European Semiconductor Industry At A Crossroads
(Friday, June 08, 2012 1:04:59 PM)
Semiconductors is a strategically important industry, providing the knowledge and technologies that generate some 10 percent of global GDP.
Friday, June 08, 2012:
European Semiconductor Industry At A Crossroads
Europe will lose advanced and competitive semiconductor manufacturing infrastructure without a European long-term industrial vision guiding and enabling the co-ordination of all stakeholders.
Semiconductors is a strategically important industry, providing the knowledge and technologies that generate some 10 percent of global GDP. Its high leverage on innovation cycles and wealth creation makes it one of, if not 'the' most important Key enabling technologies for Europe and an essential pillar of any European industrial policy.
Wafer scale-ups always bring disruptions and dislocations in the semiconductor industry. Among the most noteworthy are increased industrial consolidation and concentration and the setting of new competitive standards and rules defined by those driving the wafer transition. The next scale-up from 300mm to 450mm wafer diameter processing is now a certainty and 450mm fabs will be in full production before the end of the decade.
It will very likely be the final wafer scale up for the industry and will define the geographical locations of the next (and perhaps final) 10 to 15 most advanced semiconductor production areas worldwide.
Europe was at the leading edge during the 200mm to 300mm transition with the 1999 Siemens-Motorola joint venture R&D fab in Dresden the location of the first 300mm fab in the world, but failed to capitalize on this strength due to continuous lack of investment especially over the last decade. It is now at a crossroads, with only three 300mm fabs and a steady decline in indigenous manufacturing activities.
From a semiconductor supplier perspective, the 450mm transition is promoted by market leaders focused on advanced node manufacturing (More Moore: MM). There is currently no commitment from the European IDMs to 450mm, with only one firm (STMicroelectronics) even incorporating 450mm into its long-term strategic plan. Indigenous suppliers have leaderships in advanced products based on more mature technologies (More than Moore: MtM) that will continue to be manufactured on primarily 150mm and 200mm for some time to come.
But the fact remains that the transition to 450 mm will impact all levels of the European semiconductor supply chain, from semiconductor fabs suppliers (facilities, equipment and material suppliers) to chip manufacturers and designers, albeit with different timescales and to different degrees, depending on companies activities and portfolios. But nonetheless, all will be impacted.
Not having a 450mm production infrastructure in Europe will thus mean abdicating production of advanced semiconductor technologies, which will sooner or later (10 years) threaten the competitiveness of the current European semiconductor manufacturing base, including technology development and device design.
Note: investing in additional 300 mm fabs in Europe, when spare 300 mm capacity will be available in Asia, following the 450mm production ramp-up will not make economic sense for Europe.
Toward an integrated European 450mm strategy
The transition to 450mm will be more cost efficient than past transitions due to the increased industrial collaboration organised in Albany, NY within the Global 450 Consortium (G450C).
Although the collaboration is currently US-led, Europe should play a role in this early development phase as it did in the past. It has key strengths and capabilities to put forward in equipment and material supply, as well as R&D and technology development activities.
Whatever the degree of co-ordination, the size of investment will nonetheless remain very significant, with total cost of industry transition estimated between $25 billion and $40 billion from 2012 up to the time when the early adopters will open their first 450mm volume fab (as early as 2018). 450mm equipment and material development and qualification will concentrate the largest investment between $15 billion and $20 billion. The cost of the 450mm transition will come in addition to existing investment in 300mm technology development and thus translate into a significant increase in funding requirement.
In this context, national 450mm strategies do not make sense and a European 450mm 'master plan' is the only sensible scale. It should be based on both a strong industrial commitment and a coordinated position of public authorities (PAs) that are the necessary conditions to leverage the required funding, avoid duplication and concentrate the funding where needed.
A European 450mm master plan should also coordinate with existing initiatives (G450C) and be open to international participation. The acknowledged European leadership in semiconductor R&D activities should be leveraged to reach a critical mass and gain international dimension.
Co-ordination among European R&D institutes on 450mm critical
The different exposure to the 450mm transition across the European supply chain calls for a phased approach corresponding to individual players' needs and agendas. Three scenarios are explored in this Report, together with their cost and associated impact for Europe.
* Scenario 1 corresponds to the 'Business as Usual' scenario whereby 450mm R&D would be supported through current cooperative programs and budget that are currently almost exclusively focused on 300mm. Such a scenario would lead to a continuous decline in semiconductor production activities in Europe and a progressive shift of the equipment and material industry outside Europe.
