Recent Challenges in Semiconductor Industry and the Future

~ ETE 411.3 ~ Term Paper (Final) ~ 1 Recent Challenges in Semiconductor Industry and the Future M Manzur Ul Islam [ID# 072190045] [Sec: 03] Abstract—this writes up gives us some ideas on the topic “Recent challenges in the semiconductor industry & its future”. I. INTRODUCTION The semiconductor industry lives - and dies - by a simple creed: smaller, faster and cheaper. The benefit of being tiny is pretty simple: finer lines mean more transistors can be packed onto the same chip. The more transistors on a chip, the faster it can do its work. Thanks in large part to fierce competition and to new technologies that lower the cost of production per chip, within a matter of months, the price of a new chip can fall 50%. As a result, there is constant pressure on chip makers to come up with something better and even cheaper than what redefined state-of-the-art only a few months before. Chips makers must constantly go back to the drawing board to come up with superior goods. Even in a down market, weak sales are seen as no excuse for not coming up with better products to whet the appetites of customers who will eventually need to upgrade their computing and electronic devices. [1] II. WHAT SEMICONDUCTOR IS A semiconductor is a material that has an electrical conductivity between that of a conductor and an insulator, that is, generally in the range 103 Siemens/cm to 10−8 S/cm. Devices made from semiconductor materials are the foundation of modern electronics, including radio, computers, telephones, and many other devices. Semiconductor devices include the various types of transistor, solar cells, many kinds of diodes including the lightemitting diode, the silicon controlled rectifier, and digital and analog integrated circuits. Solar photovoltaic panels are large semiconductor devices that directly convert light energy into electrical energy. An external electrical field may change a semiconductor's resistivity. In a metallic conductor, current is carried by the flow of electrons. In semiconductors, current can be carried either by the flow of electrons or by the flow of positivelycharged "holes" in the electron structure of the material. Common semiconducting materials are crystalline solids but amorphous and liquid semiconductors are known, such as mixtures of arsenic, selenium and tellurium in a variety of proportions. They share with better known semiconductors intermediate conductivity and a rapid variation of conductivity with temperature but lack the rigid crystalline structure of conventional semiconductors such as silicon and so are relatively insensitive to impurities and radiation damage. Silicon is used to create most semiconductors commercially. Dozens of other materials are used, including germanium, gallium arsenide, and silicon carbide. A pure semiconductor is often called an “intrinsic” semiconductor. The conductivity, or ability to conduct, of common semiconductor materials can be drastically changed by adding other elements, called “impurities” to the melted intrinsic material and then allowing the melt to solidify into a new and different crystal. This process is called "doping". [2] III. USE OF SEMICONDUCTOR 1. Memory: Memory chips serve as temporary storehouses of data and pass information to and from computer devices' brains. The consolidation of the memory market continues, driving memory prices so low that only a few giants like Toshiba, Samsung and NEC can afford to stay in the game. 2. Microprocessors: These are central processing units that contain the basic logic to perform tasks. Intel's domination of the ~ ETE 411.3 ~ Term Paper (Final) ~ microprocessor segment has forced nearly every other competitor, with the exception of Advanced Micro Devices, out of the mainstream market and into smaller niches or different segments altogether. 2 companies, such as fabless semiconductor companies, is known as a foundry. If a foundry does not also produce its own designs, it is known as a pure-play semiconductor foundry. [3] 3. Commodity Integrated Circuit: Sometimes called “standard chips”, these are produced in huge batches for routine processing purposes. Dominated by very large Asian chip manufacturers, this segment offers razor-thin profit margins that only the biggest semiconductor companies can compete for. 4. Complex SOC: “System on a Chip” is essentially all about the creation of an integrated circuit chip with an entire system's capability on it. The market revolves around growing demand for consumer products that combine new features and lower prices. With the doors to the memory, microprocessor and commodity integrated circuit markets tightly shut, the SOC segment is arguably the only one left with enough opportunity to attract a wide range of companies. [1] IV. SEMICONDUCTOR FABRICATION PLANT Semiconductor device fabrication is the process used to create the integrated circuits (silicon chips) that are present in everyday electrical and electronic devices. It is a multiple-step sequence of photographic and chemical processing steps during which electronic circuits are gradually created on a wafer made of pure semiconducting material. Silicon is the most commonly used semiconductor material today, along with various compound semiconductors. The entire manufacturing process from start to packaged