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ATE executives sees future in consolidation

Posted: 22 Jul 2003 ?? ?Print Version ?Bookmark and Share

Keywords:semicon west? ic testing? ate equipment? wafer?

Looking across a landscape of shrinking capital expansion plans, excess capacity, vanishing margins and far too many clever ideas, ATE industry executives pondered consolidation at Semicon West. The only question seemed to be whether consolidation would come from concerted effort or from natural selection.

"You are looking at a tiny industry being served by 40 or 50 separate architectures," said Sergio Perez, vice chairman of the Semiconductor Test Consortium and vice president of sales at Advantest. "Every one of those architectures is essentially solving the same set of problems. So, every one has to do about the same R&D. That's a huge amount of wasteful duplication."

"Nor is that the end of the inefficiencies," executives said. Because each of the architectures is proprietary, each requires its own development effort from users, including different software development, tooling and training. The slightly different capabilities of each architecture guarantee a work-scheduling nightmare.

Advantest's preferred solution to the problem, as reflected in their strong support for the STC's Common Test Architecture standard, is for the backbone of the ATE system to become an open standard. That would eliminate duplication of effort in development systems architecture and systems software, and would provide a common set of hardware interfaces and software APIs to all vendors. Then, each vendor could focus on its own areas of competence.

But support for the common architecture - widespread among ATE customers - has been less than rousing among ATE vendors. "Second-tier companies who supply specialized equipment into the industry have been very enthusiastic," Perez said. "But this is very hard for the first-tier companies to get behind."

Some vendors are taking a much more Darwinian view of the situation. Neil Kelly, CTO at LTX Corp., said the problem wasn't too many architectures, it was too many players. He suggested that significant consolidation in the industry was just a matter of the right economic conditions.

"There's no question that there are too many players doing duplicate development," Kelly said. "But there is a strange kind of stability right now. Everyone remembers the wonderful valuation they had a few years ago, and they are all trying to hold on until they can get back to those kinds of numbers. No one right now is in so much trouble that they are willing to accept today's valuations, so everyone keeps hanging on."

The stasis is concealing another kind of restructuring, though, Kelly said. He noted that LTX now outsources all its manufacturing, and in fact ships directly from the U.S.-based contract manufacturer to the end-user. Other vendors are apparently making similar arrangements. At least one, Teradyne, is assembling some test systems in mainland China.

If the industry isn't yet consolidating, it is disaggregating by rapidly shedding fixed assets and moving points of value-add in an attempt to balance huge R&D costs against the increasingly global, cost-sensitive, and conservative market it serves.

- Ron Wilson

EE Times

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