* Scenario 2 corresponds to a dedicated European master plan to support equipment and material suppliers in the transition to 450mm platforms. To maximize impact and benefits for the industry, a shared program co-ordinating the leading European R&D institutes activities could be envisaged to secure the equipment and material industry in Europe, consolidate and even create new leaderships (450E pilot line).
* Scenario 3 finally corresponds to a process of setting up 450mm volume production in Europe with different, non-exclusive, approaches depending on fab ownerships and echnology targets. This includes the concept of a 450mm joint-fab model in Europe between IDMs (Eurofab450) in true partnership with equipment and material suppliers, initially targeting MtM products, but providing a European bridge to MM technologies in due time.
Conclusions
Europe will lose advanced and competitive semiconductor manufacturing infrastructure without a European long-term industrial vision guiding and enabling the coordination of all stakeholders. Such a long-term vision shall not oppose 300mm or 450mm, but rather consider both in parallel as part of an advanced manufacturing continuum, taking into account all the stages of the semiconductor supply chain.
Europe failed to capitalize on its strength during the 300mm transition, but 450mm could turn into a genuine opportunity to regain the position it once held in semiconductor manufacturing by securing a complete semiconductor supply chain and making sure that the most advanced semiconductor technologies continue to be manufactured on European soil.
It could start in the short term with a five-year programme to urgently set up the 450E pilot line in Europe to support the transition of the European equipment and material suppliers to 450mm and co-ordinate with the US-led G450C initiative in Albany.
From a chip production perspective, the opportunity of a joint 450mm MtM fab (Eurofab450) between Integrated Device Manufacturers and a private 450mm MM fab should be investigated and progressed in parallel to their natural conclusion. Whatever the outcome, every effort must be expended by the European Commission and national PAs to ensure that all potential locations and especially the current most advanced manufacturing centres in Europe remain favourable places for chip companies to operate in.
High tech industries can only close competitive gaps during technological shifts. The 450mm shift is one of them and most likely the last one for the semiconductor industry: the European
semiconductor industry is at a crossroads. The 450mm transition is a unique opportunity to launch a European industrial policy, building on its strengths (R&D, equipment and material,
co-operative development) and an increased level of coordination to preserve the remaining manufacturing base in Europe and protect its innovation power in the future.
- DECISION, France and Future Horizons, UK.
This study was assigned in December 2010 by the European Commission, DG Information Society and Media (DG INFSO), Directorate Components & Systems (Dir G), Unit Nanoelectronics (G1), to DECISION in partnership with Future Horizons.
Europe will lose advanced and competitive semiconductor manufacturing infrastructure without a European long-term industrial vision guiding and enabling the co-ordination of all stakeholders.
Semiconductors is a strategically important industry, providing the knowledge and technologies that generate some 10 percent of global GDP. Its high leverage on innovation cycles and wealth creation makes it one of, if not 'the' most important Key enabling technologies for Europe and an essential pillar of any European industrial policy.
Wafer scale-ups always bring disruptions and dislocations in the semiconductor industry. Among the most noteworthy are increased industrial consolidation and concentration and the setting of new competitive standards and rules defined by those driving the wafer transition. The next scale-up from 300mm to 450mm wafer diameter processing is now a certainty and 450mm fabs will be in full production before the end of the decade.
It will very likely be the final wafer scale up for the industry and will define the geographical locations of the next (and perhaps final) 10 to 15 most advanced semiconductor production areas worldwide.
Europe was at the leading edge during the 200mm to 300mm transition with the 1999 Siemens-Motorola joint venture R&D fab in Dresden the location of the first 300mm fab in the world, but failed to capitalize on this strength due to continuous lack of investment especially over the last decade. It is now at a crossroads, with only three 300mm fabs and a steady decline in indigenous manufacturing activities.
From a semiconductor supplier perspective, the 450mm transition is promoted by market leaders focused on advanced node manufacturing (More Moore: MM). There is currently no commitment from the European IDMs to 450mm, with only one firm (STMicroelectronics) even incorporating 450mm into its long-term strategic plan. Indigenous suppliers have leaderships in advanced products based on more mature technologies (More than Moore: MtM) that will continue to be manufactured on primarily 150mm and 200mm for some time to come.
But the fact remains that the transition to 450 mm will impact all levels of the European semiconductor supply chain, from semiconductor fabs suppliers (facilities, equipment and material suppliers) to chip manufacturers and designers, albeit with different timescales and to different degrees, depending on companies activities and portfolios. But nonetheless, all will be impacted.
Not having a 450mm production infrastructure in Europe will thus mean abdicating production of advanced semiconductor technologies, which will sooner or later (10 years) threaten the competitiveness of the current European semiconductor manufacturing base, including technology development and device design.
