Earlier this year, Intel delayed opening up a major chip factory as a consequence of slumping PC sales, which declined by 10% in 2013 as the presence of smartphones and other mobile technologies continued to penetrate historically PC markets.
Intel's new fabrication facility, code-named "Fab 42," was to have begun operation in Chandler, Ariz. It had been touted by President Obama as an example of how US companies were beginning to in-source their manufacturing and create on-shore jobs.
The new fab building was indeed constructed in Chandler, but by the time all of the highly expensive equipment was tallied up in projections of what it would take to bring the fab online to produce Intel's most advanced chips, the company was looking at a projected total cost of nearly $5 billion.
With the new building standing and waiting to be equipped, Intel thought again.
"The new fab has not been equipped with the capital equipment. It has heating and air conditioning but the actual tools, the expensive stuff, are not in there," said Intel spokesperson Chuck Mulloy. "It boils down to better capital utilization."
Following in the footstep of other chip fabricators that had found themselves in similar circumstances, Intel decided instead to modify some of its exiting fabrication facilities for production, for the time delaying completion of the new plant.
Stories like these are commonplace because the soaring costs of building, managing and stocking fab facilities and equipment are a major challenge for chip manufacturers. This is especially true in 2014, when SEMI's World Fab Forecast is projecting a 20% to 30% increase in semiconductor fab equipment spending for construction and equipment for an estimated 190 worldwide fab projects.
What can companies do to control the costs of fabrication?
Last year, research firm McKinsey & Company reported that a typical semiconductor production plant consumes as much power annually as 50,000 homes, and that the huge "megafabs" can consume more electricity than automobile plants or refineries. McKinsey said, "While the power consumed by semiconductor chips has been reduced significantly in the past decade, improvements in the energy used during the chip production process have lagged behind." It stated that energy costs can range between five and 30% of total fab operating expenses, depending on what the local electricity pricing is.
The irony, according to the McKinsey report, is that firms have invested in green technologies, but without reducing fab energy consumption to the levels they are capable of attaining. Taking a page out of Toyota Motor's book in the mid-2000s, many semiconductors manufacturers have also revised their manufacturing process flows with more process checks and controls to assure fewer errors and reduced risk of product loss from defects that can impact bottom lines. They have also added automation to the manufacturing processes that further reduce the human handling error factors.
However, what many companies have failed to do is to link common facility and maintenance operations into the overall operation of the plant.
McKinsey in its study found that in many cases, for instance, there is only one power meter for an entire clean room. This is a single meter through which 20 million to 30 million dollars of electricity consumed by myriads of power-intensive tools can flow each year. In other cases, exhaust fans and compressors in the plant are allowed to run above specification.
The McKinsey report projected that a 300-millimeter fab could cut up to 30% of its energy costs if it performed more effective plant management, which McKinsey estimates would contribute up to 50% of the energy total savings. This is "low lying" non-technical "fruit" that can easily be harvested with greater collaboration between plant facility management and manufacturing management. It might require some additional process development and implementation, but these are areas where fab management excels. Most importantly, implementing collaborative processes between facilities and the plant improves the profitability of the very expensive facilities that semiconductor companies operate -- and deliver directly to the bottom line.