The European semiconductor market is going through a major transition that could result in a drastically reduced role for the continent's leading manufacturers. This would negatively affect the region's economy growth unless steps are taken to enhance productivity and increase investments in next-generation technologies.
A 14-month research study conducted jointly by French economic and market consulting firm Decision Etudes Conseil and UK-based semiconductor research firm Future Horizons said “Europe will lose advanced and competitive semiconductor manufacturing infrastructure without a European long-term industrial vision guiding and enabling the coordination of all stakeholders.”
The researchers noted the semiconductor market remains a “strategically important industry, providing the knowledge and technologies that generate some 10 percent of global GDP.” But it warned that failure on the part of Europe's leading chip companies to adopt the latest technologies would “threaten the competitiveness of the current European supply chain manufacturing base, including technology development and device design.”
The cautionary tone of the report reflects current thinking in Europe, where many government leaders fear the continent is losing ground in the semiconductor production market because of recent changes in the market that have forced chip makers in the region to cut back on chip production R&D spending and capital expenditure because of the prohibitive costs of establishing new fabs.
In fact, the Decision/Future Horizons research was commissioned by the European Commission and forms part of efforts to review the region's current position in high-tech manufacturing and recommend strategies for improving the competitive position of local firms.
The researchers concluded that semiconductor suppliers and manufacturing regions that are able to develop the next-generation semiconductor fabs — mainly the 450mm wafers — will dominate the future of the industry. One reason for this is that the yields would be larger, and productivity enhancements as well as cost advantages to the producer would be vastly bigger. Companies that successfully produce 450mm wafers (the biggest is currently 300mm fabs) would be able to outperform competitors, according to Malcolm Penn, CEO of Future Horizons.
“The 450mm transition is necessary for the industry to keep up with the underlying 10 percent annual growth in wafer fab capacity demand,” Penn said in the statement.
“The wafers are 2.25 bigger in surface area, and therefore the number of ICs produced per wafer, making it more efficient to build a single 450mm fab rather than two 300mm fabs. The 450mm transition is also expected to deliver a 30 percent cost reduction thus providing 450mm wafer fabs with a definite competitive advantage over 300mm.”
Europe is at a disadvantage here, though. The region's biggest chip vendors don't seem eager to spend scarce resources on 450mm fabs due to the high cost, and some of the partnerships they forged for 300mm fabs have frayed over time.
Several US and Asian chip vendors have committed to rolling out 450mm-ready wafer technology in their latest fab plants. Leading the way are IBM, Intel, GlobalFoundries, TSMC, and Samsung, which have formed the G450 Consortium in Albany. Missing from this group are STMicroelectronics, NXP, and Infineon Technologies, the continent's biggest semiconductor suppliers.
“One of the conclusions drawn in the report is that the 450mm transition will happen and that it will very likely be the final wafer scale up for the industry,” the research firms said in a press statement mailed to reporters. “It will also define the geographical locations of the next (and perhaps final) ten to fifteen most advanced semiconductor production areas worldwide.”
The full report is available for downloading here. A few points from the key conclusions offered by Decision and Future Horizons follow:
- Europe will lose advanced and competitive SC manufacturing infrastructure without a European long-term industrial vision guiding and enabling the coordination of all stakeholders. Such a long-term vision shall not oppose 300mm or 450mm but rather consider both in parallel as part of an advanced manufacturing continuum, taking into account all the stages of the SC supply chain.
- Europe failed to capitalize on its strength during the 300mm transition, but 450mm could turn into a genuine opportunity to regain the position it once held in SC manufacturing by securing a complete SC supply chain and making sure that the most advanced SC technologies continue to be manufactured on European soil. It could start in the short term with a five-year programme to urgently set up the 450E pilot line in Europe to support the transition of the European equipment & material suppliers to 450mm and coordinate with the US-led G450C initiative in Albany.
- The opportunity of a joint 450mm MtM fab (Eurofab450) between Integrated Device Manufacturers and a private 450mm MM fab should be investigated and progressed in parallel to their natural conclusion. Whatever the outcome, every effort must be expended by the European Commission and national PAs to ensure that all potential locations and especially the current most advanced manufacturing centres in Europe remain favourable places for chip companies to operate in.
- High tech industries can only close competitive gaps during technological shifts. The 450mm shift is one of them and most likely the last one for the semiconductor industry: the European semiconductor industry is at a crossroads.