A Report from Semicon West 2005, California, US

The largest exposition in North America devoted to semiconductor and related microelectronics manufacturing has taken place.

Semicon West 2005 is the showcase conference and exhibition forum for the Electronics Industry in the US, which enables the electronics industries to showcase the latest technologies in semiconductor, MEMS, display and related industries.

The event this year had 1 500 exhibitors from more than 25 countries and more than 40,000 registrants, with major groups taking part including International Technology Roadmap for Semiconductors planning committees, SEMATECH, the ISMI Critical Materials Council, and chip manufacturing operations managers.

The programme this year included panel discussions on changing business paradigms, the international technology roadmap for semiconductors and 'bulls and bears' panel on investment trends as well as more than 100 industry standards development task force meetings.

New this year was the Emerging Technology Hall, which featured new and disruptive technologies in areas such as nanotechnology, e-manufacturing, electronic design automation and Microelectromechanical systems.

At this year's Semicon West, SEMI released its mid-year capital equipment consensus forecast for the semiconductor industry, anticipating that 2005 will be the third largest year ever for sales of new semiconductor equipment despite an expected 12.1 per cent decline from 2004.

The forecast has been drawn from interviews with companies representing a majority of the total sales volume and indicates that the industry will post around $32.6 billion in sales this year.

The forecast was presented by SEMI president and chief executive officer Stanley Myers. He said: \\$quot;A large amount of new manufacturing capacity is coming on-line following a year of very strong capital investment. SEMI members have anticipated that consumer spending in 2005 will be more cautious as the new capacity is absorbed. The outlook is for cyclic growth to resume at moderate but stable levels in the following years.\\$quot;

The expected decline follows a 67.2 per cent expansion of the market in 2004 and is thought to be just a short term trend. The trend is expected to reverse in 2006 with double-digit growth over 2007 and 2008.

The market also varies considerably by geographic region with sales of new equipment in China expected to decline by 40 per cent and South Korea the only expanding regional equipment market.

But Mr Myers added: \\$quot;Respondents may have been over cautious about capital spending. If the forecast changes, I would expect the decline to move toward zero rather than become greater.\\$quot;

20 Fab Plants to be built in China?

Another study released by SEMI shows that nearly 20 Fab plants could be built in China by 2008, however, George Scalise, president of the Semiconductor Industry Association, disagreed and said for such an investment to take place there would need to be a $150 billion increase in semiconductor revenues in the same time frame. He believes there will be 15 to 18 Fabs, built worldwide, with no more than half going to China.

But regardless of the number of Fabs which will be built there, Stephen Newberry, CEO of Lam Research, said companies needed to be aware and make the most of China's demand for trailing technologies, one or two generations behind the current art.

He believes Chinese companies will be looking for used equipment from providers with a global infrastructure that can install and support such equipment at low cost.

The number of new Fabs and packaging plants are increasing relative to other market regions and many of the projects will be equipped with used and refurbished equipment.

Last year, new semiconductor equipment sales in China reached $2.73 billion; used and refurbished equipment sales are estimated at $180 million; fab materials sales totalled $391 million; and the packaging materials market reached $781 million. The figures are released in a new SEMI report and other key findings include the fact that installed 200 mm and 300 mm wafer capacity at the end of 2004 was equivalent to 106 million square inches last year.

China is home to more than 35 domestic, joint ventures and multinational semiconductor manufacturers with wafer fabrication plants; there are approximately 200 assembly and test companies; 20 multinational packaging materials suppliers; and 40 domestic manufacturers of equipment for the semiconductor and related microelectronic industries in China.

On the topic of Fabs Aki Fujimura, Chief Technical Officer at Cadence Design Systems warned more design ideas from more places are needed in order to support the increasing number of Fabs around the world. And he said that to keep designs viable, designers and manufacturing need to work together to reduce costs. He said: \\$quot;Without design and manufacturing people collaborating, we won't be able to survive the next 10 years. We cannot simply hand stuff over the wall; we must work together to solve the cost problem.\\$quot;

And Klaus Rinnen, Managing VP, semiconductor manufacturing for Gartner Dataquest also warned changes are needed in semiconductor manufacturing He said: \\$quot;By 2014, fewer than 25 manufacturers will be building new Fabs - compared to 45 today - and less than 10 equipment suppliers will be satisfying 80 per cent or more of the semiconductor manufacturing equipment demand.\\$quot;

In addition, he said, the existing Research and Development model will have to change drastically because equipment companies will not be able to afford product development with no guaranteed return on investment.

While the forecast is for a large growth of Fabs in China, Dr Tien Wu, President, ASE - Americas and Europe, addressed the debate over the increasing role of the country in both the manufacture and consumption of semiconductors.

He said that in order to dominate any segment of the semiconductor business, a country has to control three core values, IP, manufacturing and consumption.
He said low-end PCs are all controlled by Asia, but in most other market segments, some part of IP needs to stay around Europe and Japan. And he said the United States will always control part of semiconductor manufacturing.

With the expected expansion in the number of Fabs, American based Advanced Micro Devices announced at Semicon West that it is changing the way its fabrication facilities are run with the goal of a more synchronised factory model that will go beyond automated materials handling to incorporate automated decision making. The effect, according to director of automated precision manufacturing, Thomas Sonderman, will be a highly efficient factory model that provides a larger return on investment and sets a new pattern for future factory designs.

With automated decision making, the company hopes to be able to move materials through its fab at various speeds using only a core group of human resources. Product specification will be able to be modulated in manufacturing allowing the company to tune the output of a fab to specific customer requirements. AMD's Fab 36 facility is expected to come online later this year and will implement the company’s next generation automated precision manufacturing system.


This year at Semicon West, software giant Microsoft appeared on the show floor for the first time displaying how its .NET technology is being applied to semiconductor manufacturing challenges. John McCallum, Microsoft's high tech industry manager, said: \\$quot;We have been in Fabs for some time now, just not at most people's awareness level.\\$quot;

Mr McCallum said a number of partners are using Microsoft's technology as a base for their product software and he said the problems Microsoft aims to help solve in the semiconductor industry have strong similarities to problems the company has already solved in related manufacturing industries. But he warned companies not to go looking to Microsoft to purchase software for running a factory.

He said: \\$quot;We're not releasing software in a box to run the fab, .NET is an enabling technology platform that partners and customers can build on top of.\\$quot;

SEMI is a global industry association serving companies that develop and provide manufacturing technology, materials and services to make semiconductors, flat panel displays, micro-electromechanical systems and related microelectronics. SEMI maintains offices in Austin, Beijing, Brussels, Hsinchu, Moscow, San Jose (Calif.), Seoul, Singapore, Tokyo, Shanghai and Washington.

For further information:
Semicon West 2005

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