Stakes get higher for chip gear

By Michael Kanellos, CNET News, 24 July, 2002 06:27

NEWS

Makers of semiconductor manufacturing equipment are recovering from the economic downturn, but that doesn't mean life is easier. Increasingly complex technological demands, a changing customer base and the spiraling costs of their products are making the industry more vulnerable than in the past to financial swings and pressures to consolidate, according to equipment executives attending the Semicon West conference on Monday. "As the customers consolidate, it will exacerbate the up and down cycles," said Robert Atkins, chief executive of Cymer, which specialises in light sources for the lithography machines used to "draw" circuits onto chips. "There is no doubt lithography is getting more expensive." The semiconductor equipment industry, gathered in San Francisco for the three-day conference, is largely preoccupied with an age-old technical problem -- namely, shrinkage. Moore's Law dictates that, largely through the use of ever smaller elements, the number of transistors on a single chip doubles about every two years. But chip designers are getting to the point where transistor gates and other chip features are only a few atoms thick, making it a challenge to go any smaller. Since the late 1990s, lithography equipment has been designed to make chips with circuits smaller than the wavelength of the light source used to draw the circuits, said Ken Schroeder, chief executive of KLA-Tencor. That's like trying to paint a 1-inch line with a 4-inch paintbrush, he said. "The problems are much tougher than people have ever faced before, in terms of yield," Schroeder said. Yield, the percentage of good chips popped out of each wafer of semiconductor material, is an important metric for semiconductor profitability. Meanwhile, costs for equipment have risen dramatically. Some lithography gear costs $15m to $17m, while the bill for completely outfitting wafer fabrication facilities, or fabs, can exceed $2bn. Manufacturers can find themselves paying hefty sums. Because of the rapid rate of technological change, many have to migrate to new generations of equipment before amortising existing facilities, said Richard Hill, chief executive of Novellus Systems, which makes deposition equipment for applying metal to silicon wafers. "For the marginal IC (integrated circuit) producer, the economics might not be compelling," Hill said. These rising costs couldn't come at a worse time. Semiconductor manufacturers are also contending with price wars and depressed revenue, a combination that industry stalwarts say could split the semiconductor manufacturing market into two groups: companies such as Intel that can afford to build fabs on their own, and companies that instead hire foundries such as Taiwan Semiconductor Manufacturing Co. and United Microelectronics to perform their manufacturing for them, according to Don Mitchell, chief executive of FSI International. For gear makers, that is going to mean fewer customers for equipment. Their capital budgets may increase, but the number of selling opportunities will decline. Panic buying will also set in, Atkins predicted. Companies will hold off on purchases until their competitors move, then they will all jump en masse, leading to wild purchasing oscillations. Despite the challenges, though, the equipment industry will improve, at least for the short term. Revenue will grow approximately 5 percent this year, 24 percent in 2003 and 27 percent in 2004, respectively, according to forecasts reported by Semiconductor Equipment and Materials International, a trade group for the industry. In 2001, revenue dropped 41 percent, from $47.7bn to $28.1bn. "We are never going to see the bubble of 2000 again, but overall we'll definitely see a resumption," said Hill.

See Chips Central for the latest headlines on processors and semiconductors. Have your say instantly, and see what others have said. Go to the Chips Central Forum. Let the Chips Central editor know what you think by email. And sign up for the weekly Chips Central newsletter.

Post your comment

In order to post a comment you need to be registered and logged in.

You can also log in with Facebook. Log in or create your ZDNet UK account below

By signing up for this service, you indicate that you agree to our Terms and Conditions and have read and understood our Privacy Policy. Questions about membership? Find the answers in the Community FAQ

ZDNet UK Live

Nice review and very informative. One thing I'd like to add (in reply to whs001's 1st question), the main reason to have the same interface from...

1 hour ago by GrueMaster on A tale of two distros: Ubuntu and Linux Mint

I'be been using Mint 12 since the RC came out, and I am far more happy with the Cinnamon, the Mate, and, yes (with extensions), theGnome 3...

2 hours ago by Frederick Wrigley via Facebook on A tale of two distros: Ubuntu and Linux Mint

Excellent article. One small correction, though--although a fresh installation of Linux Mint 12 will, indeed, provide the user with a version of...

3 hours ago by bdantas on A tale of two distros: Ubuntu and Linux Mint

In related news, the ISPs club together to get the members of the Home Affairs Select Committee (ya goofed on that part, ZDNet UK) copies of "The...

3 hours ago by Alan Ralph via Facebook on MPs urge ISPs to take down terrorist material

In related news, the ISPs club together to get the members of the Home Affairs Select Committee (ya goofed on that part, ZDNet UK) copies of "The...

