Semiconductor Device Manufacturing and MEMS Technology:
The Right Move at the Right Time
As industry veterans and students can testify, the semiconductor manufacturing industry is a cyclical business. As wafer fab capacity utilization ebbs and flows, so does the rhetoric surrounding that capacity. When business is good, practically no one has capacity to supply wafers to external customers let alone do development. When business is bad everyone is in the foundry business. Many small companies have been burnt by an improving economy that severely restricted their production allocations. What makes this down cycle any different from the past down cycles?
We are enduring the worst business slump in memory and the jury is still out on when the worldwide recovery will occur. Pure Integrated Device Manufacturers (IDMs) are a vanishing breed with mergers, acquisitions and plant closures a common occurrence. An IDM used to have to be a jack-of-all trades; good at all aspects of the product development cycle and having total control from design concept to device drop-ship. The severity of this down cycle has caused substantial long-term changes to the industry.
Not one company has the capability to do it all alone or with ruthless efficiency anymore. Outsourcing elements of product development is now an accepted, mature business model. Many device makers are also going fab-lite, where they keep their bread-and-butter depreciated manufacturing process technology and fabrication facility running and outsource their future technology needs to an advanced foundry partner. The outsourced and fab-lite business model trends are gaining momentum with many IDMs today and will continue in the future.
The evolutionary change brought on by these accelerating trends is that the outsource model has allowed IDMs to be less of an isolated island of exceptional people and technologies like they were a few decades ago. IDMs have opened up and are seeking interactions with suppliers that have created superior business models in areas where IDMs could only spend money. Suppliers who deliver new efficiencies for both buyers and sellers of outsourced services typically deliver tomorrow’s solutions today.
Now is the opportune time for the development of new technology and business relationships between MEMS companies and device makers. There is un-utilized capacity at many IDMs and foundries today and a buoyant feeling that there is light at the end of the tunnel, generating a scramble for “what’s next on the menu”. There is also an understanding that long-term success can be achieved through collaboration and not necessarily solely dependent on home grown solutions. IDMs are opening their minds and their fabs to identifying new technologies and product developments that are complementary, and possibly additive, to their company’s product portfolio.
Many IDMs are open to establishing dialog with technologists and business leaders of silicon-based technologies where common requirements lead to common benefits. Learning from past down cycles, IDMs and foundries know not to be too dependent on a narrow product portfolio. Silicon fabricators must be creative in utilizing their open capacity, if not, they face serious challenges keeping their people employed and declaring continued value to their corporation and stakeholders. Since MEMS is a technology cousin to silicon-based manufacturing technology, expanding into MEMS manufacturing is a natural evolutionary step, complementing today’s device maker’s bread-and-butter process technologies.
Why is this the best time for creating relationships with the device manufacturing industry? Because MEMS is not the science fiction it once was. It is real and maturing, sensing, actuating and saving lives, and encompassing daily living. The integration of electrical and mechanical components can only get stronger and more pervasive. It is a natural addition to many current device makers manufacturing processes. In fact, over half of the Fab Owners Association’s device maker membership manufactures MEMS devices for themselves or on a foundry basis.
Engaging with IDMs and foundries can take various forms based on individual needs and priorities:
- A few device makers provide a pre-production or limited production incubator environment. This allows MEMS technologists to buy time on manufacturing capable equipment permitting the development of proprietary robust process recipes. Some incubator environments supply pre- and post-processing steps to create a complete process module, ready to be exported to a foundry or other manufacturing partner.
- Other manufacturing partners are willing to supplement MEMS technologists with in-house experts. These experts become additive to the collective problem solving capability required to develop a product for manufacturing.
- Still other companies are looking for business relationships which can eventually add to their product portfolio. These companies are willing to supply time, money, effort and dedicated capacity to help make the product a success.
- Some foundry companies are even willing to make any technology or product you supply to them. This business model offers the greatest flexibility and places all the risk on the customer.
To become or remain competitive in today’s struggling economy, business managers must think outside of the box, creating new and exciting opportunities that fully leverage an innovative, collaborative business model. Many of the Fab Owners Association device makers are open minded and willing to dialog with MEMS technologists and business managers to engage in a challenging new chapter in the evolution of the industry.
To find out more about engaging with a device maker, please contact L.T. Guttadauro, FOA Executive Director, at lt@waferfabs.org.
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