SEMICONDUCTOR UPDATE
February 2009
McIlvaine Company
TABLE OF CONTENTS
Qimonda Closing Plant in Virginia
Intel Opens European Labs for Collaborative Research
International SEMATECH Manufacturing Initiative (ISMI) Is a Global Consortium
SVTC, Entrepix Expand CMP Work to 300mm
Toshiba Delays New 300mm Fabs; Cuts Capex 60 Percent
LG Display Forges Strategic Alliance on LED Chips with Cree
Jobs Cut as Part of Freescale Semiconductor Inc.’s Restructuring Initiative
Intel Closes Five Older Plants
Qimonda Seeks Bankruptcy and Becomes World's First Semiconductor Company to Collapse
Bailouts in Taiwan May Help Micron
Sematech Opens Green Technology Center
German memory-chip maker Qimonda AG says it is closing its Richmond, VA, area plant, laying off about 1,500 employees.
A spokesman said the company has begun ramping down operations at the plant and expects to be finished by April. A bulk of the layoffs will occur within the next month.
The shutdown of the Richmond plant will clear the way for the company to start making a new chip at a plant in Germany.
Qimonda declared bankruptcy earlier this month. The company said a drop in prices of the chips it produces and decreased access to financing led to the deterioration of its financial position.
Late last year, the company announced cuts of about 1,200 jobs at the plant, or 40 percent of the plant's work force.
Intel Corp. has launched the formation of Intel Labs Europe (ILE) with "open labs" being formed in Leixlip, Ireland and Munich, Germany. Coinciding with the ILE's launch, Intel chairman Craig Barrett and chief technology officer Justin Rattner attended a seminar in the European Parliament in Brussels regarding European research, innovation and competitiveness. The dialogue focused on how research and innovation can aid Europe's economic recovery and long-term competitiveness.
Intel already has about 800 engineers engaged in research across Europe so the formation of ILE is partly to do with reorganizing Intel's European research under a single management structure. Intel does plan to establish so-called open labs in Munich, Germany and Leixlip, Ireland to enable and host participation in EU Framework 7 (FP7) projects and other collaborative research with European companies, start-ups and universities.
Professor Martin Curley, professor of technology and business Innovation at the National University of Ireland, Maynooth, and global director of IT innovation at Intel, has been appointed Director of Intel Labs Europe, the company said.
The mission of ILE is to advance Intel Architecture research and innovation and to partner with European stakeholders to improve European competitiveness. The likely areas of research include: visual computing, software development, enterprise solutions, green computing, advanced microprocessor research and high performance computing.
"With the foundation of ILE, Intel is establishing a strong network of its existing labs in Europe and preparing a platform for further potential investment and advanced innovation activity," the company said in a statement. Intel is also working to align itself with the European Institute of Innovation and Technology (EIT) as it develops. The EIT started operation from a base in Budapest, Hungary in 2008.
Intel did not say whether the formation would represent any additional funding beyond what it had already planned to spend on European R&D.
Intel's Braunschweig lab in Germany is developing system- and chip-level technologies for multi-core processors and SoC designs. Intel's Barcelona lab in Spain is working on chip-level innovations intended to improve chip performance and energy efficiency over the next 25 years. In Gdansk, Poland, Intel researchers focus on developing software and hardware systems for networking and telecommunications equipment using reprogrammable silicon. The Intel Cologne, Germany lab plays a leadership role in Intel's worldwide R&D network, developing Intel tools for high-performing computing (HPC) systems and compute clusters.
Intel has participated in the EU's Fifth, Sixth and Seventh Framework Programs for collaborative research (FP5, FP6 and FP7) and has received support for its work in 20 projects to date.
International SEMATECH Manufacturing Initiative (ISMI), the global consortium of the world's major semiconductor manufacturers, announced the launch of its new Environment, Safety & Health (ESH) Technology Center in Austin, Texas. The Center will be dedicated to providing green technology solutions that lead to reduced energy consumption, lower costs, and greater productivity in semiconductor manufacturing.
