Deepak Sekar, Chief Scientist of MonolithIC 3D, has just published a really interesting blog post with a somewhat cryptic title, in my opinion. The title of the post is “Can 450mm Decommoditize the Semiconductor Industry?” The post discusses how the cost of jumping from 300mm to 450mm silicon wafers might indeed separate the big semiconductor fab players from the not-so-big. Sekar makes a compelling argument that the cost of upgrading an entire fab line from 300mm to 450mm is significantly more than the roughly $2 billion he estimates is needed to jump from one IC process node to the next node. The benefit realized from making this jump is a 20% to 25% savings in per-die manufacturing cost, so there’s a real competitive advantage to making such a move, if a company can afford it.
And that is Sekar’s premise: companies that can afford to make this jump will ultimately win.
Sekar’s subsequent analysis is based on a “rule of thumb” that says a company can only afford a fab upgrade if it has annual revenues that are twice the cost of the upgrade, which he pegs at $7 billion for a 450mm fab. He then compares DRAM vendors against DRAM vendors, NAND Flash vendors against NAND Flash vendors, and logic foundries against logic foundries to determine which might be the winners in such a conversion.
Very, very interesting reading. Click here for Sekar’s full post.
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Few can disagree that 450-mm will support the trend towards consolidation.
Indeed, unless equipment suppliers find it worth continuing to manufacture leading-edge equipment for 300mm FABs, it does indeed look as if the foundry business will become concentrated in at most three or four companies for geometries of 22-nm and below (the number will probably be set by ‘political’ views on security of supply, rather than by pure economics).
However, I doubt that this effect alone will ‘decommoditize’ memory. Firstly, it would seem that at least Hynix and Micron could overcome the hurdle by producing DRAM and Flash in the same fabs. Second, if companies had applied this multiplier in the past, foundries like UMC, Global, and SMIC would still be limited to 200mm wafers.
I suspect that part of the reason for the discrepancy between the theory as presented and companies’ practice is that the quoted factor may be the level at which it is worth building a new FAB and mothballing the old, rather than the level at which the new FAB can be profitable. I.e. it is not the level of affordability, but the level at which the switch would be desirable for geometries that can still be produced in smaller-diameter fabs.
An additional factor for memory would be the anticipated growth in NV product with the increasing penetration of SSDs.