INDUSTRY NEWS

Two vendors find recipes for relative success in down market

WRAP-UP: Trimega says the modular approach to gas and chemical distribution shown here speeds reinstallation and improves safety.

PHOTO COURTESY OF AIR PRODUCTS AND CHEMICALS

When life gives you lemons, the hoary adage says, you make lemonade. Well, the economy has dumped bushels and bushels of the citrus on the semiconductor industry's doorstep for more than two years. At least two suppliers—Trimega Electronics and Akrion—have developed different recipes that have made both firms relative success stories in these bittersweet times.

In February, Trimega, a turnkey supplier of gas, chemicals, and process systems, launched a new service called the Fab Renovation Model. The service converts idled and existing fabs from 200- to 300-mm production. Meanwhile, Akrion, a manufacturer of wet stations, continues to book multiple orders domestically and overseas. The company recently boasted of sales of its GAMA automated wet station from a new European customer and of two more orders for its V3 stations from a client in Singapore.

What's more, says Akrion's president, James Molinaro, the firm is one of only two companies hiring in Allentown, PA, where the supplier has its headquarters. "We've just opened up another 15 positions."

What's the supplier's secret? In a phrase, operational excellence, diversification, and luck, replies Molinaro, who spoke with MICRO shortly after finishing an interview with a publication from MIT. "One of the things that we were able to accomplish right before the downturn hit . . . is to get this company realigned around the idea of operational excellence."

He admits the concept sounds corny. "This isn't corny. This is why we're doing it," the executive insists, adding that companies "can't survive in this industry unless you are operationally excellent." The concept encompasses such ideas as product quality, cycle time, service quality, process quality, and quality of the underlying technology.

For Trimega, a joint venture between Air Products and Chemicals and Kinetics Group, the new renovation program involves working within the limitations imposed by the downturn and building on the core strengths of the venture and its parent companies. Trimega even relocated its headquarters from Santa Clara, CA, to Tempe, AZ, in order to move closer to major clients.

Trimega recently completed three large new fab projects for a major North America chipmaker, says Rick Beuttel, the director of business development for Air Products and the head of commercial operations for the joint venture. The work involved installing gas delivery systems, bulk and slurry chemical-delivery systems, and life-cycle systems. The client appreciated the caliber of the work, he says, but notified the venture that it was scaling back new fab construction and increasing conversions of existing facilities. "Just as we came to that conclusion on our own, our largest customer said to us that we needed to evolve in this direction," notes Beuttel.

Trimega has teams from both Air Products and Kinetics as well as consultants in decontamination, which is new to both firms, focus on "almost following the last wafer out the door." The new service shuts down systems, decontaminates equipment, dismantles, "and then facilitates or supports the conversion of the facility to a larger diameter wafer, generally," explains Beuttel.

Trimega uses a "platform for execution...to sequentially walk [the client] through each step" in the conversion process. Beuttel says the venture is pursuing three opportunities for its fab renovation plan in the United States at the moment. One of the first steps is determining the nature of the job. It could be simply a "lights-out" project, "or a 'lights-out' followed by a conversion." The toughest project is a "phased conversion," in which the customer retains "some 8-in. production while phasing out tools." Maintaining operational safety is essential in this last instance, he notes.

The joint venture hopes to take advantage of the Megasys operations of Air Products. The company has Megasys technicians in more than 70 operating fabs, Beuttel says. All are highly familiar with the equipment installed by Trimega at each plant, enabling the venture to expand its normal capabilities.

While Trimega is trying for an add-on effect, Akrion from its inception in 1999 devoted itself to "tackling the downturn," says Molinaro. The company (which was Submicron Systems, before a corporate realignment) decided to focus solely on its surface-preparation business by dumping its machine shops and farming business out to subcontractors. "In 1999, we were still making raw-material stuff, a lot of plastic, had nice big machine shops and were 100% vertically integrated. And this carried over into 2000. We want to get rid of all that. What we are is a technology house."

The company began an extensive outsourcing program, eliminating nearly 200 positions from its previous vertically integrated model. "By using outside machine-shop contractors, we were adding to the core competency of service, process, and engineering. [We asked ourselves] 'What do you want? Do you want a 300-mm applications lab, or do you want a world-class machine shop?' The answer is obvious in a high-tech semiconductor market."

It's a market whose technology nodes no longer accommodate certain spray tools, and, as a result, many other U.S. firms in the same tool segment have struggled, Molinaro insists. He emphasizes that most of Akrion's competition "is Japanese," such as Dainippon Screen.

