[SEMI Theater] Disappearing Supply Chain from Silicon Valley?

The Semiconductor Supply Chain, a Moving Market

ByJohn Housley

Techcet Group, LLC

December 2009

Techcet Group, LLCwww.techcet.com

2

Techcet Group, LLC• Strategic Planning and

Business Development Consulting –Specialized in Electronic Materials Supply Chain Business & Technical Trends

• Techcet Critical Material Reports* :• Solar Cell Process Materials • Solar Cell Equipment Consumables• Polysilicon Market and Supply Chain• Ceramics• High K/ALD Precursors• Interconnect Materials Beyond 65nm• Ion Implant Sources• Liquid Dopants• Low Temperature Dielectric Precursors• Advanced Interconnect Dielectrics• Advanced Interconnect Metallization

www.techcet.com2

• CMP Consumables• Gases• Graphite• Masks and Reticles• Photoresists and Photoresist Ancillaries• Quartz• Silicon Carbide• Sputter Targets• Wet Chemicals

* Several Critical Materials Reports are commission by International Sematech.

Supply Chains We Follow

Semiconductor Materials, both direct and indirect

OEM suppliers Intellectual treasure Skilled Labor

OEM Semiconductor Supply Chain- Silicon Valley In 2008-2009 we were losing 3-4

machine shops and related supply chain providers per month

In 2010, newer generation risk takers are buying equipment and older shops are running at full capacity

Currently no shortage or most raw materials

This supply chain is recovering, but still very vulnerable to the Asia shuffle

Intellectual Treasure Supply Chain Graduate and

experienced Engineers working on daily contracts

New Graduates, Engineers, physics and Chemistry majors working at Starbucks.

New Engineers that are hired working for much lower salaries

Will this discourage future generations of hard science majors?

Can American graduates compete with Asian engineers on a cost basis?

Is it worth it?

Skilled labor supply chain

If fabs move out of Silicon Valley, the jobs for skilled labor moves or dies

Few opportunities for occupational training

With the repeated industry ups and downs, many skilled workers switch industries.

SEMI and other companies have had good luck with their High Tech U program.

Materials Supply Chain, Always Looking for the Lowest Link

Electronic Materials

Semiconductor materials as measured in US$

CGMG-SemiconW 2010


8

Direct Materials

28%

Silicon22%

Packaging47%

Indirect Materials

3%

Supply Constraints/ Drivers


9

Materials Business Growth/

Profitability

Market Drivers• Portable Applications

Driving Need for Smaller Geometry IC’s

• Cloud Computing Driving Demand for Simpler Technologies

Other Markets Demanding Same Materials

Raw Material Production Flexibility

Si/ polySi Wafer Prices

January 2010

Makers selling to: Manufacturers, “Blenders”, Purifiers and Repackagers who sell to each other

OEMs competing with like parts/ materials suppliers (quartz, targets, post CMP cleaning)

Users always trying to buy deeper in the chain to save money and control POR

Crazy Supply Chains

CGMG-SemiconW 2010


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July 2010 Techcet Group, LLCwww.techcet.com

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ConsumptionSource: USGS

Silica Worldwide Use

Rubber36%

Health20%

Investment Castings17%

Electronics10%

Coatings8%

Other9%

Hot growth areas:• “green” tires (US & Europe)• reinforced silicone-rubber in shoes (Asia) • toothpaste (China) >5% CAGR• electronics (CMP WW)• cosmetics (WW)

“Rise in Chinese Economy Boosts Toothpaste Market”

fumed31%

colloidal66%

alkoxysilane3%

Indirect Materials Supply Chain

CGMG-SemiconW 2010


12

Base Material Supplier

Cold Cold & Hot Hot

Quartz Fabricators

OEM Eqt. Supplier

End User (IC Fabricator)

Mines

Makers selling to end users US Makers consolidating or getting out of

the business Solvents being minimized in IC Fabs Asian material supplier market growing For other chemicals such as acids, we are

too picky and cheap

Supply Chain Shift

CGMG-SemiconW 2010


13

January 2010 Techcet Group, LLCwww.techcet.com

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Gases & Wet Chemicals

ConsumptionSource: USGSSpecialty Products and Smaller Quantities Relegated to

Smaller Companies and Local SuppliersLarger Companies Primarily Want to Deal in Bulk Volumes and Cater to Asia

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

2003 2004 2005 2006 2007 2008 2009 2010 2011

Reve

nues

($M

's)

Specialty Gases

Ambient Gases

Wet Chemicals

Indirect Materials Hit Hard –Quartz and SiC Markets

January 2010 Techcet Group, LLCwww.techcet.com

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SiC and Quartz ($Ms)

