Extreme Consolidation: Connection to the Supply Chain and the Semiconductor Market

Extreme Consolidation: Connection to the Supply Chain and the Semiconductor Market

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Description: The semiconductor supply chain has been transformed over the last 10 years. IDMs were once the rule and fabless the exception. The fab equipment supply base serving these IDMs also had multiple viable suppliers in each segment.

Since then, extreme consolidation has changed to supply base landscape radically. Fabless semiconductor companies have grown to take the place of the many IDMs that dropped out or became fablite. The foundries emerged to supply them are now giant buyers of ...

 
Author: G. Dan Hutcheson (Fellow) | Visits: 3231 | Page Views: 6444
Domain:  High Tech Category: Business Subcategory: Supply Chain Management 
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Contents:
Extreme Consolidation:

ISS 2013: January 2013

Connection to the Supply Chain
and the Semiconductor Market

g dan hutcheson
This report has been reproduced for SEMI. Further distribution requires written approval of VLSI Research Inc.

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1

As we ran from sub-micron to nanometers
Technology became more difficult
Development costs rose
Consolidation occurred
Partnering won and PICOS lost
The economic benefits of Bruck’s Rule end with
extreme consolidation
Will we run out of green fields?

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2

Consolidation effect on R&D cost

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3

Fewer players lowers industry’s
R&D cost
Industry cost
could have been
$120B for 10mm

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4

Bruck’s Rule on Consolidation

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5

First seed’s of extreme
consolidation:

EUV 300mm 450mm

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6

1990

Scanners

Tracks Ion Impl.
CMP

Deposition

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Clean Process Cntrl

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Ja
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2000

Scanners

Tracks Ion Impl.
CMP

Deposition

Etch

Clean Process Cntrl

VLSIresearch … intelligence to make better decisions faster
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Ja
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2010

Scanners

Tracks Ion Impl. Deposition
CMP

Etch

Clean Process Cntrl

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Ja
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9
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With Consolidation, Competitive
advantage shifted to those best
at Collaboration

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10

Semiconductor-to-tool-supplier
partnering styles split in the 90’s:
‘cost reduction’ vs. ‘partnering opportunity’

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11

PICOS* failed
because
• Low price highest goal
– In order to do that, it must be mistrustful
– Closes communication channels
– Closes off the benefit of partnership in favor of
transactions

• If you’re operating on a FUD model
– you’re tearing down the sense of trust
– you’ve worked so hard to build
*Pressure Intensive Cost Optimization of Suppliers

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12

Switching to a Positive
Partnering Style Grows Margins

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13

Sources of GM
differences






Time-to-market
Time-to-ramp
Time-to-yield
Fewer yield excursions
Shorter yield excursion recovery
times
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14

Trust Works

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15

2012:
a partnering milestone
• ASML’s co-investment program
• Customer-2-Supplier and C2C relationship
that was once inconceivable came to be
• The common interest for all is advancing
technology

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16

Partnering’s New Dimension
• From National to International Consortia
– We were once very nationalistic
– Lack of trust between nations long gone
– Pushing Moore’s Law forward has become the
intercontinental railroad of the 21st century
• But it’s global

• Public and Private Partnerships abound
• And they’re global too!
• Equity investments in suppliers
• Tiered IP sharing agreements

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17

Spoiler Alert:
• Escalation of patent wars
– The Economist front page: “Tsunami of Lawsuits”
– Across the spectrum of telecom and computing
– Apple vs. Samsung

• IDM vs. Asset Light vs. Fabless
– Fabless to IDM or Fabless vs. Foundry?
• TSMC raised prices – the customer always pays
• TSMC rejected $B offers

• Could go more vertical – pancaking tiers
– TSMC, Intel, Samsung > 50% of CapEx
– ASML co-investment program an early sign?
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18

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