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The lack of core in semiconductor equipment has a far greater impact than you think
2022-05-04

Global semiconductor supply imbalances have hampered countless industries, including important areas such as automotive and medical care, as well as workers and consumers. Globally, policy makers are improving semiconductor manufacturing capacity to strengthen the supply chain and meet the growing demand for semiconductors through strong incentive schemes totaling hundreds of billions of dollars. Global efforts to improve semiconductor manufacturing capacity depend on the production and installation of additional semiconductor manufacturing equipment (SME). Simply put, there can be no additional capacity without more SMEs.

The shortage of chips has led to an increase in the delivery time of wafer factory equipment and other complex semiconductor manufacturing tools. In 2020, the delivery time of wafer plant equipment will be between 3 and 6 months. It will be extended to an average of 10 months in the first quarter of 2021, and even further extended to an average of 14 months in July 2021. For some fab equipment, the delivery time is more than two years.

Ensuring the chip supply required by SMEs will significantly shorten the delivery time of wafer plant equipment required by semiconductor equipment manufacturers to expand capacity without changing their distribution strategy.

All efforts to expand chip production depend on SMEs

The extension of equipment lead time hinders the marginal expansion of wafer factories, because there is enough space to increase production capacity in these places, and may seriously hinder the expansion efforts of a wide range of equipment manufacturers and their supply chains - from material and process equipment suppliers to packaging and testing suppliers.

According to semi world Wafer Factory prediction, 86 new wafer factories or major wafer factory expansion projects are expected to be put into operation from 2020 to 2024 (see Figure 1), which represents a 20% increase in the total capacity of 200mm wafer factories and a 44% increase in the capacity of 300mm wafer factories during this period. Longer equipment delivery time means that the planned chip capacity is increased slowly, which may prolong the shortage time.

Figure 1: new 300 mm and 200 mm wafer plants by region are expected to be put into operation from 2020 to 2024.

SME production relies on a relatively small number of semiconductors, which are usually purchased from SME original equipment manufacturers (OEMs) by contract manufacturers and integrated into SME components. These chips for SME OEMs and OEM manufacturers account for far less than 1% of the global semiconductor market. However, SMEs' chips are critical to increasing semiconductor capacity and meeting growing demand, so they are critical to the success of all investments and public policies aimed at increasing capacity and strengthening the manufacturing supply chain.

The direct challenge of expanding SME production is to ensure adequate, timely and reliable semiconductor supply. In addition, silicon substrates are equally important for semiconductor production. Original silicon wafer manufacturers also rely on small and medium-sized enterprises to increase production capacity, and this equipment also needs chips. Industry and government stakeholders calling for increased capacity must ensure that SME OEMs and contract manufacturers get the chips they need to build tools critical to new fabs.

Multiplier effect of SME

Importantly, although the semiconductor volume required to build SME is very small, these tools can produce a large number of chips, equivalent to a multiplier effect of > 1000 times. SME OEMs require a variety of quantities and types of semiconductor devices, such as field programmable gate arrays (FPGAs), power management ICs (pmics), sensors, microcontroller units (MCU), programmable logic devices (PLDs), analog-to-digital converters, power amplifiers and memory chips - different tools for them. Multiplier effect applies to all instruments; Some examples include:

A typical FPGA test tool needs about 80 FPGAs to build. However, the tester can test about 320000 FPGAs per year - the multiplier effect is about 4000 times.

The process tool requires about 100 FPGAs to build and can process 120 or more wafers per hour. Wafers pass through each tool many times in the manufacturing process, but the contribution of most tools to the overall production is equivalent to at least 2 million devices per year - about 20000 times the multiplier.

Optical wafer inspection tools require about 100 high performance computing (HPC) server chips to be manufactured. Their multiplier effect can reach about 30000 times or even higher.

A typical MCU tester needs to manufacture about 100 FPGAs, but the tool can test nearly 10 million MCU in a year, and the multiplier effect is about 100000 times.

The US Department of Commerce pointed out that MCU is one of the chips facing the most serious shortage. They are used in many key downstream industries, including automobiles. If we consider an example of using the 100000 times multiplier effect on the tester and extending it to the automobile supply chain, assuming that the number of MCU required for automobile manufacturing is about 100 per vehicle, each tool / tester can enable enough MCU to manufacture 100000 vehicles (see Figure 2).

Figure 2: example of the impact of SME chip Multiplier Effect on the automotive market (source: semi Research)

This MCU tester example demonstrates the powerful multiplier effect of ensuring sufficient chips for SME OEMs and contract manufacturers. In order to increase production capacity, the semiconductor industry needs more SMEs. More importantly, automakers and companies in other industries rely on SMEs to achieve capacity growth. The production of billions of semiconductors and countless downstream devices of integrated semiconductors ultimately depends on a small number of chips used by SMEs. All stakeholders in the semiconductor supply chain must help ensure an adequate supply of these chips so that semiconductor capacity can grow to meet future demand and strengthen the supply chain to avoid future shortages.

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