By Jeff Chappell
By now, with the rise of China as a center of manufacturing, everyone in the chip industry has no doubt heard of the supposed Chinese curse, “May you live in interesting times.” It’s practically cliché. The thing is, the next two industry cycles may indeed prove interesting for the used equipment market.

At the moment, everyone is tired of interesting times, and those in the used equipment sector are no different. The current industry downturn has been one of the longest ones in recent memory for them.

It’s difficult to express how bad things have been in terms of numbers for the used chip equipment market. The sector is fragmented, and much of the buying and selling is between brokers—often for specific customers. But one thing is clear: Times have been tough.

“This has been the longest sustained downturn in the used equipment market in the 16 years that I’ve been in it,” said Julian Gates, managing director for AG Semiconductor Services. AG is one of the largest, if not the largest, suppliers of used semiconductor capital equipment and services in the industry.

“We’ve seen worse, but this one has been sustained for a long time and has had a real negative impact on everyone in the used equipment market,” Gates said. It is a sentiment voiced by others in the market, whether they’re based in the United States, China or Europe.

Even as some first-tier chipmakers are moving to add capacity, things are quiet among second-tier customers. “I haven’t heard of a second-tier scanner that was sold in the last three months,” remarked one sales executive from used equipment supplier SDI Fabsurplus LLC.

But there are signs of the proverbial light at the end of the tunnel. Just as there has been talk of capacity expansion in the chip industry, consequently there are signs the market for used equipment may be picking up. One of the few notable bright spots this spring for purveyors of refurbished semiconductor capital equipment and services has been in the packaging front, where 3D packaging and related newly-developing technologies are proving drivers in the chip industry as a whole. In terms of equipment, that means a need for wet processing, plating, physical vapor deposition (PVD), photolithography and etch equipment.

This technology-driven expansion is coupled with the fact that companies in the backend are also looking to move packaging and test operations to mainland China. The market for analog and power devices also has remained strong, as has demand for memory to some extent, all driven by consumer electronic devices. And all this has helped drive what business there is of late in the used equipment sector.

But as a whole the entire market, in terms of geography, is really quiet, used equipment providers say—even China, where the only projects of any notable size currently underway are being driven by the government, as opposed to the private sector. As one Fabsurplus sales executive tersely quipped of the Chinese market, “It’s not hot.”

But recently interest on the part of customers has picked up across much of the used chip equipment market. As one Shanghai-based equipment sales executive noted with regard to China and packaging, no one is doing through-silicon vias (TSVs) just yet, but everyone there is talking about it. Whether or not all this interest translates into actual orders in the latter half of the year remains to be seen. Historically, however, increased activity in the backend, i.e. packaging, usually presages a broader rebound, and used equipment vendors are cautiously optimistic.

“We are seeing definite signs of an uptick,” said AG Semi’s Gates. “For the first time in a year and a half, people are broadcasting their intent to invest. Our hope is that it will be sustained … and not just an initial hype that we see sometimes.”

He characterized this interest as potentially large expansions in Asia, Brazil and India, where companies are looking to invest in entirely new—to them, at least—manufacturing lines. North America and Europe are still quiet, he said, but these markets usually follow as interest builds elsewhere.

At least one used equipment company that is focused on the European market is anticipating an uptick of orders in Q4, however. Some European device makers are currently planning to convert fab lines to what is, for them, next-generation technology, said Tony McKie, CEO of memsstar.

UK-based memsstar is focused on the market for deposition and etch equipment and related support services for both semiconductor and microelectromechanical systems (MEMS) applications. McKie noted the company recently has done several wafer-size conversions for customers, upgrading fab lines from four- to six-inch wafer processing and from six- to eight-inch.

In terms of a Q4 uptick there are a number of standard pureplay semiconductor companies in Europe looking to place orders at the end of the year, but there has been keen interest in the MEMS market as well, not to mention power devices. “Right now we’re seeing quite a bit of interest in power applications,” McKie said, noting that European power device makers are seeing intense competition from Asian device makers at the moment.

Will used 300mm equipment represent strategic opportunities?
If the industry is on the edge of a current up-cycle, it also may precede interesting times in the next cycle, as the market for used 300mm equipment continues to develop. The market for refurbished 300mm tools is relatively small and new, compared to the used equipment market as a whole.

It’s also been busy, of late and will likely continue to be so. But refurbished 300mm tools are the sole province of first-tier IDMs and foundries, for the time being.

