SAN JOSE, Calif. – There are an alarming lack of new, leading-edge fabs on the drawing board-a trend that could propel the IC industry into a nightmarish era of tight capacity, higher chip prices and shortages.
Capital spending is on the rise in 2011, but leading-edge fab capacity is expected to be tight for the foreseeable future for various reasons. Fab companies are reluctant to build new 300-mm plants and are only upgrading their existing facilities. And at least three fab companies-Intel, Samsung and TSMC-have suddenly become pre-occupied with 450-mm activity.
It’s unclear if fab companies will continue to build new 300-mm greenfield fabs in the future. Perhaps they will bypass 300-mm and simply take a quantum leap into the 450-mm era.
Analysts have warned that there is not enough 300-mm capacity right now. And costly 450-mm plants are delayed and not expected to go into mass production until 2017 or 2018, according to IC Insights Inc.
What that means is that there could be a noticeable gap in the transition between 300- and 450-mm, leading some to believe there could be possible disruptions and chaos in the IC supply chain.
It also leads some to believe that leading-edge fabs will become endangered species. Only a select few can afford to build leading-edge fabs today. Fewer will be able to afford 450-mm plants. And only a few 450-mm plants will be required to meet future IC demand, leaving the balance of manufacturing power in the hands of a select few.
Times have changed in the IC industry. Several years ago, nearly all chip makers owned fabs. Then, in the late 1980s, the foundry business was born, fueling the growth of the fabless industry. Starting at that time, the integrated device manufacturers (IDMs) began to outsource a large percentage of their production to the foundries as a means to cut manufacturing costs. More recently, fewer IDMs can afford to build new fabs, as chip manufacturing costs have skyrocketed.
Amazingly, there are only three new 300-mm fab projects slated to break ground for 2011 and 2012, compared to eight new plants in 2010, according to SEMI. The three new fab projects include those from Hynix Semiconductor Inc. (M12), Samsung Electronics Co. Ltd. (L17) and Taiwan Semiconductor Manufacturing Co. Ltd. (Fab 15), according to SEMI.
Spending on new fab construction projects jumped 162 percent in 2010, but that number is expected to fall 11 percent in 2011 and another 26 percent in 2012, according to SEMI. ''Currently, there is a bleak outlook in new fab construction plans,’’ warned Christian Gregor Dieseldorff, an analyst with SEMI. ''Companies (are) focusing their spending mainly on upgrading or ramping existing fabs.’’
Indeed, something has changed in the psyche of semiconductor manufacturers, said Malcolm Penn, founder and principal analyst with Future Horizons, at a recent event. They are no longer building wafer fabs in anticipation of demand. "Forget fab-lite, welcome to the fab-tight era," Penn warned.
Fab companies have been reluctant to build new plants-and for good reason. ''At this point, there is little to no excess leading-edge 300-mm capacity and more and more fabless companies are migrating onto the 300-mm network as they migrate to 65-nm process technology,’’ observed Gus Richard, an analyst with Piper Jaffray & Co., in a recent report. ''The foundries over the last five years have been (also) hesitant to add capacity ahead of demand as the tighter the supply, the better the pricing’’ and margins.
@MarkLaPedus: it was good to see you at DesignCon last week. I remain skeptical of TSMC's plan to have a pilot line for 450mm by 2013. Other market factors including the stabilization of flash memory prizes and their future fluctuations also have an impact on the urgency to drive the 450mm adoption.
Missing in the article are references to technology nodes that are going to be piloted in TSMC/other vendor fabs and their strategy thereof.
Lack of automation standards is a significant impediment but given the number of players wanting to participate in 450mm is so small, I hope it is easily resolved.
I think its a deliberate move from those few companies (read TSMC) to kill off its competition. The big companies that can afford it will do it to grab all the business cornering the market, much like OPEC controls oil prices.
Judging by where 450mm is today, and how long it took 300mm to get into production (ignoring Motorola) from a similar point, we're looking at what, 7 years? That doesn't change any capacity issues for a long long time.
Folks seem to forget that Dan Maydan, then in the Office of the President at AMAT,suggested in the mid 90's that the industry should go directly to 450mm from the incumbent 200mm. What followed of course was the initial 300mm "false-start"
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