Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
EE Times-Asia > Manufacturing/Packaging

Shortages, price hikes seen for used IC equipment

Posted: 23 Mar 2005 ?? ?Print Version ?Bookmark and Share

Keywords:ic equipment? semiconductor?

Shortages of used semiconductor-equipment have hit the worldwide supply chain, causing prices for these potentially "disruptive" products to soar at new and record levels.

The used or refurbished IC-equipment market is a cyclical business that tends to peak during the down cycles, especially when chip makers are looking for inexpensive gear to stock their factories. But now, the used equipment market is becoming more important for chip makers, especially in China, which could potentially use these tools to turn the IC-manufacturing model upside down.

"Pre-owned fab tools can be refurbished and certified by the vendor at a cost savings of 40-50 percent versus a leading edge tool," said Bill Ong, an analyst with American Technology Research Inc. "While the refurbished tool market is still small, it has the potential impact to change the margin structure of the semiconductor equipment industry."

And, since the beginning of 2005, there has been an acute shortage of used equipment amid a lull in the overall IC industry, said Don Cowan, president of Cowan Alexander LLC., a company that specializes in auctions for used capital equipment.

"There is a healthy demand for used equipment in the market, but the problem is that there is not much of a supply," Cowen said. "People will have to scramble to find used equipment. But if they scramble, they will find some good deals."

While used equipment is generally in short supply, prices have steadily increased. Prices for used equipment generally ranges from $0.30-to-$0.50 on the dollar right now, as compared to $0.15-to-$0.30 on the dollar about two years ago, he said.

Fueling the demand are the typical suspects: universities, startups and chip makers in Asia, especially in China, he said. "They will spend a lot of money for a good piece of equipment," he added.

For years, China has been one of the big markets for used gear. "The recent emergence of semiconductor fab production in China was made possible by acquiring advanced but not leading-edge fab tools that were used elsewhere by having these tools refurbished and purchased at substantially lower prices," said Ong of American Technology Research in a report issued this week.

"A limited number of semi equipment vendors accommodated such requests as a 'custom special' way to serve the customer in exchange for future opportunities to sell more expensive, leading-edge tools," Ong said. "Used tools were acquired either from chip makers selling off fab production equipment or tool vendors selling their existing lab tools as vendors upgraded their lab facilities."

Third parties such as General Electric Co. offer refurbished gear. Fab-tool makers such as Applied Materials Inc. and Novellus Systems Inc. have also set up internal operations to sell refurbished 200mm tools, primarily for Asian chip makers.

In any case, there are some new and intriguing ramifications for used gear. "What if chip production tool cost was cheaper by about 30 percent or more - how would that change the dynamics of chip demand and where chip production occurs?" quizzed Ong.

"This could further change the competitive landscape as chip production could accelerate towards the lower cost Asian region," he said. "The potential benefit of cheap chips could yield a new wave of unforeseen applications. Currently, the refurbished process tool market is targeting the 0.18?m, 200mm market. The 300mm tool market is still new and thus has virtually no meaningful used tools for refurbishing. However, with the time period between a mainstream device node and a leading edge node continuing to shorten, refurbished tools could start encroaching on the leading edge."

There are other implications as well. "Fab tool vendors will have to rethink their business if Asian chipmakers acquiring refurbished tools could simply incorporate a few key components to bring a mainstream used tool to near-leading edge capability at a dramatically lower cost," he said.

"If and when the refurbished tool market becomes larger, the vendor business model margin structure may start to shift and the more foresighted companies would have to respond faster to potentially disruptive change in the new semiconductor equipment business," he added.

- Mark LaPedus

EE Times

Article Comments - Shortages, price hikes seen for used...
*? You can enter [0] more charecters.
*Verify code:


Visit Asia Webinars to learn about the latest in technology and get practical design tips.

Back to Top