"Given the global environmental challenges we face, we believe there is nothing more important than energy and resource conservation," said Scott Kramer, vice president of manufacturing technology at SEMATECH. "Our objective in launching the ESH Technology Center is to lead the effort to keep our industry's manufacturing businesses productive, profitable, and sustainable, while significantly reducing the environmental footprint of manufacturing operations."
In addition to the current ISMI members, who represent over half of the world's semiconductor production, participation in the ESH Technology Center is open to all chipmakers and equipment and materials manufacturers. Adopting ISMI's successful collaborative model, the Center's participating companies will share ideas and resources, and direct, continuously evaluate, and refresh the program portfolio.
The new Center will drive ESH programs, built over 15 years by SEMATECH and ISMI, to:
· promote energy and resource conservation through technical evaluations and demonstrations;
· advance green semiconductor operations and processes;
· provide forums for sharing ESH benchmark data, surveys, and best practices.
As an example of the Center's work, past projects have demonstrated 10-20 percent utility reductions by adopting best practices in ultrapure water recycle/reclaim and cleanroom HVAC optimization. The new Center will continue this focus on practical and cost-effective engineering solutions, and target other important areas such as energy reduction in process equipment.
"At the Center we will work through all levels of the supply chain to address the industry's need for sustainability, productivity, and cost-effectiveness," said Ron Remke, ISMI's ESH program
manager who will head the Center. "We'll be a source of data-driven best practices to tackle the challenges of sustainable manufacturing and act as a proving ground for technology solutions."
"Sustainable manufacturing is vital for the long-term growth of the semiconductor industry," said Kramer. "There is a high level of interest in the Center, and we're convinced that it will bring significant value to existing ISMI member companies and new participants alike. We all share a common commitment to what is good for business and good for the environment, and together, we can do great things."
SVTC Technologies (née Cypress Semiconductor's Silicon Valley Technology Center, spun out to VC/private equity owners in March 2007) and CMP outsourcing firm Entrepix are expanding their existing partnership to 300mm wafer processing. Under the deal, Entrepix will handle all 300mm chemical mechanical polishing (CMP) development and production services -- including experimental planning/support, engineering project oversight/execution, data analysis, interpretation and reporting, and pilot production activities -- for customers of SVTC's Tool Access Program at its Austin, TX facility.
The two cite shrinking resources and cost-cutting needs as key factors pinching devicemakers, particularly for next-generation products. "Traditional [chipmakers] are still advancing down technology nodes: low-k, 32nm for 300mm, etc.," said Dave Anderson, VP of corporate business development for SVTC. "We see people needing new materials polished all the time. There's a continual demand for CMP expertise for which customers are seeking fast solutions."
The majority of SVTC's overall work (~75%-80%) is for 200mm-level processes, mainly traditional and project-based development services for larger customers, Anderson explained. But SVTC is seeing growing interest in 300mm areas, from test wafers and blanket films, primarily to equipment and materials firms, and most of that is 300mm, he noted.
Going forward, added Entrepix VP/GM Bob Tucker, the two partners want to not only offer IDMs support on next-generation materials evaluation, but also a path to cost reduction or the next required technology path that can be transferred back into a customer’s facility. And materials/equipment suppliers selling to these IDMs need help too, he pointed out; "they have to have good data sets on pads and slurries," for example.
One area the two are already working on today is MEMS through-silicon vias (TSV), for example. "People aren't doing TSV on 300mm, but it's evolving from 200mm to 300mm," Tucker pointed out. Synergies developed now "will pay dividends three, five, ten years from now; they'll be 300mm technologies then, just like MEMS has evolved to 200mm."
Tim Tobin, CEO of Entrepix, noted how CMP processes have become dramatically more complex in just the past few years, and even across applications. What a MEMS device will need from CMP is on the scale of a couple of microns in size, vs. Angstrom-level scale for semiconductor manufacturing, and each with completely different materials, tools, and processes, he pointed out.
