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Fab tool execs brace for longer downturn

Posted: 16 Jan 2009 ?? ?Print Version ?Bookmark and Share

Keywords:fab tool? R&D? market downturn? equipment IC?

Fab tool vendor executives have warned that the current IC downturn will be long and painful, causing more consolidation in the market and stress in the supply chain.

The downturn also has negative implications on R&D spending, which in turn could delay scaling and push out next-generation technologies like 450mm wafer fabs.

The poor business climate is causing a new round of losses and layoffs in the fragile fab tool sector. Business is so bad that some vendors received no orders during Q4 08.

The first quarter of this year and beyond looks equally grim. In total, the IC equipment market could fall by 40 percent in 2009 over 2008, said Art Zafiropoulo, president and CEO of Ultratech Inc. The downturn is "going to be longer and deeper than anything we've seen before," Zafiropoulo said, noting that the industry faces a "delayed recovery."

As a result, the industry is not looking for growth in 2009, but rather "survival," warned Tom St. Dennis, senior VP and general manager of the Silicon Systems Group at Applied Materials Inc.

R&D in the red
The downturn is expected to accelerate industry consolidation, St. Dennis added. Besides consolidation, the fab tool supply chain, including the critical subsystems and related sectors, will be under stress for some time, St. Dennis predicted. Another issue is a shortfall in R&D dollars. If the fab tool industry spends 15 percent of sales in R&D, the total R&D budget for the entire sector will be $3 billion in 2009, he estimated. (Sales for the total wafer fab equipment sector is $20 billion.)

At $3 billion in total R&D spending, St. Dennis believes there is not enough money to support all fab tool projects like 450mm fabs and others. "Is [$3 billion] enough to do the job?"

A shortfall in R&D dollars, coupled with the downturn, could have other serious ramifications, including a slowdown in IC scaling. With the exception of Intel Corp., the industry faces a "slowing on the leading-edge," St. Dennis warned.

There is a silver lining, however: The downturn could propel a boom in the 300mm used equipment sector. The industry must also innovate and find ways to boost the productivity in existing 300mm plants, St. Dennis said.

- Mark LaPedus
EE Times

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