chips ready for shipment takes six to eight weeks and is performed in highly specialized facilities referred to as fabs. A semiconductor fabrication plant (commonly called a fab) is a factory where devices such as integrated circuits are manufactured. A business that operates a semiconductor fab for the purpose of fabricating the designs of other Figure 1: NASA’s Glenn Research Center clean room V. RECENT CHALLENGES IN INDUSTRY The challenges applicable to the construction of semiconductor industries are: A. Threat of New Entrants In the early days of the semiconductors industry, design engineers with good ideas would often leave one company to start up another. As the industry matures, however, setting up a chip fabrication factory requires billions of dollars in investment. The cost of entry makes it painful or even impossible for all but the biggest players to keep up with state-of-the-art operations. It comes as no surprise, then, that established players have had a big advantage. Regardless, there are signs that things could be changing yet again. Semiconductor companies are forming alliances to spread out the costs of manufacturing. Meanwhile, the appearance and success of "fables" chip makers suggests that factory ownership may not last as a barrier to entry.[1] B. Power of Suppliers For the large semiconductor companies, suppliers have little power - many semiconductor companies have hundreds of suppliers. This diffusion of risk over many companies allows the chip giant to keep the bargaining power of any one supplier to a minimum. However, with production getting hugely expensive, many smaller chip makers are becoming ~ ETE 411.3 ~ Term Paper (Final) ~ increasingly dependent on a handful of large foundries. As the suppliers of cutting-edge equipment and production skills, merchant foundries enjoy considerable industry bargaining power. The largest U.S.-based foundry belongs to none other than IBM – which is also a top chip maker in its own right. [1] C. Power of Buyers Most of the industry's key segments are dominated by a small number of large players. This means that buyers have little bargaining power. [1] D. Availability of Substitutes The threat of substitutes in the semiconductors industry really depends on the segment. While intellectual property protection might stop the threat of new substitute chips for a period of time, within a short period of time companies start to produce similar products at lower prices. Copy-cat suppliers are a problem: a company that spends millions, if not billions, of dollars on the creation of a faster, more reliable chip will strive to recoup the R&D costs. But then along comes a player that reverse engineers the system and markets a similar product for a fraction of the price. [1] E. Competitive Rivalry The industry is marked by intense rivalries between individual companies. There is always pressure on chip makers to come up with something better, faster and cheaper than what redefined the state-ofthe-art only a few months before. That pressure extends to chip makers, foundries, design labs and distributors – everyone connected to the business of bringing chips from R&D into high-tech equipment. The result is an industry that continually produces cutting-edge technology while riding volatile business conditions. [1] F. Factory Cost Clean room costs for large fabs (9,000 m2) are rapidly raising to over $48,500 (US) per square meter as users demand design and construction schedules that put from 750 to 950 square meters of clean room ($36-45 million US) in place per month at submicron quality standards. Escalating factory capitalization and operational costs are impacting 3 profitability of semiconductor manufacturing companies. According to the NTRS, factory costs have increased by 20% annually and the depreciation costs associated with them represent 45% of the wafer cost/cm2. To remain on the historic improvement curve, operating cost/cm2 must improve 1% annually. G. Factory Investment Risk Management and Time Factors The rapidly diminishing time allowable to recover initial and recurring factory investments requires that facilities be delivered faster with higher certainty. To reduce capital expenditures and start up times, facilities should be delivered in modular units just as they are needed. Several key metrics are: H. Minimum Economical Capacity Increment: Efficient and profitable factories will be sized at 3040K WSM (wafer starts per month) in the near future. This will require modular “just enough, just in time” additions to capacity. What Drives Semiconductor Fundamentals and Stock Prices? Drivers Impact Measured By Drives Units shipped revenue vs. Market share gains and earnings competition increases Absorptio n of higher Manufacturin Higher fixed costs g process margins/profits contributes efficiencies to lower unit costs Stimulates Performance greater results based enthusiasm Higher product on industry performance vs. the for end benchmarks products competition and support ~ ETE 411.3 ~ Term Paper (Final) ~ 4 What Can Go Wrong? Impact on Fundamentals Shipment volumes Weak economy and/or may be negatively product environment affected Loss of revenues, profits and Delayed delivery of competitive position; products potential reduction in demand for current chips Shrinking profit Sever price competition margins