He noted that Entrepix can port CMP work from one toolset to another, handling complexities regardless of toolset or processes. Combined with SVTC's abilities in 300mm work (and expanded capabilities, e.g. metrology equipment) offers "instant credibility," he said.
SVTC, like everyone else, is feeling the squeeze from the current economic crisis, Anderson noted, with some customers pulling back "to better understand their budgets." But this actually makes the outsourcing option even more attractive, as they look to find ways to still get what they need from a development standpoint even if they can't do it internally.
And in these economic times it helps to have patient owners, too. Anderson pointed out that one SVTC's two owners, private equity firm Oak Hill (the other is Tallwood Venture Capital), has several investments in outsourced services (e.g., financial and HR), so "they understand growth opportunities in a down market."
Significant losses generated in its semiconductor and TFT-LCD businesses have forced Toshiba Corporation to make sweeping restructuring plans as the global downturn and continued poor demand for its electronic products takes hold. The company expects to cut 4,500 jobs across enterprises, delay the construction of two previously announced 300mm fabs and reduce capital spending for FY2009 by 60% compared with 2008 in an effort to save approximately US$3.3 billion in operating costs.
In February 2008, Toshiba and SanDisk announced plans to build a new 300mm NAND flash memory fab adjacent to Toshiba’s Yokkaichi Operations, where four NAND flash fabs are currently operated. Toshiba would also construct a second 300mm fab on the site of Iwate Toshiba Electronics, Iwate, Japan. Both facilities were earmarked to start construction in March 2009.
Toshiba has now said that both facilities will be delayed. The NAND flash fab will be postponed by approximately 12 months while the second fab will be postponed until memory markets have improved to the point that such a facility would be required.
A reorganization of its discrete System LSI operations is also planned. Toshiba said that will accelerate the use of overseas production facilities for power devices and opto-electronics products, rationalizing domestic production to lower operating costs. The company will also transfer system analog IC production from its Kitakyushu fab to its Oita operations. More of its back-end assembly requirements will also be transferred overseas.
However, restructuring efforts could go further. Toshiba said that it would undertake a more comprehensive review of its semiconductor operations, which could include a complete spin-off of these operations. The company did not provide timing for such plans.
Expenditure in both capital equipment and R&D are to be reduced significantly in FY2009. Toshiba said that it would cut R&D expenditures by more than 20% and CapEx by approximately 60% to approximately US$1.1 billion compared to FY2008.
CapEx will focus on scaling NAND flash process technology to sub-4x nodes to remain cost competitive. Previous plans to expand production at Fab 4 would seem to be delayed or slowed down in light of the CapEx cut.
The workforce reduction targets contract workers specifically. Although 4,500 jobs will initially be lost, Toshiba said that approximately 500 of these workers will be rehired as Toshiba employees, mainly attributed to its power plant operations.
Seoul, Korea -LG Display, a leading innovator of thin-film transistor liquid crystal display (TFT-LCD) technology, announced that it has formed a strategic alliance with Cree Inc., a LED (light emitting diodes) chip manufacturer in the US.
LG Display signed a supply agreement with Cree for LED chips to be used in LCD backlighting in early January. Under the agreement, LG Display secures a stable supply of LED chips, a key component in next-generation LCD products, and receives technological support from Cree for LED packaging.
LG Display also plans to secure an early lead in LED-backlight notebook PCs by internalizing LED related technologies as LED packaging and LED backlighting production. LG Display will strengthen its leading position in the global notebook LCD market.
Sang Beom Han, Executive Vice President and Head of IT Business Unit at LG Display, said, "LG Display will expand the share of panels featuring LED-backlight to 50% of its total notebook LCD output. We will provide differentiated value for our customers and consumers with premium LED-backlight panels."