It’s no secret that capacity is tight at the leading edge and near-leading edge nodes, and yet companies need to shave costs wherever they can. This means demand for used 300mm tools at top-tier device makers—core systems that can be refitted or otherwise refurbished for other applications—has remained strong even as the market for used 200mm tools has been ghostly quiet for most of this year.

A primary example of this is financially beleaguered DRAM maker ProMOS’ sale of a 300mm fab in Taiwan earlier this year. Foundry giant GlobalFoundries snatched that up. “From what I’m seeing in their forecasts, GlobalFoundries is a major player,” said a FabSurplus sales executive. The foundry expects to buy some $150 million of 300mm tools and services in 2014, for both backend and frontend expansion in 300mm fab lines.

There just have not been any second tier chipmakers, be they IDMs or foundries, making a play or even expressing much interest in used 300mm tools—yet.

But what if there were? Could a second-tier chipmaker theoretically jump into a market dominated by first-tier players by upgrading a fabline with used 300mm equipment and consequently offer a cost-effective alternative product?

“If one of those second tier companies had decided to go after, say Promos facility … their cost of equipment capital would have been lower” than that of a company investing in a brand new fab line, said Gates. “We haven’t seen it happen, but that’s not to say it couldn’t. It’s really been the first-tier customers that have taken advantage of the 300mm equipment in the used equipment market,” he said, but noted that AG Semi has actually seen some tentative interest from second-tier customers.

Certainly it is a possible scenario for a European chipmaker. Memsstar’s McKie noted that European companies are well established and comfortable with manufacturing devices using refurbished 200mm tools; they would not be averse to adding 300mm capacity with used systems. The real issue is the availability of core manufacturing systems; as with Promos’ fab sale noted above, used 300mm tools tend to get bought up very quickly in today’s market.

So this scenario is highly unlikely in the current cycle—assuming that the industry is on the edge of an upturn. But it’s a distinct possibility in the next cycle. Perhaps with the low-power needs of the end market driving things such as finFETs in the front end and TSVs in the back end, there will be an opportunity for a second-tier player to jump into a market dominated by first-tier players as the 300mm market matures and more systems become available.

There is definitely interest on the packaging side for used 300mm tools, refurbished tool brokers report. Many 300mm packaging lines that utilize advanced technology will be moving from pilot lines into production in the next cycle. Could this be a strategic yet cost effective opportunity for a second-tier company?

It is speculation, to be sure, but one thing is certain: A growing market for 300mm tools will be a boon for used equipment providers. As markets mature, original equipment makers don’t always find it cost-effective to offer service and support for used equipment. This provides an opportunity not just to broker and sell used tools, but service and support for those tools as well. In terms of the 300mm market and the related manufacturing complexity found in the accompanying technology nodes, there likely will be a strong demand for refurbished and repurposed tools and accompanying support services in the next cycle.

“The used 300mm equipment market is really now just developing,” said Gates. “We’re really going to see it come into it’s own.”

By Mark LaPedus

The recent Nano Job Fair in New York exceeded the 800 registrant capacity. Due to the overwhelming response, and the need to fill an additional 300 jobs, another job fair will be scheduled in the next few months. The fair itself filled more than 300 current and future openings at the CNSE, including positions with the Global 450mm Wafer Consortium (G450C).

China’s transition from a low-cost manufacturing hub to an innovation hotspot with growing foreign ambitions represents both a threat and an opportunity, according to Lux Research. Foreign acquisitions worth $28 billion are just the beginning of China’s global ambitions, according to the firm.

The Chinese IC market is forecast to have a 2012 to 2017 compound annual growth rate (CAGR) of 13%, five points higher than the 8% CAGR forecast for the total IC market during this same time period, according to IC Insights. By 2017, China is expected to represent 38% of the worldwide IC market, up from 23% in 2007, according to the firm.

Skyworks announced its results for the quarter. The company has also garnered some RF antenna tuning design wins, some of which are based on silicon-on-insulator (SOI) technology, said David Aldrich, president and CEO of the RF chip maker, on the Seeking Alpha Web site.

STMicroelectronics announced its results for the quarter. During a conference call, Carlo Bozotti, president and CEO of ST, said the company is developing ASICs for various applications using FD-SOI technology. ST also is looking at strategic options for ST-Ericsson, the cell-phone chip venture with Ericsson, he said. The venture recently rolled out a chip based on FD-SOI.

Following the announcement of STMicroelectronics’ intention to exit as a shareholder of ST-Ericsson, Ericsson is also exploring various strategic options for the venture.

