015, compared with the prior year, due to the shortage of tools that could be bought, refurbished, and resold.

Emerald Greig, EVP, SurplusGLOBAL

But the market is also "hot," said Greig, explaining that "Whatever I get I can ship out quickly. If I have a certain kind of tool, I have five customers that want it."

Among the biggest issues facing 200mm fabs, she said, is parts availability. "Some of these companies are very savvy; they are running technologies that are still okay with 20-year-old tools. They keep ‘parts tools’ that may not be production-worthy but are good enough for cannibalizing parts."

Greig’s recommendation: "Raise ASPs." She contends that companies making parts in 200mm fabs should raise their prices so they can afford to keep their fabs up to date, buy new and refurbished tools as needed, and thereby meet the looming demand for Internet of Things products made in 200mm fabs.

Joanne Itow, Foundry Analyst, Semico Research

A few years ago, when the shortage of 200mm tools began, Joanne Itow, foundry analyst at Semico Research (Phoenix), said that she expected more companies to switch from 200mm to 300mm manufacturing. And while companies such as Texas Instruments and TSMC have moved some high-volume analog products to the larger wafers, Itow admitted that "the move to 300mm wafers has been a lot slower than I anticipated."

She noted that fab owners have become more organized, sharing information on 200mm parts sourcing, for example. Also, large companies such as Applied "are working with their customers to fill in, where needed, with new tools to keep fabs running."