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Suppliers, OEMs, chipmakers must improve cooperation

The clouds didn't part and the earth didn't shake, but a key message sprang from SEMI's recent conference on semiconductor materials. Collaboration and equitable intellectual-property arrangements will be necessary if the industry is to have a prayer of developing advanced materials in a cost-effective manner.

No longer able to count on "gifts from God"—as one executive calls traditional chipmaking materials—suppliers, OEMs, and semiconductor manufacturers must work together to confront the scaling challenges ahead, said several speakers at the trade association's Strategic Materials Conference in mid-January.

PIECES OF THE PIE: The process materials market (excluding silicon wafers) grew to $8.5 billion in 2004, with the mask and gases segments leading the way.


In his keynote speech on emerging device architecture- and technology-driven requirements for new materials, Intel's Ken David emphasized that the industry no longer has the luxury of long development times. "We need better methods to collaborate clearly in an open sort of environment," says the director of the components research group at Intel. "The materials suppliers themselves don't have the equipment or the experience to understand the integration effects of these films. The only way to shorten the time to implementation is through much clearer interactions between IDMs and the suppliers."

To stay on track with Moore's Law, David advocates a concept he calls equivalent scaling. The concept involves geometric scaling combined with innovations that are furthered by strong industry cooperation.

The multi-billion-dollar materials segment alone faces several tough tasks in the coming years, according to analysts who spoke at the Half Moon Bay, CA, meeting. IP ownership and licensing by OEMs to materials vendors is just one of these hurdles, notes Karey Holland, a senior managing partner of Techcet Group.

Holland, whose firm specializes in process materials market research and analysis, enumerated additional challenges. These include continuing consolidation and reduction in the supplier base, downward pressure on prices, a shift of materials manufacturing to Asia, and reduced R&D spending.

Excluding silicon wafers, the process materials market took in revenues of $8.5 billion in 2004, Holland says. As the chart on page 18 illustrates, photomasks, gases, photoresists, and CMP consumables composed the major segments of the overall materials pie at 25% and 23% for the former two categories and 10% each for the latter two. In order of size, the remaining segments are wet chemicals, ancillaries, quartz, targets, crucibles, graphite, and silicon carbide (SiC). Photomasks, gases, CMP, wet chemicals, and targets show the greatest growth potential.

Holland singled out intellectual property as a big sticking point. "IP ownership is a real hot button. OEMs are trying to grab the IP. That means a large price increase gets passed on to the end-user. That is going to continue to be a problem." She cites patent moves in the CMP sector by Applied Materials as one example.

The search for replacement materials and integrated processes has been somewhat rocky, and it's unlikely to get any easier. The industry's technology roadmap is strewn with red-brick roadblocks involving optical lithography limits, short-channel effects, and scaling limitations of gate dielectrics as well as junction and silicide scaling, notes conference speaker Mohammad Mirabedini, manager of advanced technical development at LSI Logic.

"The whole industry is based on silicon dioxide," says John Poate, CTO of Axcelis Technologies. Poate, who participated in a panel discussion on the IP issue, emphasizes that the industry is unsure whether high-k materials such as hafnium oxide are viable alternatives to silicon dioxide. "There's been a lot of research in the past five to 10 years, but it's proving more difficult than people realized. It's really the first time that radically new materials are being brought in, aside from these gifts from God."

Axcelis, he notes, is "80% an implant company" that by nature is "integrally tied in with suppliers, except for source-gas materials. But that game is changing, and that's one reason I was there." Axcelis's curing and strip divisions are "intimately involved with the materials suppliers, and a couple of those were on the panel."

Participants came away from the conference with the sense that Axcelis's approach to handling strategic materials and IP through carefully crafted joint-development agreements is "a bit of a model," Poate believes. In these JDAs, Axcelis owns the hardware, the materials suppliers own the materials, and both sides divvy up the process part.

Denis Robitaille, the chief patent counsel for Axcelis, elaborates: "We protect our core business with respect to hardware to make it a win-win situation. We allow the materials companies to protect their domain with respect to materials, and the process technology that comes out of that is jointly owned."

Robitaille admits that both sides owning "equal parts of the whole" is a difficult concept to grasp, and he urges caution: "You don't want to have technology development in which your joint partner goes out and takes ownership of technology that you want to exploit and provides it to a competitor. This is a way to divvy up that technology and the ownership so that you still protect your core interests."

Crafting JDAs in this way furthers Axcelis's goal, which is "to sell our tools to all the competitors," Poate emphasizes. "Just to put this into context, the 800-pound gorilla in the closet is Applied Materials. They probably are trying to get into the materials business as well in order to start to own this stuff. The materials suppliers are under a lot of pressure."

"I think that where our approach is somewhat novel," adds Robitaille, "is that we're willing to acquiesce to the material makers and give them their value out of the joint development, whereas an Applied Materials might use a more heavy hand. That's certainly the approach we use with certain types of arrangements. We are a little more open-minded about it."