3 hours ago by Alan Ralph via Facebook on MPs urge ISPs to take down terrorist material

For Gnome 2 die-hards, it is possible to add icons to the bottom panel (or top top panel, if you prefer) which provide the exact Gnome 2...

4 hours ago by Moley on A tale of two distros: Ubuntu and Linux Mint

Your comments would seem pretty naive and immature. Your 'solution' appears to be, "gee, let's all just give in to the hackers and give them...

4 hours ago by ramwellian on Cloud computing security: no more oxymoron?

"Interesting thought ... If you installed Win7 as a dual boot on a machine that previously only had Linux, and it wrecked your Linux installation,...

5 hours ago by BugStalker on Windows 7 Declares War on GRUB

This is an excellent summary of Ubuntu and Mint and the interface differences between them. Most such articles take a very partisan position for...

5 hours ago by whs001 on A tale of two distros: Ubuntu and Linux Mint

@ewallace. Not so clear. Anyone can obtain the text, for example from here http://www.ustr.gov/webfm_send/2379. I support ACTA so long as it and...

5 hours ago by Moley on ACTA: Facts, misconceptions and questions

I think WinRT is fantastic. I just wish it was an option for people that didn't want to go through Microsoft's App Store with its attendant...

8 hours ago by 45283 on Why Windows 8 needs architectural hygiene for WOA

Nine people? £30m? Who's back pocket is that lot going in? And IF they say it is for new buildings, what about all the ones the government has...

9 hours ago by Burn-IT on Police set to launch three £30m e-crime hubs

Just to be clear, nobody knows what is in the text of ACTA, here is a photograph of the text of ACTA http://twitpic.com/8h9iju as submitted to the...

9 hours ago by ewallace on ACTA: Facts, misconceptions and questions

Unfortunately main issue is that ASUS is refusing to accept that they make some mistake on this version of asus Transformer prime. 1 - GPS sensor...

10 hours ago by fgvrg56 on Asus Eee Pad Transformer Prime Wi-Fi & GPS problems?

@Marcus A fair question. Just talked with Archos which said it was working on an announcement for next week....

11 hours ago by Ben Woods on Archos confirms G9 Ice Cream Sandwich update schedule

Any update on this, considering the claimed "first week of February"?

13 hours ago by Marcus Karlsson via Facebook on Archos confirms G9 Ice Cream Sandwich update schedule

Bill Goodrich : Just as al_langevin pointed out, with Windows Server 2008 there is no Services for Macintosh anymore. It's gone, not available....

21 hours ago by apexwm on Windows Server 2008 drops the ball for Mac compatibility

Replying to an old topic that I'm currently facing with my CEO (who is on a Mac). Our servers are primarily Windows Servers, office is about...

1 day ago by txtrainguy on Windows Server 2008 drops the ball for Mac compatibility

Sure, that makes perfect sense. Pay wrong-doers money and thank them for breaching your security and pointing out your flaws, that would surely...

1 day ago by k0tcs3 on US indicts Romanian over NASA climate change hack

I think he's referring specifically to Android apps, as Apple do regulate their App Store, but Google seem to let any old crap onto the Android store!

1 day ago by Random_Error on RIM: BlackBerry will keep 'garbage' apps out of store

Featured white papers

Latest jobs

Stakes get higher for chip gear

Daily Newsletters

Topics

Related stories

Chip equipment orders rise again

AMD looks to ARM itself for low-power tablets

Apple tops list of semiconductor buyers

Post your comment

ZDNet UK Live

Latest in Processors

AMD looks to ARM itself for low-power tablets

Apple tops list of semiconductor buyers

Featured white papers

Latest jobs

Test Analyst - Business Intelligence /Data Warehousing

Test Analyst - Business Intelligence /Data Warehousing

Technical MI Manager - 50-60k - Leeds

Inside ZDNet UK

A tale of two distros: Ubuntu and Linux Mint

2012 Predictions: VCE FastPath, VI SAN Probe & Hadoop

BlackBerry Bold 9790

Case study: How cloud enables growth

Ten factors that make Ubuntu 11.10 a hit

Toshiba Portégé Z830-10P Review

BT's archive: Pictures from the vault

News & Analysis

Reviews

Blogs

Resources

About Us

Member Services

Special Features

Advertising Features

ZDNet UK / News and Analysis / Workspace IT / Processors

Stakes get higher for chip gear

Daily Newsletters

Topics

Related stories

Post your comment

Get ZDNet UK's daily newsletter

Enter your email address to sign up

ZDNet UK Live

Latest in Processors

Featured white papers

Latest jobs

Inside ZDNet UK

Resources

About Us

Member Services

Special Features

Advertising Features