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[April 05, 2012]

Costly shift to new wafers [Times Union, Albany, N.Y.]

(Times Union (Albany, NY) Via Acquire Media NewsEdge) April 05--ALBANY -- Not everyone is excited about efforts at the University at Albany's College of Nanoscale Science and Engineering to start making computer chips on larger silicon wafers.

That lukewarm feeling extends to companies that make the wafers.

In their continuous efforts to drive down costs, computer chip companies want to make their products on 18-inch, or 450 millimeter, silicon wafers -- a move that would significantly increase output and profit margins at their factories compared to using the 12-inch, or 300mm, wafers that are the standard today.

The switch, which has been debated by the industry for years, now appears inevitable after Gov. Andrew Cuomo announced an international consortium based at the NanoCollege on Fuller Road that will lead the move to 450mm wafers.

The consortium, composed of Intel, Taiwan Semiconductor Manufacturing Corp., Samsung, IBM Corp. and GlobalFoundries, is expected to attract billions of dollars in research spending and create thousands of new jobs.

The state is putting $200 million toward the first phase of the project, a commitment that includes $50 million in cheap power, while the industry has committed $825 million, a number that will almost certainly increase.

But it's also putting a lot of pressure on the companies that supply computer chip factories, which will have to make big investments in new equipment to adapt to these larger wafers.

And the suppliers most directly impacted by this shift are the wafer manufacturers -- companies like MEMC Electronic Materials outside St. Louis.

Bruce Kellerman, a product marketing executive with MEMC, spoke about the impact of the move to 450mm Wednesday at the NanoCollege at a forum held by SEMI, a Silicon Valley-based trade group that represents computer chip factory suppliers.

Kellerman said the wafer industry has been hurting lately, consolidating manufacturing operations and laying off workers amid poor financial results.

And a shift to 450mm wafers will require new spending without any financial return until the new wafer size becomes standard -- a transition that could take 10 years.

"It's a real challenge for us," Kellerman said. "We're basically going to be losing money until this reaches maturity. It's an ugly scenario." Michael Liehr, vice president of research at the NanoCollege, is in charge of leading school's 450mm effort, known as the Global 450mm Consortium, or G450C. He said the consortium has issued a request for qualifications to companies that want to supply a 450mm pilot manufacturing line that will be housed at the $365 million NanoFab Xtension building under construction on Washington Avenue Extension.

About 100 "tools" -- the large machines that process wafers in chip factories -- are being sought for a pilot line that's expected to become operational in 2015. Responses to the RFQ are due later this month.

Moving to 450mm manufacturing is critical to the chip industry if it wants to continue to grow. For decades, the industry has fueled its explosive growth and profit margins by cramming more and more transistors onto each chip and by shrinking their size.

But as scientists reach the physical limits of doing this, the industry must find new ways of fueling profitability. Using larger wafers is one solution, since roughly double the number of chips can be produced in the same amount of time and for less money than using the 12-inch wafers. The problem is that the cost is so high to build a 450mm factory that fewer than 10 chip companies are expected to be able to afford the transition, which is why the G450C is using a cost-sharing model.

lrulison@timesunion.com --518-454-5504 --@larryrulison ___ (c)2012 Times Union (Albany, N.Y.) Visit Times Union (Albany, N.Y.) at www.timesunion.com Distributed by MCT Information Services

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