Increasing chip complexity requires Failure to keep up with more advanced technology processes to keep costs under control A slowdown in pace of Depresses industry computer replacement organic growth rates. Risks I. Process / Factory Complexity Processes and factories are constructed and operated with increasing amounts of material, process and technology change in an increasingly interdependent environment. NTRS lists a goal for factory effluent reduction of 80% by 2006 and more importantly of 50% by 1997. Tool manufacturers are struggling to make even modest reductions in effluent. The facility designers and constructors must develop solutions to efficient waste recovery. Tool manufacturers must better understand the energy costs, waste disposal and input chemical costs before designing families of tools. Designs with high chemical, gas, water and power usage, and effluent are significant impacts on facility first costs and operating costs. This research program will address the information management issues. [4] VI. SEMICONDUCTOR INDUSTRY FACES GLOBAL LEADERSHIP CHALLENGES Semiconductor Industry Association (SIA) President George Scalise recently remarked that “the U.S. semiconductor industry today is strong and healthy, but our world leadership position faces a very stern challenge in the years ahead. For more than 50 years, world leadership in technology and innovation has been the foundation of American strategies for economic growth, improved productivity, a better standard of living, and national security. U.S. leadership, however, is not a birthright. Other countries have recognized the strategic importance of leadership in the semiconductor industry and are becoming formidable competitors. The U.S. must choose to compete if we are to retain our leadership position. Maintaining global leadership will require us to address major concerns, including investing in basic research, improving our K-12 education system, creating incentives for students to pursue higher degrees in the sciences, and maintaining a favorable investment climate for capital-intensive industries. These issues are our top priorities.” Backing up Scalise’s remarks was a report by the Industrial College of the Armed Forces (ICAF) that detailed the effects of globalization in 2004, which was just as current in 2005 and 2006. The report said the U.S. is now facing the challenge of reacting to an information age becoming more uncertain and more globalized, particularly in the semiconductor industry. It can also impact the supply of ~ ETE 411.3 ~ Term Paper (Final) ~ semiconductors employed for national security. A typical example of this globalization might be: 1. Semiconductor design created in the U.S. 2. Exported to Taiwan for production. 3. Sent to Malaysia for assembly. 4. Moved to Thailand for packaging. 5. To China for incorporation into larger end-items. 6. Then, multiple imports into the U.S. or stay in China, where there is a growing consumer base. The ICAF report said that the U.S. semiconductor industry is a leader in globalized industrialization with innovators, producers, suppliers, markets, and users of semiconductors spanning the globe. Previously, the U.S. competitive advantage was in the design, construction, packaging, and selling of microchips. That is no longer completely true because the U.S. advantage does not necessarily include production and packaging. [9] VII. CHANGING SEMICONDUCTOR INDUSTRY FORCES CHANGES TO GROWTH STRATEGIES Semiconductor industry profits, opportunities, and star players are shrinking, according to iSuppli Corp, which this week painted an honest but somewhat bleak picture of the market. According to the research company, the semiconductor industry is now in a period of lowered expectations and thinning options, forcing chip suppliers to rethink their strategies for success. “Semiconductor profitability has eroded steadily since mid 2004, with quarterly net profits having fallen into the single-digit range in 2008, down from the 17% to 19% range in 2004,” said Derek Lidow, iSuppli's president and CEO, said in a statement. “The semiconductor industry now is less profitable as a percentage of revenue than the notoriously low-margin PC business, something that hasn't occurred before, except during a short period of the severe market downturn in 2001." What could be considered short-term trends, said Lidow, are instead examples of a changed industry. “To a degree, conditions in the semiconductor industry have been impacted by short-term events, such as the market volatility in 2006 due to 5 inventory write-offs and price wars in major product segments like DRAMs and microprocessors,” he said. “However, the long-term trend indicates that the semiconductor industry— which historically has been good at capturing profits in the electronics value chain—seems to have lost its money-making touch.” As profit has diminished, the semiconductor industry has re-segmented itself into new groups, iSuppli said. What once was an industry divided into companies that outperformed the market and preyed on mid-performing suppliers and low performing companies for additional market share, now no longer allows for the lowest rank of suppliers, minimizing growth opportunities for top performers. “The number of low performing companies decreased by so much that there now are only two major