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Laser pulses illuminate downturn and recovery

A different way to look at real volume in chip production.

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Laser pulses per month for Gigaphoton's KrF and ArF lasers

Laser pulses per month for Gigaphoton’s KrF and ArF lasers

I thought this image was a nice illustration of exactly what happened in the most recent industry downturn. The graphic shows the number of pulses per laser, per month, for Gigaphoton’s installed base of ArF and KrF lasers. A stepper processing 1,000 wafers per month typically produces about 800 million pulses per month.

As you can see, in late 2008 and early 2009, wafer production fell off a cliff. It didn’t recover to pre-downturn levels for nearly a year. In a more typical cyclical capital spending downturn, equipment purchases slow down as new capacity exceeds new demand, but wafer unit volume keeps rising. When demand catches up, companies start building fabs again. For the most part, chipmakers and their suppliers have learned how to manage their way through these ups and downs: they’ve been part of the industry from the beginning.

Falling wafer volume, in contrast, means that the semiconductor industry downturn is tied to a macroeconomic recession: people don’t buy as many chips. Such dips are much more unusual, and much more challenging for company management. Capital expenditures don’t recover until capacity utilization improves, and that doesn’t happen until customers start buying again.

Image courtesy of Gigaphoton, Inc.