$0$100$200$300$400$500$600$700$800$900

$1,000

2003 2004 2005 2006 2007 2008 2009 2010

Rev

enue

s ($

M's

USD

) SiCQuartz Fabrication

0%

5%

10%

15%

20%

25%

30%

35%

40%

SiC

as a

Per

cent

of T

otalBoth SiC and Si

continue to gain relative market shares Graphite losing ground based on “dirty” perceptionSilicon and SiC have such a better CTE, and cleaner reputation, they are hard to beat

December 2009 Techcet Group, LLCwww.techcet.com

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Consumption

January 2010Techcet Group, LLCwww.techcet.com

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Targets - Tantalum Supply and Demand

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• Poor demand impacting Ta market

• Main Ta Mine Moth-balled

• 2009 Ta Target Revenues ~ $70M will soar to >$140M in 2010 due to price escalation

Ta 2000 2010 est commentsSupply

Australia 1.3 0.0 Mines shutdownAfrica 0.79 1.025 Humanitarian

issuesBrazil 0.42 0.85China 0.37 0.33SE Asia 0.25 0.27Canada 0.17 0.15Others 0.05 0.19Recycled 0.75 0.5Stockpiles 0.65 0.42

Total Supply 5.25 3.735Demand 5.2 4.2Shortfall 0.05 0.465

050,000

100,000150,000200,000250,000300,000350,000400,000450,000

2005 2006 2007 2008 2009 2010 2011 2012 2013

Ann

ual C

apac

ity (M

T/Yr

)

Established Suppliers New Entrants


January 2010 17

Polysilicon

0%50%

100%150%200%250%300%350%400%450%500%

Price Fluctuation

Source: SEMI and Techcet

July 2010 Techcet Group, LLCwww.techcet.com

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Consumption

CMP Slurry & Pad Materials Market

Cu Barrier

Cu Step 1

Tungsten

Oxide

S-STI

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2006 2007 2008 2009 2010

Slur

ry &

Pad

A

nnua

l Rev

enue

(M$U

SD)

Cu Barrier

Cu Step 1

Tungsten

Oxide

S-STI

Cu Barrier

Cu Step 1

Tungsten

Oxide

S-STI

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2006 2007 2008 2009 2010

Slur

ry &

Pad

A

nnua

l Rev

enue

(M$U

SD)

January 2010Techcet Group, LLCwww.techcet.com

Supply Chain Cross-Links PV Materials Markets drive for lower cost

will impact ASPs of Like SC Materials Already happening in TFT area - Gases

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Meters of Solar Cell Substrates

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2008 2009 2010 2011 2012 2013

Mill

ions

of m

2

CIGS/CISCdTea-Si/mx-Sic-Si

Thin Film CAGR of 20%+ expected over 5 yrs


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Front End Process Materials*

January 2010

* Without Silicon

CMP

Gases

Masks

PhotoresistAncillaries

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Rev

enue

s (M

$'s)

Ceramics

Silicon Carbide

Quartz

Graphite

Wet Chemicals

Targets

Ancillaries

Photoresist

Masks

Gases

CMP

Electroplating

Adv.Dielec. and SOGs

Indirects


21January 2010

Worldwide Estimated Photoresist Market Size (in US$)

11501230

1400

950

12001300

1540

0

200

400

600

800

1000

1200

1400

1600

1800

2006 2007 2008 2009 2010 2011 2012

Ann

ual R

even

ue in

$M

Cost Per Puddle Puddle size Puddles Per Wafer


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December 2009 Techcet Group, LLCwww techcet com

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Conclusions?

These four supply chains are at major riskGrowth in Asia continues, causing much of this riskSome jobs can switch to software or bio-engineering, but where is the re-training for the over 45 group?For materials, US laws and regulations affect an aging and disappearing manufacturing baseGrowth areas in SC Materials

Litho – 193 nm ArF resistsInterconnect Materials (CMP, dielectrics, metals) > $2BFront End Materials (dielectrics, metals) <$200M by 2015

December 2009


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Acknowledgements• SEMI - Dan Tracy, Ph.D. and Lara Chamness• TechSearch International - Jan Vardaman• VLSI Research – Risto Puhakka• Techcet Partners and Associates

– Lita Shonroy – Partner– Karey Holland, Ph.D. – Partner– Steve Holland, Ph.D.– Partner– Mike Fury, Ph.D. – Director / Sr. Technologist– Allan Wiesnoski – Director / Sr. Market Analyst– Jiro Hanaue – Associate Market Analyst


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Technology

[SEMI Theater] Disappearing Supply Chain from Silicon Valley?