Mannerisms

Earlier this month I was amazed to listen to Dr Mark Pinto, CTO of  Applied Materials, the world's largest manufacturer of IC manufacturing equipment, make a presentation to the IEF2008 and hardly mention what Applied is doing in IC equipment development.

That emphasis was not, said Pinto: "Because of the doldrums we're in in the IC industry today."

In other words, it's a permanent shift in emphasis.

Pinto's talk was almost all about developing equipment to manufacture what he called 'large area' products like solar cells, flat panel displays and energy-efficient glass.

Looking at Applied's latest results, it seems that, in Q2 08, Applied had sales of  $1.27 billion worth of equipment for manufacturing ICs, representing 59 per cent of its total sales, but received new orders for IC manufacturing equipment, amounting to $2.15 billion, representing only 44 per cent of Applied's total new orders.

That's a pretty significant trend.

Applied said that, this year, it expected IC manufacturing equipment sales  to drop  25 to 35 per cent while sales into the display industry are expected to be up 50 per cent, and sales to the solar industry are expected to show 'strong growth'.

So, it seems, large area processing, rather than IC processing, is where Applied, and other semiconductor equipment companies, are looking.

One reason is that scaling drives cost in large area processing better than it does in ICs, so delivering a better value proposition to the customer.

 "Scaling has been the primary cost driver for ICs, but cannot come at an overcompensating increase in cost/area", said Pinto, "the driver is the number of bits you can get in a unit area, but process cost has to be kept relatively flat in order to get constant cost reduction."

By contrast, pointed out Pinto, a 20 inch LCD cost $1,000 in 2004, a 42 inch display costs $1,000 today and in 2011 a 60 inch display will also cost $1,000.

Driving Applied's interest in solar, is a production equipment market expected to be worth $6 billion a year in 2010, according to Pinto.

The speaker following Pinto, Waguih Ishak, vice president at Corning, said there are over a hundred photovoltaic start-ups in Silicon Valley.

"There are many entrepreneurial professors with companies in stealth mode working, not on devices, but on energy storage", said  Ishak.

So where does all this leave the IC manufacturing companies? If the suppliers of manufacturing equipment are concentrating their development focus elsewhere,  from where will the innovations and advances in IC manufacturing equipment come?

Might they have to go back to doing it themselves, as in the old days?

Or will the equipment guys just turn the economic screw a little harder, making the IC manufacturers pay their development costs up-front?

It was interesting to see a recent plaintive cry to get  450mm wafer development underway from Samsung, Intel and TSMC.

Unless the threesome can put together a development fund of $100 billion, which seems unlikely, it looks as if the reply will be something along the lines of: Get lost.