"We built a 300-mm applications lab center while everyone else was divesting. We put in Rudolph tools, an Applied Materials Excite system . . . and added 30% more people and process capability," Molinaro boasts.

Adhering to ISO 9001 is one of the keys to successfully working with subcontractors, the executive points out. "ISO 9001 goes down to the business practices and continuous improvement for subcontractors and the base company. ISO 9000 was the old metric; if you screwed up, what you had was a well-documented screw-up. ISO 9001 says, 'what are you going to do to fix this?'"

As a result, he notes, "a lot of people who were good suppliers in 1999 did not turn out to be Akrion suppliers in 2000." Quality is either part of the company culture or it isn't. "Some people get it, and some people don't. And the economy is such that there are lot of suppliers to choose from."

The results, as they say in business school, speak for themselves. For Akrion, diversification follows operational excellence and contributes greatly to its reputation, Molinaro says. In 2000, worldwide MTBF (mean time between failure) rates were less than 300 hours. In 2003, "worldwide MTBF is 1641 hours. "What are the benefits of that? Lots. Reputation, of course. Plus you don't need a large service organization. When you're at 1641 hours MTBF you can ship a lot more tools, and you don't have to increase your service organization."

He also notes that warranty expenses on parts declined from $400,000 or more per month in 2000 to less than $20,000 per month in 2003 for tools in the field. "That's a measurement of how well this is working. It's a measure of the embedded quality when revenue per employee went from $150,000 to $300,000 in a compounded down market."

Critics may carp 'you laid off people,'" Molinaro says. "I outsourced. This is called running a business properly to survive. . . Cash is king, and you can't burn any of it right now."

The executive credits Akrion's executive team—rebuilt in 1999—with "getting religion around the idea of operational excellence." These executives "are steering the boat in turbulent waters. We've been pretty much cruising the North Sea for 21Ž2 years."

Molinaro points out that Akrion's applications lab "found wonderful diversification to other business segments that people may not consider sexy but that really pay the bills. MEMS, for instance. Is there anything sexy about MEMS?"

One of Akrion's customers is the largest MEMS supplier in the world, he notes. The company represents 20% of Akrion's revenues. A large European chip manufacturer uses Akrion tools in advanced BEOL processes. In addition, military contracts "have been very good to us."

A glance at Akrion's tool orders shows a high degree of diversification. "Twenty percent of our total business is the largest any one customer is to us. What happened to our large competitor in the U.S. is they had one main customer and when that customer stopped buying, they lost 80% of their revenue. In 2000 we had 24 different customer sites buying our equipment. Today we have 51." Even though all 51 can't afford large purchase orders, if some "buy one or two tools, you can double your customer base and grow. And the customer who buys one or two tools gets the same service as the one who buys many more."

After operational excellence and diversification you need luck, the executive says. "By sheer luck our product platform was easily upgradable to handle MEMS and masks for reticles for both 200- and 300-mm wafers." A "minor upscale" of the platform enabled Akrion to accommodate "a larger production application base." Other companies "had to come up with a new 300-mm wet bench or spray tool."

So what lessons can recession-challenged companies take from Akrion and Trimega's stories? Molinaro says it doesn't matter whether you're making computer printers or automobiles, ISO 9001 forces you to sit down with your director of quality and executive council and define operational excellence. The most difficult objective to attain has been "embedded supplier quality," he says. "Ultimately, some companies couldn't get there. And ultimately we had to let them go. It's not rocket science for them to get there. It's the culture."

For Beuttel, collaboration has been a key element in Trimega's success, one he believes will carry over to the fab renovation venture. In addition, what he calls a "high degree of self-performance" is a lesson others can learn from. "We're not just a construction manager that's out there beating up a bunch of subcontractors with no control on that specific job. We rely very heavily on the parent companies, and they provide a lot of scope."

The new program hasn't burdened the joint venture's pocketbook, Beuttel says. It tapped the expertise of five to 10 staff professionals for two to three months, and it has enabled the company to cross-train employees for a recession-hampered work environment.

"The industry is in the dumps and has been for a while," Beuttel says. Both venture partners had "gotten tired of hearing, 'Well, it'll rebound in six months.' People got tired of hearing that about a year ago."

A run of fab closures and conversions to larger-diameter wafers and smaller geometries requires such adaptation, Beuttel emphasizes. "This is the way the industry is. We've decided to make some lemonade."