Cold and Rainy Weather at Semicon Japan Does Not Dampen Industry Enthusiasm

Last week I attended my first Semicon Japan.  This is typically one of the largest Semicon events, but considering the lull in equipment sales since this summer combined with the Japan earthquake in March, I was uncertain what to expect.  Seating at the opening keynote and welcome presentations were standing room only, but the foot traffic on the show floor was far from overwhelming.  (Even during the peak lunch hour, a SEMI aficionado directed me to some delicious food booths with essentially no lines.  I wish I could get those yummy noodles at Moscone during Semicon West.)

There was still a lot of talk relating to the earthquake impact and recovery but overall the mood was upbeat.  On the advanced technology front, vendors are preparing for more 450mm activity.  TSV and the move to FinFET transistors are providing plenty of opportunities and challenges for equipment and material suppliers.  Add to that a host of More Than Moore innovations for the mature fabs, and the topics for discussion were abundant.

I specifically went to Semicon Japan to speak at the Used Equipment Seminar so most of my time was spent with used equipment vendors and customers.  Discussions revolved around supply and demand of used equipment, used equipment pricing and availability of parts and services.  Raj Kumar, Senior Vice President, 200mm Business Unit and General Manager, GLOBALFOUNDRIES, also presented.  He outlined the importance of More Than Moore technologies in GLOBALFOUNDRIES’ strategy.  Much of their success in the delivery of cost effective manufacturing services depends on the products and services being offered by used equipment vendors.  GLOBALFOUNDRIES has been buying used equipment from OEMs and brokers for years but more recently from IDMs and refurbishers.  But the cost of refurbished tools are not in line with other industry models.  Kumar borrowed an example from the used car market where the cost to ‘refurbish’ a used car might cost an additional 16% of the total used car value.  In contrast, the refurbishment cost of a used semiconductor tool is closer to 150% of the tool price.  Kumar suggested that stronger partnerships would help solve the price differentials.

Hiroshi Tamagawa, Manager, Rohm Production and Engineering Division has found a very effective way to utilize the Rohm capital expenditure budget through a strategic mix of used and new equipment.  Rohm maintains over 20 manufacturing facilities in Japan and Asia.  These include facilities for front end fabs, assembly, wafer products, LED, molding dies and lead frames.  Rohm’s current manufacturing capabilities cover a broad spectrum of technologies and functions.  This allows them to implement an in-house reutilization program.  A new tool might be purchased for their leading edge line. The tool that is being replaced would then be moved down to their BD-MOSLSI line.  The tool that is being replaced in the BD-MOSLSI line then moves down to the Power-LSI line and so on, all the way down to the Diode line.  Rohm labeled this strategy as efficient reutilization by relocation.   We have seen other IDMs use this strategy in the past, notably TI.

Of course, my trip to Japan would not have been complete without a visit to the Renesas Naka Factory.  Details of their recovery effort after the March earthquake and tsunami are covered in a Semico Spin posted on July 18^th, 2011.  My meeting with Takashi Aoyagi, General Manager, Renesas Naka Factory was definitely the highlight of my trip.  Aoyagi-san oversees both the 200mm and 300mm facilities at the Naka site.  The availability and quick turnaround of refurbished tools and parts were critical to the re-opening of their facilities.  A small smile appears on Aoyagi-san’s face when asked if the recovery effort stayed within budget.   Some things were more expensive than expected; however, partnerships and new procedures are now in place to prevent a similar situation.

The Naka site includes a 25 year old 200mm fab and a 10 year old 300mm fab.  Aoyagi-san knows the 25 year old facility has a lot of life left and at only 10 years old, the 300mm fab will provide more capacity and technology for many years.  During the recovery effort, Aoyagi-san was moved by the many employees who exceeded expectations in both teamwork and creativity.  The result was more effective manufacturing.   Looking toward the future, Aoyagi-san feels it’s his challenge to maintain the enthusiasm of his employees in order to continue to improve and innovate.

On the other side of the equation, used equipment vendors experienced a drop in activity this summer.  In general, used equipment vendors will report lower sales in 2011 compared to 2010.  We’ll look back on 2011 as a tough year with the earthquake and tsunami in Japan, the floods in Thailand, and the economic instability in Europe.  But Semico’s IPI points to an end to the downward cycle by Q1 2012, with improved conditions by the 2^nd half 2012.  This view is shared by many of the people that I talked to in Japan as they already begin to see increased activity and look to 2012 with optimism.

Joanne Itow

Managing Director