LG Display claimed the largest share of the worldwide notebook LCD market on shipment basis in the fourth quarter of 2008. The company also launched production of the world's first 17.1 inch RGB LED notebook LCD with color reproduction ratio of 105% and unveiled the world's slimmest LCD TV panel with an LED direct backlight system.
What is LED-Backlight?
Highlighted as an alternative for CCFL(cold cathode fluorescent lamp) backlight, LED is a key component for environmentally friendly, ultra slim panels offering high picture quality. Application of LED-backlight is expected to expand from notebook LCD panels to LCD TV panels in the near future.
The Austin-based chipmaker sent a letter to the Texas Workforce Commission outlining 90 positions that will be eliminated in mid-March from the company’s facilities at 6501 William Cannon Dr. and 7700 W. Parmer Lane. The jobs range from design engineers to project managers.
In October, Freescale said it would cut at least 2,400 jobs, or 10 percent of its global work force, in an effort to trim costs. In November, the company notified the state that it was eliminating 138 jobs from facilities in Travis and Williamson counties in January.
A company spokesman confirmed that the 90 jobs are coming on top of the original 138 in the local market, but that they are a part of the 2,400 positions the company said it was cutting. The affected employees have been notified, he said.
Freescale employs roughly 5,000 people in Austin.
Under Texas’ Worker Adjustment and Retraining Notification Act, employers in the state that plan to lay off 50 or more workers at a single site must notify the Texas Workforce Commission within 60 days of the planned cuts.
Intel said that it will close five older plants that employ as many as 6,000 people, including its last factory in Silicon Valley, as the world's biggest chip maker copes with a worldwide recession.
Intel will shutter a factory at its headquarters in Santa Clara, a plant in Oregon, and assembly and test facilities in Malaysia and the Philippines. Some workers affected will be offered positions elsewhere in the company, Intel said.
Advanced Micro has two plants in Dresden, Germany. AMD, Intel's only major competitor in microprocessors, moved production to Germany to take advantage of government tax breaks. The old AMD plant in Sunnyvale, Calif., is now owned by Spansion Inc., an AMD spinoff.
Slowing demand for PC chips has forced Intel to run its factories below capacity, making them less profitable. Earlier this month the company reported a 90 percent drop in fourth-quarter net income. Intel, founded in 1968, may struggle to turn a profit in the current period, Chief Executive Officer Paul Otellini told employees.
Chairman Craig Barrett, 69, who steered the company through the dot-com meltdown as CEO and has become a high profile advocate for expanding computing in the developing world, plans to retire in May after 30 years with the company, Intel said.
Many chip companies in Silicon Valley, such as Nvidia Corp., Altera Corp. and Xilinx Inc., don't make physical products, concentrating their efforts instead on designs that are manufactured in Asia.
"What's driving Silicon Valley is the research, development and marketing prowess of the companies here - that will be the engine that drives us in the future," said Patrick O'Malley, chief financial officer of Seagate Technology, the world's largest maker of hard-disk drives.
Intel said the closures won't slow down a shift to more advanced manufacturing technologies. The company has its most modern plants in New Mexico, Oregon, Arizona, Israel and Ireland.
German memory chip maker Qimonda AG (NYSE: QI) has sought bankruptcy protection from the lenders, becoming the world's first company in semiconductor sector to have collapsed amid slumping memory chip prices.
Qimonda said to have filed an application with the local court in Munich to open insolvency proceedings, with an aim to reorganize the firm as part of the ongoing restructuring program.
The news of bankruptcy followed just one month after the company, which is majority-owned by Infineon Technologies AG (NYSE: IFX), received 325 million Euros ($422 million) in emergency funds.
"The insolvency petition is the result of the massive drop in prices in the DRAM industry and dramatically decreased access to financing on the capital markets, both of which have led to the deterioration of the financial position of Qimonda in recent months," the company said.
