200mm Equipment Shortfall

A surge in demand for consumer electronics, communications ICs, sensors and other products has created a shortage in 200mm fab capacity that shows no signs of abating.

None of these chips need to be manufactured using the most advanced processes, and there have been enough tweaks to processes at established nodes to eke even more out of existing processes. But that has left chipmakers struggling to procure 200mm equipment for those fabs as demand for chips at these older nodes continues to rise.

Responding to that demand, Applied Materials, ASML and Lam Research recently re-entered the 200mm equipment market. Now, these companies are making new and select 200mm tools. Other fab tool vendors are also making new 200mm systems and/or beefing up their used equipment efforts.

But even with these efforts, there is still an acute shortage of 200mm “cores” in the market. “Core” is a term that refers to a used piece of equipment that must be refurbished by an OEM, third-party refurbishing house or end-user.

By some estimates, there are somewhere between 600 to 720 pieces of 200mm used equipment or cores that are in inventory or available for purchase on the open market today. However, there is demand for about 1,000 200mm cores among device makers today, according to Emerald Greig, executive vice president for the Americas & Europe at SurplusGlobal, one of the world’s largest suppliers of secondary equipment.

“There is really a shortage of equipment out there,” Greig said. “It’s ridiculously low.”

The shortages include all major tool types, such as CMP, etch, deposition and lithography. In addition, the 200mm equipment shortfall is problematic for another reason: prices are increasing for 200mm tools.

“The cost of those cores, because there are so few of them, has gone up,” said David Sachse, director of asset management at Lam Research. “It’s more expensive to buy a used 200mm core than it is for a comparable 300mm core.”

To be sure, chipmakers and equipment vendors will need to keep a close eye on the 200mm market. “People will stay on 200mm in a large way,” said John Cummings, managing director of marketing and business development at Applied Materials. “The ‘more than Moore’ technology base is large and a growing market. It’s not dead.”

For example, a large percentage of chips for automotive, mobile systems and wearables are manufactured on 200mm wafers.

“We’re seeing a lot more demand for capacity at 55/40,” said Walter Ng, vice president of business management at UMC. “And because of packaging options, we’re also seeing a lot of companies trying to leverage existing designs. So they’re using advanced packaging to come out with a new solution. Packaging in multi-die solutions is getting more steam, and there is a potential for even more steam if cost points come down a little.”

That means even more emphasis on 200mm manufacturing, because these packages can include chips developed at different process nodes. “We’re on the cusp of packaging solutions opening up the ability for even more applications to take advantage of multi-node die,” Ng said. “There is a lot of integration going on right now, and there will be time to market aspects as well as economic aspects to consider. We believe that in the next few years, 2.5D and other solutions will be much more mainstream.”

There already are some indications of a market shift. A smartphone, according to Applied, has some 90 different chips. “A lot of them are stacked on top each other,” Cummings said. “Eighty percent of them are 200mm.”

How did we get here?
So how did the industry end up with so few 200mm tools? The used equipment market gained traction more than a decade ago, when many chipmakers migrated from 200mm to 300mm fabs. This, in turn, caused an excess of used 200mm gear to hit the open market.

At the same time, several equipment companies went out of business or were acquired over the years. Many vendors decided to stop building or supporting certain types of tools, but there was—and still is—demand for these systems in the market. In fact, demand is increasing for 200mm chips as vertical markets such as automotive and virtual/augmented reality begin ramping. Many of these chips are analog or mixed signal, and the analog piece does not scale the way digital ICs do.

To deal with the legacy gear, a plethora of used equipment companies and brokers emerged over time. And at last count, there are somewhere between 100 to 200 entities that are selling used tools today.

Meanwhile, the secondary or used semiconductor equipment market has grown at a compound annual rate of 14% over the years, according to SurplusGlobal. In total, the secondary equipment market was somewhere between a $2.8 billion to $3 billion business in 2015, according to the company.

But amid a slowdown in the overall fab tool sector, the secondary equipment market is projected to fall to around $2.0 billion in 2016, according to SurplusGlobal. There are several reasons for that decline. First, there aren’t enough 200mm tools to match the right application or fab flow today. Second, there was a huge wave of mergers and acquisitions in the IC business in 2015. Many of those acquisitions resulted in excess fab capacity and tools. But instead of releasing those tools in the open markets, IC vendors are generally holding on to their fab gear for future use.

This, in turn, fueled the shortfall of 200mm equipment in the market. “What’s interesting is that there was not a lot of equipment that came out from (the M&A activity),” Grieg said. “As we talk to customers now, they say: ‘We are not selling anything. We are holding on to them and transferring them to another fab.”

Going forward, meanwhile, the industry faces some big challenges. The installed capacity for 200mm is projected to reach 5.4 million wafers a month in 2019, up 8% from 5 million in 2015, according to SEMI. (See chart below)

“People have been really good at finding applications to amortize older fabs,” said David Fried, chief technology officer at Coventor. “People have also been really good at finding technologies to put in older fabs. You are seeing more sensors, MEMS and IoT devices. This is the stuff that doesn’t require the finest geometries.”

However, there aren’t enough 200mm tools to meet that demand. In total, there are slightly more than 600 200mm used tools or cores that are available on the open market, according to SurplusGlobal’s Greig. Of that figure, some 500 of those 200mm tools were recently released on the open market from undisclosed sources in Korea.

On top of that, third-party refurbishing companies and brokers are also sitting on inventory. That inventory amounts to roughly 10% to 20% above that 600 figure, according to Greig.