Kilopass, a provider of semiconductor intellectual property (IP), will demonstrate its one-time programmable (OTP) memory IP on IBM’s 45nm, silicon-on-insulator (SOI) technology at the Common Platform Technology Forum. The event, which is on Feb. 5, will take place in Santa Clara, Calif.

Mentor Graphics announced the latest release of its HyperLynx product for superior high-speed design and analysis.

Chipmakers must explore, and embrace, new design methodologies to cut costs and boost cycle times. One way to bolster the design flow is to rethink the register-transfer level (RTL) synthesis process.

Applied Materials said that George Davis, executive vice president and chief financial officer, will depart the company effective March 8. The company expects to name a successor in the coming weeks. Davis will become CFO for Qualcomm.

SEMI and the U.S. Photovoltaic Manufacturing Consortium (PVMC) announced the signing of a memorandum of understanding (MOU) to enhance their cooperation in the areas of standards and roadmap activities for the solar thin film industry.

Renesas continues to cut costs. The company has sold its backend operations to J-Devices.

American Semiconductor has a process that transforms standard silicon wafers into flexible wafers. The technology is now available on TowerJazz’ CMOS foundry process.

Worldwide tablet shipments outpaced predictions, reaching a record total of 52.5 million units worldwide in the fourth quarter of 2012, according to IDC. Samsung is gaining ground on Apple, according to the firm.

VLSI Research says the IC industry will grow 10.1% in 2013. “We expect (the IC industry) to be an ASP-driven upturn,” according to the firm. “Even though the Chinese New Year is still weeks away, chipmakers are becoming more optimistic about 2013. This is driven in part by a modest improvement that is taking place at the macro level. The visibility for the U.S. economy has improved considerably. China’s macro data has also been positive and the European debt crisis appears to be fading.”

Chip inventory held by semiconductor suppliers reached alarmingly high levels in the third quarter of 2012 amid weak market conditions, according to IHS iSuppli.

By Mark LaPedus
Ongoing hype around cloud computing is creating misperceptions about the technology, according to Gartner.

GlobalFoundries wants to be No. 1 in the foundry business, according to a report from The Business Review. GlobalFoundries has appointed Joe Chen as its new sales head for Greater China.

After 2014, China will boast the world’s largest LED epitaxy and chip production capacity base, according to SEMI.

SEMI reported that worldwide semiconductor manufacturing equipment billings reached $10.34 billion in the second quarter of 2012. The billings figure is 4% lower than the first quarter of 2012 and 13% lower than the same quarter a year ago.

Applied Materials has approved a quarterly cash dividend of $0.09 per share.

Mentor Graphics said that its Calibre LFD signoff lithography checking tool has been certified by TSMC for its 20nm IC manufacturing process.

ARM is winning the processor wars in the smartphone and tablet markets. Intel has intensified its battle against ARM. Intel has provided more details about its fourth-generation Core processor family for ultrabooks and tablets.

Featuring a new biometric identification technique, Intel has demonstrated how to eliminate passwords.

Veeco achieved a major breakthrough to reduce defects from multi-layer deposition of mask blanks used for extreme ultraviolet lithography (EUVL).

Samsung held a groundbreaking ceremony for a new memory fab in Xi’an, China. Once completed, the new facility will make use of 10nm-class technology in producing NAND flash memory chips.

Five companies will account for 64% of total semiconductor CapEx in 2012, according to IC Insights.

IHS iSuppli forecasts the iPhone 5 will be a major success in the market, helping to drive Apple’s smartphone shipments in 2012 to 149 million units, up 60% from 93 million in 2011.

Smartphone shipments are forecast to reach 567 million units in 2012, and nearly double that by 2016, according to DisplaySearch.

The global discrete power semiconductor market is predicted to grow by 3.7% in 2012, reaching a total market value of $13.4 billion, according to a recently published report from IMS Research.

The traditional uses of RFID for the identification of animals, people, and within the automotive sector are continuing to grow and are projected to increase by $2.8 billion from 2012 to 2017, according to ABI.

By Mark LaPedus

SEMI announced the introduction of 450 Central, a web-based information service to help the semiconductor industry efficiently transition to 450mm-ready solutions.

Samsung has taken a 3 percent stake in ASML in a move to accelerate the development of 450mm fabs and extreme ultraviolet (EUV) lithography. Intel in July entered into a series of agreements with ASML in a combined deal worth up to $4.1 billion. TSMC also invested in ASML for similar reasons.

