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Fab firms' focus on 450mm could disrupt supply chain

Posted: 04 Feb 2011 ?? ?Print Version ?Bookmark and Share

Keywords:leading-edge fab capacity? 300mm fabs? 400mm fabs? IC supply chain?

Dean Freeman, an analyst with Gartner Inc., sees a glut of capacity in the foundry sector in 2012, as Globalfoundries, TSMC and Samsung are currently increasing their capital spending. The foundry business is expected to see 9.2 percent growth in 2011, down from 40.2 percent in 2010, he said. The IC market is expected to grow 4.6 percent this year, compared to 31.5 percent last year, he said.

For its own forecast, VLSI Research Inc. said the IC market will grow 8.1 percent in 2011, down from 30.9 percent in 2010. And more importantly, 2011 is off to a better start than anticipated.

"Nearly all the chip making companies that have reported so far have beaten expectations. They expect Q1 growth to be above normal seasonal growth. This shows that after a weak Q4, the chip industry is roaring back thanks to a strong holiday season and an improving macroeconomic environment," according to VLSI Research.

"The recent trend shows that overall inventories are tight and supply in the channel is dwindling," according to VLSI Research in a report. "NAND supplies, in particular, are very tight due to strong demand from electronics OEMs. As a result, NAND spot prices jumped higher for the tenth straight week. DRAM is also improving. The decline for mainstream DDR3 has abated."

Soaring fab costs
Despite the improvement in business, fewer companies are willing to throw down the money to build new, greenfield plants. One reason is that fab costs are soaring out of control.

At one time, a leading-edge 300mm fab was about $3 billion to $5 billion. Now, Toshiba Corp. may have set the record for the world's most expensive fab. The company's new 300mm NAND plant (Fab 5), including construction costs, is expected to run $10.5 billion to $11.5 billion, according to SEMI.

At the recent Industry Strategy Symposium (ISS), sponsored by SEMI, Robert Bruck, vice president of the Technology and Manufacturing Group at Intel Corp., said a 450mm fab could run $10 billion. That figure may not include construction costs.

The R&D costs to develop a 22nm process is expected to run from $999 million to $1.354 billion, compared to $581 million to $796 million at 32nm, according to Handel Jones, CEO of International Business Strategies Inc. At 90nm, the R&D cost ranged from $198 million to $283 million, Jones said.

Fab tool costs are also soaring, especially lithography. In the 1980s, a leading-edge lithography scanner sold for about $1 million. Today, ASML Holding NV's 193nm immersion scanners run $40 million each. And a production-worthy extreme ultraviolet (EUV) tool could sell for about $125 millionif or when these machines are shipped.

Photomask costs are also increasing. A 45nm "mask set" runs about $800,000 to $900,000, but a 32/28nm "mask set" could run $2 million or so, according to one photomask vendor. A 22nm "mask set" could double, according to some.

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