It added, "An increased need for financing for the current financial year recently became apparent as a consequence of the price decline in the December quarter and the fact that important investments needed for productivity improvements could not be made due to the delay in negotiations."
The company said that the financing package from its parent company Infineon Technologies, the German Free State of Saxony, and an unidentified Portuguese bank failed to complete in time.
The package included a 150 million Euros ($208.8 million) loan from Saxony, a 100 million Euros ($139.24 million) loan from a leading financial institution in Portugal and a 75 million Euros ($104.42 million) loan from Qimonda's parent company.
Qimonda, which has about 12,200 employees, has six manufacturing facilities, including three in Asian region, two in Europe and one in the U.S. Infineon currently holds a 77.5 percent equity interest in Qimonda.
Reports say the company is considering merging with a Taiwanese firm or forming alliances there to compete with Korean market leader Samsung.
The global glut of computer chips keeps swelling, and dwindling demand keeps increasing pressure on semiconductor industry players like Micron Technology that are already hammered by a lengthy market downturn.
Now, as government bailouts spread around the globe, most manufacturers of memory chips are already - or will soon be - looking for cash infusions to keep them afloat until the market recovers.
Micron could benefit from bailouts, too. Not from the U.S. government, but from Taiwan.
The island nation's government has promised to make $3 billion available to its cash-poor dynamic random-access memory industry. Like Micron - which is the only U.S.-based manufacturer of DRAM, the most common type of memory used in computers - the Taiwanese companies don't want to be crushed by Korean giants Samsung and Hynix, the world's No. 1 and No. 2 DRAM makers.
The industry is reeling. Global DRAM revenue fell 20 percent last year. "Since 2007, DRAM suppliers have spent billions on new capacity even amid weakening demand, contributing to oversupply, price declines and a massive market downturn that is hurting all suppliers," said Nam Hyung Kim, director and chief analyst of memory for iSuppli.
Some manufacturers have received help already. A German state and Portugal offered $600 million to Qimonda AG, another DRAM maker.
But for Germany-based Qimonda, the help was too little and too late. The company declared bankruptcy. Samsung reported its first-ever loss too.
Micron is not talking, but it is reported to be interested in merging with a Taiwanese firm, in part to gain access to government money.
"Taiwan built the industry there, and they want to keep it and its employment running," said financial analyst David Petso of Boise. "At some point they may admit that they aren't any good at it, and with the technical advantages that Micron appears to have, (Micron) could offer to merge with a Taiwanese firm that is basically worthless, install their own technology and resources in the fabs and build them up, and in return ask for a billion dollars or low-interest loans."
Samsung had about 30 percent of the global computer chip market at the end of the third quarter, while Elpida and the three Taiwanese companies accounted for 24 percent of global DRAM revenue, according to market research firm’s iSuppli and DRAMeXchange.
News reports in Taiwan say Micron executives met with government officials at least twice in the last month and offered to build a new research and development facility as part of a proposed merger with ProMOS.
But a merger is hardly assured. At least one other memory manufacturer, Elpida of Japan, is competing with Micron for alliances with the Taiwanese facilities. Elpida and Micron are No. 3 and 4 in the world DRAM market, with positions changing depending on the way market share is measured.
Elpida is trying to forge an alliance with the three primary Taiwanese chip makers - ProMOS, Powerchip and Rexchip.
But Micron is trying to go one better, forging an alliance with the three Taiwan companies plus Elpida, creating a powerhouse whose 40 percent market share would exceed Samsung's.
Micron's manufacturing plants are up to date, and Micron is - or is nearly - the world's lowest-cost producer of memory chips, Petso said.
Micron's cash has dwindled over two years of losses, but its $1 billion reserve puts it in better financial shape than any DRAM maker but Samsung.
Micron must hope that some of the competition disappears, which will shrink the oversupplied memory market, and that consumer demand will be resurrected before Micron burns through its remaining $1 billion, down from $1.4 billion the previous quarter.