distributions in the industry: a few outstanding performers and the rest,” Lidow said. “The number of competitors achieving growth of more than 100% during the period of 2004 to 2007 declined to nine, down from 19 during the period of 2001 to 2004. This shows semiconductor companies can no longer break out of the pack by taking market share away from weaker rivals.” [10] VIII. SEMICONDUCTOR INDUSTRY The semiconductor industry is the aggregate collection of companies engaged in the design and fabrication of semiconductor devices. It formed around 1960, once the fabrication of semiconductors became a viable business. It has since grown to be the $249 billion dollar industry it is today. Semiconductor device manufacturing has spread from Texas and California in the 1960s to the rest of the world, such as Europe, India, Israel, Japan, Taiwan, Korea, Singapore and China. It is a global business today. The leading semiconductor manufacturers typically have facilities all over the world. Intel, the world's largest manufacturer, has facilities in Europe and Asia as well as the U.S. Other top manufacturers include ST Microelectronics (Europe), Analog Devices (US), Atmel (US/Europe), Freescale ~ ETE 411.3 ~ Term Paper (Final) ~ 6 Semiconductor (US), Samsung (Korea), Texas Instruments (US), Global Foundries (Germany, future New York fab in construction), Toshiba (Japan), NEC Electronics (Japan), Infineon (Europe), Renesas (Japan), Taiwan Semiconductor Manufacturing Company (Taiwan), Chartered Semiconductor Manufacturing (Singapore), Fujitsu (Japan/US), NXP Semiconductors (Europe), Micron Technology (US), Hynix (Korea) and SMIC (China). [5] leading companies are profiled with supporting key financial metrics. It’s supported by the key macroeconomic and demographic data affecting the market. IX. SEMICONDUCTOR INDUSTRY IN OUR X. TOP SEMICONDUCTOR SUPPLIERS REPORT: MEMORY MAKERS SLIP IN RANKINGS NEIGHBORING COUNTRIES Our neighboring countries like India, Indonesia, Korea and Pakistan improved their capabilities of semiconductor and day by day they improving their technologies through the help of the blessings of semi-conducting materials. This following examples will illustrate the bit of present scenario of our neighboring countries that how they affectively used semiconductor to enhance their technology. A. Semiconductors in India: Sony Computer Entertainment Launches Slimmer, Lighter PS3 in India. India is on a clicking spree. Now that taking years ago. Nikon also has a large semiconductor business. We first started looking at India, a leading provider of highly integrated semiconductor products that enable intelligent processing for networking, design team locations in California, Massachusetts and India. B. Semiconductors in Japan: Datamonitor's Semiconductors in Japan industry profile is an essential resource for top-level data and analysis covering the semiconductors industry. It includes detailed data on market size and segmentation, plus textual and graphical analysis of the key trends and competitive landscape, leading companies and demographic information contains an executive summary and data on value, volume and/or segmentation. It provides textual analysis of the industrys recent performance and future. Its prospect incorporates in-depth five forces competitive environment analysis and scorecards. It includes a five-year forecast of the industry. The Other south-Asian countries like Korea, Pakistan are also established semiconductor based technology in their countries. They also manufacture semi conducting devices which are leading them to the process of success and development Plummeting chip prices resulted in DRAM and flash memory makers suffering revenue declines in 2007. Intel and Samsung - two companies that supply a lot of chips to the computer industry - remain the top semiconductor suppliers, but chipmakers that supply to cell phone makers are moving up in the rankings. Meanwhile, memory IC makers are slipping. “A couple companies that showed some of the strongest growth last year and in the first quarter were Qualcomm and Broadcom in terms of percentage growth,” says Brian Matas, vice president of research for IC Insights in Scottsdale, Ariz. Qualcomm grew sales 29% in the first quarter of 2008 after posting a 24% revenue increase in 2007. While Broadcom increased its 2007 revenues only 2.1%, its sales grew 14% in the first quarter of 2008 to crack IC Insight's list of the top 20 semiconductor companies. Both companies supply chips to makers of high-end cell phones. Of course Intel remains the top semiconductor company. It owns more than 80% of the microprocessor market and grew sales 7.8% in 2007, according to researcher iSuppli's list of the top 25 semiconductor companies for 2007. Its sales increased 16% in first quarter of 2008. AMD's sales dropped 21% in 2007 due in large part to its price war with Intel. However, in the first quarter AMD grew its sales 22% as the price war cooled. AMD's ranking slipped from eighth in 2006 to 10th in 2007, says iSuppli. Samsung, which is the leading memory IC supplier, saw its sales slip a little less than 1% in 2007. However, its revenue increased 19% in the first quarter of 2008 as memory prices began to ~ ETE 411.3 ~ Term Paper (Final) ~ firm. Many memory IC makers slipped in sales rankings because of low prices for DRAM