Big data, 3D printing, activity streams, Internet TV, Near Field Communication (NFC) payment, cloud computing and media tablets are some of the fastest-moving technologies identified in Gartner’s 2012 Hype Cycle for Emerging Technologies.

GlobalFoundries is projected to surpass UMC as the world’s second-largest foundry vendor, according to IC Insights.

Mentor Graphics has announced that Denso has adopted its ICanalyst tool. Mentor also said that iD has selected its Questa CDC for clock domain crossing verification.

Qualcomm has acquired cell-phone chip maker DesignArt Networks.

International Rectifier has announced its results. IR plans to close its El Segundo, California, fabrication facility. The company is also downsizing its fab in Newport, Wales.

ON Semiconductor plans to cut about 250 jobs.

The hybrid product line from Cirrus Logic’s Apex Precision Power business unit has been sold for $26 million to a group of private investors led by Alerion Capital. In doing so, Apex Microtechnology, which Cirrus Logic acquired in 2007, has been re-established as a stand-alone corporation.

A technology roadmap for the PV industry is set to emerge during 2013, bringing the PV industry into alignment with adjacent technology sectors where roadmaps typically have broad industry support, according to Solarbuzz.

Slow growth in the gallium arsenide (GaAs) device market in 2011, coupled with a shift away from GaAs technology for handset switches, dropped demand for semi-insulating GaAs bulk substrates by 4 percent, according to a firm.

Healthy growth in information technology (IT) spending in China will stimulate adoption of technologies, including desktop and server virtualization, software, and media tablets, according to Gartner.

LG Display more than doubled its tablet display sales revenue in the second quarter compared to the first, thanks to panel shipments for Apple Inc.’s iPad, according to iSuppli.

Global semiconductor revenue now is expected to decline slightly for the year, contracting by 0.1 percent, according to preliminary results from iSuppli. The previous forecast called for marginal growth of less than 3 percent. This will mark the first annual decline for the global semiconductor industry since 2009.

Samsung Electronics Co. Ltd. said it is planning to build its NAND flash fab in China in the city of Xi’an. On April 2, 2012, Samsung approved the investment for establishing the fab in China at a cost of $2.3 billion. That figure is part of the total investment amount of $7 billion to be invested over the next several years.

The company is considering establishing a 10nm-class NAND Flash memory production line in Xi’an, China to meet growing market demand for NAND products.

Xi’an, the capital of the Shaanxi province, is famous for the “Terracotta Army” site. This is a collection of terracotta sculptures depicting the armies of Qin Shi Huang, the first Emperor of China.

Samsung ”selected Xian because the city has sound industrial infrastructure such as water and electricity supply and can supply a talented workforce,” according to The Korea Herald, a newspaper and Web site. ”The city has a number of universities and research and development centers for IT firms.”

Last December, Samsung said it applied for the Korean government’s approval for establishing a NAND fab in China, but it did not announce the exact site. The idea behind the fab is to mass produce NAND products at 20 nanometer-class or below, according to Samsung. The company aims to start building the production line in 2012 and begin operation in 2013. The company plans to invest between 4 trillion won ($3.5 billion) and 5 trillion won on the fab, according to reports.

In 2012, Samsung’s capital expenditures are forecast to amount to 25 trillion won ($22.3 billion), in which 15 trillion won ($13.39 billion) will be invested in the semiconductor business.

Chinese foundry vendor Semiconductor Manufacturing International Corp. (SMIC) has closed a seven-year syndicated loan in the amount of $600 million from a consortium of banks led by the China Development Bank and the Export-Import Bank of China.

The other participants in the syndicated loan are China Construction Bank, Bank of Shanghai and Bank of Beijing. The new loan facility will primarily support SMIC’s Beijing 300mm fab expansion and technology development.

Tzu-Yin Chiu, chief executive and executive director of SMIC, said: “This credit arrangement shows that major Chinese policy banks and commercial banks recognize the potential of our advanced 12-inch fab in Beijing. In addition, this loan facility strengthens our capital structure, achieving an improved balance between short term and long term debt.”

Separately, SMIC, Brite Semiconductor (Shanghai) Corp., and Zhejiang University IC and Basic Software Research Institute recently announced the founding of a joint IC research program. As part of the agreement, SMIC and Brite Semiconductor will provide Zhejiang University graduate students with hands-on training and internship opportunities. Zhejiang University will provide a continuing education program for SMIC and Brite Semiconductor employees.