Micron's stock closed at $3.56 on Friday, up almost 10 percent. Shares have traded as low as $1.59 in the last year but have trended above $3 since reports of mergers in Taiwan have become public.
Responding to concerns over the environment and fab costs, International Sematech has launched a new green technology center.
Part of chip-making consortium Sematech (Albany, N.Y.), the International Sematech Manufacturing Initiative (ISMI) hopes to get wide support for the center. But some wonder what's taking the industry so long to embrace or jump on the green bandwagon.
ISMI's Environment, Safety & Health (ESH) Technology Center, to be based in Austin, Texas, will be dedicated to develop green technology solutions for IC production. The goal is to reduce energy consumption, lower costs, and boost productivity in semiconductor manufacturing.
In addition to the current ISMI members, the center is open to all chip makers and equipment and materials manufacturers.
''Given the global environmental challenges we face, we believe there is nothing more important than energy and resource conservation,'' said Scott Kramer, vice president of manufacturing technology at ISMI.
Sematech declined to comment on the funding for the program. Initially, the center will have fewer than 10 employees, but ISMI is expected to expand the effort over time, Kramer said.
The new center will drive and consolidate other ESH programs from Sematech. They include the promotion of energy and resource conservation through technical evaluations and demonstrations. It will propel the development of advance green semiconductor operations and processes. It will also provide forums for sharing ESH benchmark data, surveys, and best practices.
The time is ripe for green technology for fabs. Past projects have demonstrated 10-to-20 percent utility reductions by adopting best practices in ultrapure water recycle/reclaim and cleanroom HVAC optimization, according to Sematech.
This represents the latest effort by Sematech to address the green issue. And it appears that many of these efforts are still getting off the ground--or have flopped.
For some time, Sematech and others have talked about the Leadership in Energy and Environmental Design (LEED) Green Building Rating System. This is a comprehensive design and assessment tool that helps architecture, engineering and construction professionals improve building efficiency and measure the sustainability of their projects.
In 2007, ISMI agreed to draft a ''green fab standard'' aimed at building semiconductor factories that will use less energy and water, minimize waste and air pollution, and ultimately save money for chip makers.
ISMI members compiled a set of best practices and tactics for conserving energy in current factories, using activities as simple as turning down tool exhaust fans, and as complex as writing software to automatically control equipment pumps. Potential cost reductions from these refinements are significant: a typical fab can save at least $100,000 per year for each 1 percent reduction in energy consumption.
Many chip makers are already addressing the issue--and for good reason. Indeed, the power required to run a fab is moving towards a troubling trend. In a 200-mm fab, some 53 percent of the power consumption is attributed to the facility and the remaining 47 percent by the fab equipment, according to Toshiba Corp.
In a 300-mm fab, some 46 percent of the power consumption is taken up by the facility and the remaining 54 percent by the equipment, the company said in a recent presentation.
Like many chip makers, Toshiba is taking steps to reduce its fab and equipment power consumption. On the facilities front, for example, the chip giant is looking at solar panels and LED lighting.
The company is also working with equipment vendors to boost tool productivity, but simultaneously, it hopes to lower power consumption. Among those measures include a new system of humidification and improved heating systems.
At Intel Corp., the company is moving towards LEED certification at some fabs. In 2007, Intel announced plans to achieve LEED certification for a wafer fabrication facility known as Fab 32 located in Chandler, Arizona.
''Our publicly stated goal to reduce energy consumption by an average of 4 percent per production unit per year from 2002 through 2010 has already driven our energy conservation initiatives,'' according to Intel.
''Energy-efficient systems are found throughout our operations. Many of our locations feature efficient lighting; 'smart' system controls; boiler efficiency; chilled water improvements; and clean room heating, ventilation, and air-conditioning improvements; and improved operating processes and procedures. In 2007, we implemented projects that will save us 90 million kilowatt-hours (kWh) this year,'' according to the firm.
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