and flash in 2007. “A lot of them are way down the list because of brutal pricing,” says Matas. XI. FUTURE OF SEMICONDUCTOR: Energy has become a big factor in this developing world. We need energy for technology, invention of modern industries, new innovation. The demand of energy is increasing day by day with the increase in population so we should think of an alternate energy source. Solar power energy will be the most suitable one. Solar cells represent the fundamental power conversion unit of photovoltaic system. They are basically p-n junctions made of semiconductors. The process is described below: When enough photons are absorbed by the negative layer of the Photovoltaic cell, electrons are freed from the negative semiconductor material. Due to the manufacturing process of the positive layer, these freed electrons naturally migrate to the positive to the positive layer creating a voltage differential, similar to a household battery. When the 2 layers are connected to an external load, the electrons flow through the circuit and create electricity. Each individual solar energy cell produces only 1-2 watts. To increase power output, cells are combined in a weather-tight package called a solar module. These modules (from one to several thousand) are then wired up in serial and/or parallel with one another, into what’s called a solar array, to create the desired voltage and amperage output required by the given project. Mobile phone is the common gadget we can find in everyone’s hand. We can earn a lot of money if we establish a semiconductor industry which will provide the hardware requires. In this way we can also save the money which we spend every year to export the hardware and mobile sets from foreign country. [6] A. Future aspects of Bangladesh The present status and future prospect of these widegap semiconductor high-power devices are very important, in the context of applications in wireless communication and power electronics which is widely spreading in Bangladesh. In 7 Bangladesh, now there are companies producing semiconductor materials which can lead us as a technically developed country. POWER IC ltd. Is such a fab-less semiconductor company which is developing US qualities analog and mixed signal power management IC’s. So we can say we are getting along the modern communications by developing semiconductor materials of good quality by our own and will develop more integrated IC’s, diodes, transistors in near future. Though the contribution of Bangladesh in the semiconductor industry is very few some research projects are going. The projects under Dr. A.B.M Harun-ur Rashid at Bangladesh University of Engineering & Technology, Dhaka include: ● Very High frequency (25 GHz) Transceiver circuit design for on-chip wireless interconnect using integrated antenna. ● Fault detection and localization in Analog and Mixed-signal integrated circuit ● Si on-chip wireless channel modeling ● Signal processing chip design using ASIC and FPGA ● High Speed and Low power design of Content Addressable Memory ● Early detection of Breast cancer using MIST beam forming ● Novel circuit design using Carbon Nan tube Cadence VLSI Design tools is designed and implemented at the Robert Nayce Simulation Laboratory at the department of EEE, BUET which is the first its kind in Bangladesh. [7] We have a Semiconductor Technology Research Center (STRC) at University of Dhaka. The Department of Physics at Rajshahi University has a reputation of research in different fields of Physics. Some of the current research areas include: • Condensed Matter Physics: a) Perfect and defect crystals - computer simulation studies (theoretical). b) Solid state reaction (experimental) • Superconductivity ~ ETE 411.3 ~ Term Paper (Final) ~ • Semiconductors: Thin film deposition and characterization • Structural properties of glass and glass ceramics • Solar Energy [8] XII. CONCLUSION: Semiconductor industry is one of the fastest growing industries in the world. Although it faces different types of problems in getting established fully but if we think on Bangladesh’s perspective, our neighboring countries have achieved new heights regarding technological development but our Bangladesh is yet to fulfill such goals. But with the help of diligent citizens of the country reaching that goal will be within our grasp. The equipments required for setting up a semiconductor plant is extravagant and on top of that finding the right people for the skillful job is very difficult. Although the country has great prospects but in order to bring about a revolutionary change in the system there are many factor to be considered which can only come about from all round development of a nation which, I for one, hope will materialize in the near future. References [1] http://www.investopedia.com/features/industryhandbook/semi conductor.asp [2] http://en.wikipedia.org/wiki/Semiconductor [3] http://en.wikipedia.org/wiki/Semiconductor_fabrication_plant [4] www.ce.berkeley.edu/~tommelein/.../Sanvido&Mace.pdf [5] http://www.sia-online.org [6] http://www.energybangla.com/index.php?mod=article&cat=G reenPage&article=2198 [7] http://203.208.166.84/abmhrashid/ [8] http://www.rubd.net/faculty/faculty-of-science/92department-of-physics.html [9] http://www.springerlink.com/content/362603w085883g77/ [10] http://www.edn.com/article/CA6597389.html 8