This, in turn, amounts to about 60 to 120 additional tools. So by some estimates, there are 660 to 720 200mm cores available today. This figure doesn’t include 200mm tool inventory within the OEMs like Applied, ASML, Lam, TEL and others.

The problem? While there are roughly 660 to 720 cores in the market now, “the demand for 200mm cores is at a minimum of about 1,000,” Greig said.

In comparison, there are 2,000 300mm cores or tools in the open market today. “We do see an increase in 300mm, but it’s been slow,” she said. “People aren’t putting in 300mm capacity.”

The emphasis, at least for the moment, is on 200mm, which is a big change from several years ago.

“We used to throw that [200mm] equipment away,” said Michael Zunino, director of semiconductor products at EquipNet, a global asset management firm that provides appraisal and auction services for pre-owned equipment. “It’s all back in the game now.”

EquipNet is trying to change the current broker model. “Investment recovery is a big concern now,” said Thomas Noonan, the company’s vice president of auctions. “We’ve been doing that for 10 years. If EquipNet can save $200,000 in investment recovery for a client, that could save someone’s job. We maximize how they use their internal equipment.”

The solutions
To solve the shortfall of 200mm tools, the industry is moving in several different directions. For example, a handful of third-party used equipment companies are not only selling used systems, but they are developing new systems under their own brand names.

Then, Applied, ASML and Lam are re-entering the 200mm market. Other OEMs are beefing up their new and used 200mm efforts.

Still, it’s unclear if OEMs can make up the shortfall, especially in select tool markets. Generally, lithography tools are the hardest 200mm equipment to find in the used market.

“Supply has always been tight,” said Ted Shafer, director of business development for mature product sales at ASML. “Nobody overbought lithography.”

For 200mm, ASML has a multi-pronged strategy. As before, ASML sells an older 248nm tool for 150mm and 200mm fabs. In addition, the company can take an older ASML scanner in the field and refurbish it.

What’s new is that ASML also can take its high-throughput 300mm platform, the TwinScan, and reconfigure that for a new 200mm lithography system. “If you retrofit it for 200mm, it can often give you a cost-of-ownership advantage,” Shafer said.

ASML’s move underscores a key trend in the overall 200mm arena. “It’s just not about refurbishing a tool at a lower price,” Applied’s Cummings said. “More and more customers do need and expect new technologies.”

Indeed, besides scanners, the industry wants other new and upgraded 200mm tool types, such as CMP systems, etchers, deposition tools, among others.

In response, Applied Materials recently restarted its 200mm efforts. “We can still make brand new 200mm tools,” Cummings said. “We have a number of new chambers and systems.”

As before, Applied Materials also refurbishes older tools. “Most of our business is refurbishing tools that have already been in the industry,” he said.

Meanwhile, Lam has also restarted the production of 200mm tools in three areas—CVD, etch and wet clean. “We realize that we just can’t push everybody up to 300mm. A lot of customers have much more technology demands at 200mm now,” Lam’s Sachse said. As before, Lam also provides refurbishment services for used tools.

In addition, TEL continues to make new 200mm tools, according to TEL. TEL also continues to follow the more traditional route in the used equipment arena. “We are trying to work on what we call a core-less manufacturing capability, where you can take used or refurbished parts and put together a system,” said Kevin Chasey, senior vice president of field operations at TEL.

All told, each fab tool company has a different strategy. Regardless, OEMs, used equipment companies and brokers face the same challenges in the 200mm arena.

For example, a chipmaker wants to procure a 200mm tool with advanced specs for a given fab flow. For this, a chipmaker can take a couple different routes—buy a new 200mm tool from an OEM, or procure a refurbished system from the OEM or a third-party.

“It all comes down to what the customer needs,” said Jim Mello, vice president of sales and marketing at Entrepix, which specializes in refurbished chemical mechanical polishing (CMP) tools. “If they come to you with a spec that says: ‘I need the newest equipment.’ Then, they would have to go to the OEM. But if it’s a technology level below that, then they have options.”

Then, the next challenge is to find a new or used tool in the market. In just the 200mm used CMP tool market alone, for example, there are less than 20 cores available worldwide, according to Mello. “There are also not many 300mm CMP tools available,” he said.

Regardless, it’s sometimes hard find parts to build new or legacy 200mm tools. At times, the boards, chips and software are outdated or no longer in production.

But even if one can obtain the parts, the spares and subsystems are sometimes relatively expensive, which, in turn, could boost the overall price for a given tool. “It’s a big challenge just to control the cost for 200mm tools,” Lam’s Sachse said.

Building a new system from nearly scratch is difficult. But refurbishing an older system is problematic. “It’s relatively easy to get ‘generation one’ tools,” said Hans Peters, head of systems sales and marketing for Ebara’s European operation. “But those are the tools that you don’t want to sell anymore, because they are out of service and difficult to maintain and difficult to deliver parts to.”

It’s also difficult to deal with a second-generation (or later) 200mm tool. “Those cores that are coming on the market are sometimes in very bad shape. Sometimes, you have a lot of surprises when you open the box. It makes it sometimes difficult and unpredictable in terms of how long the refurbishment process could take,” he said.

There is some good news. Many OEMs and used equipment companies are hiring people who can build, service and support the older 200mm tools.

The bad news is that 200mm tool shortages aren’t going away, at least for the foreseeable future.

—Jeff Dorsch and Ed Sperling contributed to this report.

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