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Toolmakers jump on China/Asia
used-equipment bandwagon

SHANGHAI—Semicon China 2005 was the venue of choice for several OEMs to announce the start of certified refurbished-tool programs. While Novellus Systems and KLA-Tencor led the pack, Aviza Technology followed suit immediately after the show, stating that it has initiated a new business unit to supply "cost-effective solutions" for the 200-mm market.

The toolmakers' decision to use the Shanghai trade show to inaugurate their used-tool businesses was not accidental. "The technology node gap is broadening," commented Tom St. Dennis, Novellus's executive vp of sales, worldwide service, and marketing. In China, device geometries tend to span the 1.0- to 0.13-Ám range, "but the sweet spot is 0.35 Ám." Approximately 49% of Chartered Semiconductor Manufacturing's devices, for example, are fabricated at the 0.18-Ám level or below, St. Dennis remarked, while 51% are at the 0.25-Ám level or above. "The trend is clear that there will be lower-tech 200-mm fabs with long lifetimes and a loyal customer base. Technologies exceed the needs of many customers. So growth is being satisfied by more of the old stuff."

In addition to its China customers, Novellus's customers in South Korea and Japan are interested in purchasing refurbished tools, said St. Dennis. The company will initially offer refurbished PECVD, CVD tungsten, and HDP-CVD tools but plans to add CMP and photoresist strip equipment in the future.

Many applications, including consumer ones, use larger, reliable device nodes—hence the need for older-model tools. And despite the proliferation of 300-mm fabs in the last several years, the number of 200-mm fabs has increased by 48% since 1997, according to Gartner Dataquest. Most of that 200-mm activity has taken place in Asia, fueling the market for reliable used tools.

Novellus, noted St. Dennis, "used to refurbish tools on an ad hoc basis, but not systematically." The purpose of the refurbished-systems business unit is to provide customers with a more stable supply chain. "The use of refurbished tools and 200-mm fabs is greater in China than anywhere else in the world. Seventy percent of our revenue is outside the U.S. and Europe—i.e., in Asia. That trend will only continue."

The company has a strategic need "to source materials out of Asia, becoming more of a global company, and to do more in China," where it employs about 100 people in sales and service capacities. An indication of Novellus's China strategy was its donation in 2004 of a copper-tool product line to Shanghai's Fudan University. At the same time, its infrastructure in other parts of Asia is growing as well. In Hanoi, the company contracts out the manufacture of flow systems for its tools.

"In general, the used-tool business is big—in China, Taiwan, Japan," remarked Tomoyasu Cho, director of KLA-Tencor's Asia sales and the K-T Certified division. In contrast to used-equipment brokers that do not offer service and support, K-T is marketing its refurbishing unit as one-stop shopping.

"Old tools get transferred to K-T Certified," Cho notes. "To do the used-tool business, you need parts, service"—not simply sales. "KLA-Tencor will provide full support. Fully refurbished and tested KLA-Tencor equipment meets or exceeds original product specs." In addition, the company supplies the latest software versions "so that with old tools customers get software upgrades."The company also makes hardware improvements and typically offers warranties on its used equipment.

K-T's used inspection and metrology equipment will range in age, depending on the life cycle of the customer. Cho sees a big market in China and Japan. A top-tier Japanese company "is building a fab now and stocking it with used tools. This company is spending lots of money on future technologies, but it has to make money today."

Used-equipment brokers are taking note of the big toolmakers' announcements, but they are not necessarily concerned. "I believe it is a wise move for the OEMs to offer and support the used-equipment needs of the customers," noted Bill Wintgens, COO of Techlink, which has provided front-end equipment to fabs, R&D facilities, and universities since 1987. "This can benefit the OEMs now, with spares, service support revenue, and potentially satisfied customers for new tools in the future."

Observing that over the past five years the used-equipment market has expanded by 40–50% over previous years, Wintgens remarked that most brokers only sell equipment but do not offer service and support. "Techlink is among a number of refurbished-equipment companies that offer warranted refurbished equipment, including service and support, in China."

With the presence of big players such as Novellus and KLA-Tencor, "the competition will definitely increase in the used-tool-sales market," Wintgens believes. However, unless the OEMs keep their pricing in check, that should not have a great effect on companies such as Techlink. "I feel it would also benefit the OEMs to cooperate more with the refurbish companies instead of no cooperation, no parts sales, or support," he said. Joint efforts could produce [good] future results for new-equipment sales with less investment for the OEMs."—BM

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