Tim Archer

By David Lammers

Wafer-level packaging and 3D NAND are two market drivers that will propel revenues at the combined Lam-Novellus operation this year and next, chief operating officer Tim Archer said.

In a conference call following release of Novellus Systems’ fourth quarter and full-year 2011 results, Archer was asked if he stood by earlier predictions that Novellus’s revenues would reach the $2 billion level in the next two years, up from about $1.35 billion last year.

“2013 will be a strong year for wafer front end (WFE) investments overall, and in our case we will see a payoff from our focus on the 3D packaging space. WLP represents $700 million in new SAM (served available market) and already we are seeing tremendous growth in the copper electroplating segment. And we are still a strong believer that 3D NAND will begin to take off in 2013,” Archer said.

As memory companies build NAND devices with 16 to 32 layers of NAND memory cells, Novellus will be able to sell more plasma-enhanced CVD and dry strip tools, he said. Tungsten back fill is another area of opportunity.

“When we compare 2D to 3D NAND, the Novellus opportunity grows by about 30 percent at the same bit growth rate, according to our analysis,” Archer said.

Throughout the conference call, various stock analysts congratulated CEO Rick Hill on his 19 years of service at Novellus. Hill said while the merger between Lam and Novellus is likely to be completed in the second quarter, another Novellus conference call is unlikely. As Hill departs, Lam Research CEO Martin Anstice will lead the combined company, with Archer serving as the COO.

Hill said he is more optimistic about capital spending in 2012 than most other CEOs and industry analysts. While foundry investments will remain relatively strong in the first half, Hill said he is optimistic about a recovery in NAND-related investments in the second half of the year, partly because Ultrabook-style computers will rely more heavily on solid-state disk drives. Also, he said China will begin to invest in leading-edge semiconductor production, moving quickly forward with a “major thrust at the leading edge, which they are quite capable of doing.”

Governments in Europe and the United States will continue to stoke their economies in 2012. “This is an election year, and money will be stuffed in because leaders are worried about deflation,” Hill said.

While Novellus’ 2011 revenues were identical to 2010 revenues, at $1.35 billion, Hill said the company earned an all-time-high earnings per share of $3.20. Bookings in Q4 were $286.9 million, up $60 million (26.4 percent) from Q3 2011 bookings of $226.9 million.

Taiwan’s Advanced Semiconductor Engineering Inc. (ASE), the world’s largest semiconductor packaging and test company, announced the groundbreaking of its Shanghai, China-based headquarters in the Zhangjiang Industrial Park.

The ASE Shanghai headquarters, to be opened in three phases, occupies a land area of 120,000 square meters. ASE’s investment in the Zhangjiang region has grown to over $2 billion and it now employs over 11,000 people at its manufacturing facility.

The company said it plans to invest another $3.7 billion in the Jingqiao industrial area to expand its semiconductor assembly and manufacturing service offerings.

Within the next eight to 10 years, ASE expects its investment to exceed $6 billion, generating annual revenues of $8.5 billion and employing over 50,000 people in Shanghai.

Advanced Micro-Fabrication Equipment Inc. (AMEC, Shanghai, China) launched its Primo Advanced Decoupled Reactive Ion Etch (AD-RIE) system for 22nm and beyond requirements.  The tool, which will begin shipping in the third quarter with a “tier-one foundry in Asia” as the initial customers, is the company’s second-generation etcher.

AMEC said it has 30 tools at nine customer sites in Asia, including the world’s top foundries. It said it is expanding its manufacturing capacity in China, and this year will complete a final assembly and test facility in Zhunan, Taiwan.

AMEC is claiming cost and footprint advantages over its competitors. Michael Chu, vice president of the company’s etch products group, said the Primo AD-RIE system has capital productivity gain of 35 to 50 percent “when compared to the industry standard,” and a footprint that is “at least 30 percent smaller” than competing systems.

The Primo AD-RIE features a mini-batch cluster architecture that can be flexibly configured with up to three dual-station process modules.  It offers decoupled, dual-frequency RIE with independent ion density and energy control.

It has a 2-13.5 Mhz switchable RF module, which is in addition to the existing 60MHz RF, for a wider process window. The RF input has a symmetrical power distribution architecture for uniform plasma density, and a triple-zone gas distribution with dual tuning gases for fine etch uniformity tuning.

Each module is capable of dual- or- single-wafer processing. The design features bottom-powered, high-frequency RF with a low-pressure, high-plasma-density strip to preserve the integrity of low-k materials.  It uses direct resistive top electrode heating with closed-loop control for precise temperature control.