Cost of new factories will delay 18-inch wafers

The demand is there, but building new manufacturing capability from scratch is a barrier

The world’s largest contract chip manufacturer is part of a group of companies exploring the use of 18-inch (450 mm) silicon wafers to drive down chip costs, but the technology faces a major hurdle: nobody can afford to build an 18-inch wafer factory.

Taiwan Semiconductor Manufacturing (TSMC) is working with an industry group led by the International SEMATECH Manufacturing Initiative (ISMI) to figure out how to make 18-inch silicon wafer technology more economical, as well as overcome some technical challenges.

It’s important that they find a solution to the problem, because without the new wafers, chip manufacturers won’t be able to reduce costs at the pace users and gadget makers have come to expect. Chips are the foundation of every electronic device, and often one of the most expensive components.

Two main efforts hold the key to reducing the cost of chip production: shrinking the size of transistors to make chips smaller, and enlarging the wafers to hold more chips. Typically, the industry has focused on shrinking the transistors, but that is becoming more difficult as they are nearing the size of an atom.

The new 18-inch wafer initiative is the latest attempt at making the silicon discs larger. The 12-inch (300mm) wafers used today can yield 2.25 times more chips per wafer than older 8-inch (200mm) wafers, yet take just about the same amount of time to pass through a factory, significantly boosting total monthly output. An 18-inch factory would show a similar leap in output.

The trouble is that a factory designed to make chips on 18-inch wafers could cost between US$12 billion (NZ$16 billion) and US$15 billion to build, nearly triple the price of an equivalent 12-inch wafer factory. Not many companies could afford to build such factories, according to Stanley Myers, president of Semiconductor Equipment and Materials International, who made the comment on the industry group’s website.

Chip makers will only buy into the new technology if it makes sense financially.

“Is it going to cost 2.25 times more to build a fab? Am I going to need 2.25 times more people on the production line? Is the equipment going to cost 2.25 times more? If the answer is yes, then the costs are too high and it doesn’t make sense to invest in the new technology,” says Ben Tseng, a vice president at ProMOS Technologies in Taiwan. The memory chip maker isn’t even looking into 18-inch technology right now because the technology needs more time to develop, he says.

A TSMC representative says it’s far too early to discuss when the first such factory might be built, because chip makers are still looking into the technology.

They still have time. The 12-inch factories in vogue today are relatively new, and chip makers continue to figure out ways to manufacture more chips on each wafer, driving costs down further.

Infineon Technologies was the first company to build a 12-inch plant, in 1998, but only a few other chip makers followed suit initially, because the technology was far more expensive than that used in the 8-inch wafer factories it replaced. It wasn’t until 2003 that companies significantly increased investment in 12-inch factories, mainly because the memory chip industry started to pull out of a two-year glut.

That pattern is likely to continue with the move to 18-inch wafers.

“The industry will likely delay the transition to 18-inch because of the cost issue,” says Charles Kau, president of Inotera Memories, a memory chip maker that operates a 12-inch plant in Taiwan. It normally takes 12-15 years for the chip industry to transition to a larger wafer size, he says.

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