Note: investing in additional 300 mm fabs in Europe, when spare 300 mm capacity will be available in Asia, following the 450mm production ramp-up will not make economic sense for Europe.
Toward an integrated European 450mm strategy
The transition to 450mm will be more cost efficient than past transitions due to the increased industrial collaboration organised in Albany, NY within the Global 450 Consortium (G450C).
Although the collaboration is currently US-led, Europe should play a role in this early development phase as it did in the past. It has key strengths and capabilities to put forward in equipment and material supply, as well as R&D and technology development activities.
Whatever the degree of co-ordination, the size of investment will nonetheless remain very significant, with total cost of industry transition estimated between $25 billion and $40 billion from 2012 up to the time when the early adopters will open their first 450mm volume fab (as early as 2018). 450mm equipment and material development and qualification will concentrate the largest investment between $15 billion and $20 billion. The cost of the 450mm transition will come in addition to existing investment in 300mm technology development and thus translate into a significant increase in funding requirement.
In this context, national 450mm strategies do not make sense and a European 450mm 'master plan' is the only sensible scale. It should be based on both a strong industrial commitment and a coordinated position of public authorities (PAs) that are the necessary conditions to leverage the required funding, avoid duplication and concentrate the funding where needed.
A European 450mm master plan should also coordinate with existing initiatives (G450C) and be open to international participation. The acknowledged European leadership in semiconductor R&D activities should be leveraged to reach a critical mass and gain international dimension.
Co-ordination among European R&D institutes on 450mm critical
The different exposure to the 450mm transition across the European supply chain calls for a phased approach corresponding to individual players' needs and agendas. Three scenarios are explored in this Report, together with their cost and associated impact for Europe.
* Scenario 1 corresponds to the 'Business as Usual' scenario whereby 450mm R&D would be supported through current cooperative programs and budget that are currently almost exclusively focused on 300mm. Such a scenario would lead to a continuous decline in semiconductor production activities in Europe and a progressive shift of the equipment and material industry outside Europe.
* Scenario 2 corresponds to a dedicated European master plan to support equipment and material suppliers in the transition to 450mm platforms. To maximize impact and benefits for the industry, a shared program co-ordinating the leading European R&D institutes activities could be envisaged to secure the equipment and material industry in Europe, consolidate and even create new leaderships (450E pilot line).
* Scenario 3 finally corresponds to a process of setting up 450mm volume production in Europe with different, non-exclusive, approaches depending on fab ownerships and echnology targets. This includes the concept of a 450mm joint-fab model in Europe between IDMs (Eurofab450) in true partnership with equipment and material suppliers, initially targeting MtM products, but providing a European bridge to MM technologies in due time.
Conclusions
Europe will lose advanced and competitive semiconductor manufacturing infrastructure without a European long-term industrial vision guiding and enabling the coordination of all stakeholders. Such a long-term vision shall not oppose 300mm or 450mm, but rather consider both in parallel as part of an advanced manufacturing continuum, taking into account all the stages of the semiconductor supply chain.
Europe failed to capitalize on its strength during the 300mm transition, but 450mm could turn into a genuine opportunity to regain the position it once held in semiconductor manufacturing by securing a complete semiconductor supply chain and making sure that the most advanced semiconductor technologies continue to be manufactured on European soil.
It could start in the short term with a five-year programme to urgently set up the 450E pilot line in Europe to support the transition of the European equipment and material suppliers to 450mm and co-ordinate with the US-led G450C initiative in Albany.
From a chip production perspective, the opportunity of a joint 450mm MtM fab (Eurofab450) between Integrated Device Manufacturers and a private 450mm MM fab should be investigated and progressed in parallel to their natural conclusion. Whatever the outcome, every effort must be expended by the European Commission and national PAs to ensure that all potential locations and especially the current most advanced manufacturing centres in Europe remain favourable places for chip companies to operate in.
High tech industries can only close competitive gaps during technological shifts. The 450mm shift is one of them and most likely the last one for the semiconductor industry: the European
semiconductor industry is at a crossroads. The 450mm transition is a unique opportunity to launch a European industrial policy, building on its strengths (R&D, equipment and material,
co-operative development) and an increased level of coordination to preserve the remaining manufacturing base in Europe and protect its innovation power in the future.
- DECISION, France and Future Horizons, UK.
This study was assigned in December 2010 by the European Commission, DG Information Society and Media (DG INFSO), Directorate Components & Systems (Dir G), Unit Nanoelectronics (G1), to DECISION in partnership with Future Horizons.