Chemical suppliers in particular "are under an awful lot of pressure," Poate asserts. There's the small matter of how to fund the R&D of new materials and get a fair financial return for your trouble. In the panel discussion on IP, that topic was a "real issue that wasn't resolved."

What overarching principle governs the Axcelis agreements? Well, just look to your backyard. "Good fences make good neighbors," explains Poate. "We really get to know our partners well so when the agreements are crafted they're crafted to work to the model with these watertight compartments.

His company is working with Dow Chemical, ATMI, and other suppliers, Poate says. Axcelis's approach to IP has garnered it several invitations to appear at seminars "focused on attracting the customer side."

For another analyst and speaker, an industry shakeout may be just what the fab doctor ordered. "You're looking at a $12 billion—maybe a $14 billion—industry if you include the wafer segment," points out Mike Corbett, director of electronic chemicals and materials from Kline & Company. Echoing some of Holland's points, Corbett says chemical suppliers are finding it hard to generate adequate financial returns and developing the innovative materials to keep the industry on the technology roadmap.

Corbett says many large chemical companies can choose to invest their capacity dollars in industries other than chipmaking. Several gas vendors, for instance, are involved in healthcare or in "setting up large hydrogen plants and refineries. The point is that they have alternative places where they can invest. If the returns aren't there, we can see some investment migrating out of the [semiconductor] industry into other end-use applications."

Corbett says the industry has "structural problems," which is a euphemism for too many players. "We need to see some consolidation on the technical side, but we're really not seeing it happen." Sure, "you hear about acquisitions," and he quickly names a few: EKC bought by DuPont, Ashland Chemical by Air Products, Arch Chemicals by Fuji Film, and recently, Merck's electronics chemicals unit by BASF. "So we're seeing that go on, but nobody is shutting any [of the companies] down.

"The question comes to this: From the chipmakers' perspective, there are seven large photoresist suppliers in the world and everybody is developing new 193-nm products. Who's really paying for that? The chipmakers are ultimately paying for these massively parallel development efforts."

If only three or four companies were developing these resists, you would save money because there would no longer be such a duplication of cost and effort, the analyst asserts. Nevertheless, Corbett acknowledges, "Each one wants to be a survivor."

He believes the melding of Shipley and Rodel into the multiunit Rohm and Haas Electronic Materials business is a good synergistic example. The companies are able to focus "a bigger source pool" on innovation and process efficiency. "Everybody benefits. The chipmaking companies might not say they're benefiting because they have limited pricing leverage when there's some dominant suppliers."

Isn't competition good for customers, though? "I don't disagree with that," Corbett replies. "This is obviously a technology and service—rather than a capital-intensive—business on the chemical side. You have a lot of duplication of technology development. You have to remember that chemical suppliers could be spending 10 to 15% on research and development, and ultimately the customers are paying for that."

Techcet's Holland says the recent emergence of a government-supported Japanese chemical consortium will put even more pressure on producers in the United States. "If they do this successfully, they could eliminate the ability of the U.S. chemicals suppliers to sell chemicals."

Suppliers and end-users need to collaborate if only to prevent the introduction of unworkable solutions at the cost of millions, according to Holland. She cites IBM's decision last year to switch from Dow Chemical's SiLK spin-on dielectric to a more entrenched CVD approach at the 90-nm node as an example of how tough the integration challenges are. Dow believes the material can work at the 65-nm node.

"End-users and suppliers have got to work together because we never know what we don't know," Holland says. "If IBM had any idea it was going to fail in final chip build, they sure as hell would have tested it. You can't just put all that risk on the poor suppliers."

For a prime example of the trials and tribulations of materials integration, one need look no further than the struggles with copper. "When people introduced copper damascene five or six years ago, everyone who went into this, even with more-standard dielectrics, got yields of around 70%," Holland points out. "No one was used to 70% yields. Everyone is used to 95 to 100%. Some of the companies say they've made it over the hump, but I think they made it 'over the hump' at 80%, which is why DRAM companies have not gone to copper yet."

"Until you do the detailed studies, you just don't understand these things," Intel's David emphasizes. He would like to see better tools for integration such as the existing pore symmetry tools "that can measure the fraction pore content of an ILD film. Having those data at our disposal allows us to predict a lot of process interactions to characterize the films much better."

Most of the "big analytical tools like SEMs and TEMs and SIMS...are very good at a bulk microscopic level. What I'm looking for is a suite of tools that give better insight into what's happening at the molecular and structural levels." These capabilities exist primarily at university research labs.

Nevertheless, David remains optimistic. "The challenges of scaling are apparent in a lot of different areas. We're looking for material solutions in almost every one. I believe there's progress being made in most areas."—JC

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