SEMICONDUCTOR MANUFACTURING R&D FUNDING GAP MAY EXCEED $9 BILLION BY 2010
SEMI-Commissioned White Paper Identifies Threat to Productivity Gains
San Jose, Calif., October 18, 2005 -- Semiconductor manufacturing productivity and the resulting technological progress are being threatened by a looming gap in funding for research and development (R&D), according to an industry survey and white paper commissioned by SEMI and developed by Infrastructure Advisors. If current technology and economic trends continue, the funding gap could exceed $9 billion by 2010, according to the report.
"The semiconductor industry is at a crossroad," said Stanley Myers, president and CEO of SEMI. "The development of the IC has contributed to remarkable improvements in the electronics sector, resulting in enormous economic and social benefits. However, without significant attention to the R&D gap, the semiconductor equipment and materials industry will not be able to afford to keep up with Moore's Law."
The white paper estimates that the semiconductor equipment and materials industry will be able to afford a projected annual R&D budget of $10.4 billion by 2010. However, the estimated R&D funding required for the continued scaling of CMOS technology in accordance with Moore's Law will be $16.2 billion.
If the industry proceeds with development of the next wafer substrate size, annual R&D funding requirements could rise to $19.7 billion in the same timeframe, leaving a gap of more than $9 billion. A slowdown in industry growth, combined with slower R&D investment rates and continued heavy pricing pressures, could produce an even larger gap, the report warns.
The white paper identifies several challenges over the next decade as contributors to the R&D funding gap, including new materials and process integration, next generation lithography and a progression to a larger wafer size.
The report estimates that the equipment and materials industry collectively spent about $12 billion for the transition to 300mm wafers, spread over the 1996-2003 timeframe. A 450mm program could take as long as eight years to bring to market and is likely to cost the equipment and materials industries well over $20 billion, the report estimates.
The report also highlights the risk of “blind alleys”, where substantial R&D investments are incurred on new technologies that do not yield returns. One example is 157nm lithography. Several equipment, materials and sub-system suppliers invested hundreds of million of dollars in R&D for 157nm before it was shut down in favor of 193nm immersion lithography. The White Paper suggests a more conservative approach would be to invest some collaborative pre-competitive resources to assess the most feasible and likely solutions, and then apply any competitive advantage to develop products for the market.
Further, total R&D spending has escalated as technology starts to converge on barriers created by the basic laws of physics. Many of these barriers can be overcome with new structures, processes and materials -- but at a cost and in a timeframe that is not feasible from a business management standpoint, the report says.
The white paper suggests five potential solutions to close the R&D funding gap. They are: Stronger business models to maintain R&D spending in cyclic downturns; reduction of R&D costs; sharing or partnering; external funding; and government funding/investments.
“In reality, it will take a combination of these to ensure the future of this industry, which is vitally important to the global economy. A sixth alternative is to let the pace of progress slow down to meet the affordable funding level,” said Ron Leckie, president of Infrastructure Advisors.
The white paper is an independent investigation commissioned by SEMI. Input was received from device, equipment and materials companies from around the world. In-depth interviews were conducted with 60 executives from 45 companies in Europe, Japan and the U.S. The scope of the report includes wafer processing, IC packaging and test, and semiconductor materials.
To view the white paper, visit:
SEMI is a global industry association serving companies that provide equipment, materials and services used to manufacture semiconductors, displays, nano-scaled structures, micro-electromechanical systems (MEMS) and related technologies. SEMI maintains offices in Austin, Beijing, Brussels, Hsinchu, Moscow, San Jose (Calif.), Seoul, Shanghai, Singapore, Tokyo and Washington, D.C. For more information, visit www.semi.org.
Ron Leckie/Infrastructure Advisors