SAN FRANCISCO -- For some time, the fab tool industry has seen a wave of consolidation.
The big are getting bigger. Some of the smaller and weaker players are getting gobbled up by the larger players. At one time, there were multiple vendors in each equipment segment. But now, the market has generally consolidated into two or three players in each equipment segment.
Some equipment segments are nearly turning into quasi-monopolies, leaving fab tool buyers with fewer choices. ''The rich getting richer as market share leaders are getting stronger, including ASML in litho, Varian in implant, and Lam Research in etch,’’ said C.J. Muse, an analyst with Barclays Capital, in a recent report.
There are two or more competitors in lithography, ion implantation and etch, but ASML, Varian, and, to a lesser degree, Lam, are running away from the field. Some fear that the lack of competition will lead to less innovation and higher tool prices.
Clearly, the market is maturing, leaving some to ask a simple question: Is there room for small- to mid-size companies in the semiconductor equipment business? ''There is room if you bring a value proposition,’’ said Bob MacKnight, president and chief executive of Crossing Automation Inc., a fab tool automation vendor.
Still, there are issues for both large and smaller players. For startups, one challenge has become apparent: Venture capital is scarce in the semiconductor sector.
That’s one of the reasons there are fewer fab tool startups today. For both small and large companies, there are other challenges: Fewer sales opportunities. There are fewer leading-edge chip makers with fabs, but the technology demands are increasing at each process node.
Some large chip companies are sometimes reluctant do business with smaller and unproven companies. Leading-edge chip makers are looking for innovative tools, but on the other hand, many are unwilling to take major risks.
''A disruptive startup is not an easy thing to do these days,’’ said Steve Lerner, CEO of Alchimer S.A. The French company seeks to displace physical vapor deposition (PVD) equipment from Applied, Novellus and others in applications with a novel wet chemistry technology.
''There is a risk element, especially with a startup,’’ said Nader Pakdaman, founder and CEO of tau-Metrix , at a recent event. Tau-Metrix provides non-invasive, time-based characterization technologies for the semiconductor industry.
During a recent presentation, the executive outlined the challenges for fab tool startups. Generally, it takes six years, possibly 10 years, to develop a tool technology at an average R&D cost of around $100 million, he said.
Then, once a system is brought to market, there is a three-year sales cycle, he said, which itself could cost about $20 million. There is another three-year cycle for service, which also runs $20 million.The high cost of bringing up a new tool technology leads to a simple formula: A fab tool startup needs funding and a ''strategic partner,’’ he said.
But over the years, the fab tool sector has been littered with innovative startups and established companies that failed or were acquired. The cyclical nature of the semiconductor business makes it difficult for new vendors to survive.
Take the fab tool automation business, which is a tough and mature industry. For example, Blueshift Technologies Inc., which claimed to have a breakthrough automation platform, was backed by Intel Corp. and others. The company could not get off the ground and went under. Eventually, it recently sold its intellectual property to Brooks Automation Inc.
There are other reasons for consolidation beyond the shakeout. For instance, fab automation pioneer Asyst Technologies Inc. went out of business after it was run into the ground by its management.
Another fab tool automation player, startup Crossing Automation, faces an uphill battle in the same market, but the company believes it can compete with a new technology. It competes against Brooks Automation and others.
Formed in 2003, Crossing Automation was funded by Tallwood Ventures and Intel Capital. The company raised $15 million in its Series A round and $6.5 million in a B round in 2009.
Crossing Automation designs automated vacuum wafer handling systems known as ExpressConnect, which it brought to the market in 2009. ExpressConnect is a modular building block family of automation components, said to deliver integrated atmospheric and vacuum substrate handling for semiconductor manufacturing. Crossing also delivers a broad range of component technologies to both OEMs and semiconductor manufacturers, including isolation, robotics, and tracking.
In August of 2009, Crossing Automation acquired the atmospheric lines and related assets of now-defunct Asyst, making it a complete supplier of atmospheric and vacuum wafer-level automation to the semiconductor and related manufacturing industries.
In September of 2009, Crossing Automation named MacKnight, the company's executive chairman, as its new president and CEO. Since his appointment, the company has made several major announcements.
In March, the company named three new members to serve on its board. The new members are Gidu Shroff, Peter Hanley, and Casey Eichler.
Also in March, Crossing said it has improved its Spartan equipment front end module (EFEM) performance, enabling it to achieve 450 wafers per hour (wph) throughput. The improved design was undertaken to address the requirements of high throughput semiconductor manufacturing processes, such as strip/ash, clean and ion implant. The improved Spartan EFEM enables 100 percent process tool utilization due to its patented wafer engine atmospheric robot which offers the fastest available wafer exchange time of less than 2.5 seconds.
A month later, Crossing Automation named Hakuto Corp. as its exclusive distribution channel in Japan as of April 1. Moving forward, Hakuto will offer sales, service and support for Crossing Automation's vacuum and atmospheric wafer automation products.