Chip Scale Review - November December 2019

46 Chip Scale Review November • December • 2019 [] 16% and hold 80% market share in 2018. Samsung and Intel together made three out of every 10 dollars in the industry. In 2018, mergers and acquisitions (M&A) and semiconductor industry consolidation act iv it y d id cont i nue, alt hough an increasing number of deals were blocked due to regulatory reviews by governments in Europe, China, and the U.S. (e.g., Qualcomm/NXP deal) ( Table 1 ). Financial investment The investment needed to purchase a fab will vary depending on the type and size of fab in which a company is interested. Securing used tools over new ones will reduce the CapEx needed to start a facility. However, finding a complete and integrated used tool line that can be moved from an Top six considerations when selecting a fab location By Stephen M. Rothrock [ATREG, Inc.] This article is derived from “Semiconductor Manufacturing Strategy: Where In The World To Locate A Fab Or Cleanroom?” presented and published on October 3, 2019 at the 52nd IMAPS International Symposium on Microelectronics (International Microelectronics Assembly & Packaging Society) in Boston, USA. he global market for advanced technology manufacturing assets is becoming ever tighter, compelling semiconductor companies to carefully explore all available options when planning manufacturing operations relating to fabs, tools, and cleanrooms. Despite the semiconductor industry’s optimistic growth forecasts, global uncertainty generated by the continuing trade war between the U.S. and China is causing anxiety among advanced technology companies and forcing them to constantly rethink their manufacturing strategies. In 2019, infrastructure-rich cleanroom manufacturing assets continued to play an essential part in shaping these strategies to ensure global competitive advantage as more wafers are needed and more facilities are being built worldwide. Despite a slowdown in semiconductor mergers and acquisitions activity, the global semiconductor market will continue to consolidate as the manufacturing needs of advanced technology companies evolve with market changes. This has put a strain on manufacturing space and resulted in a number of new capital projects and expansions that may become difficult to fulfill in the current market. A shortage of existing manufacturing space means cleanrooms and operational fabs will sell at a premium. Many companies are also looking at greenfield sites with local government incentives playing an active role. Running in tandem, there is still a shortage of used and new production tools with lead times in excess of one year to purchase new fabs from original equipment manufacturers (OEMs) or equip new fabs. In light of all these moving parts, successful fab site selection remains crucial for advanced technology manufacturers. This article aims at providing insights into how to best approach manufacturing strategy decisions in the context of today’s global semiconductor landscape. Transaction and consolidation trends The re wa s a major slowdown in operational fab sales in 2018, in fact, not one operational fab sold last year. This is the first time this has h a p p e n e d s i n c e o u r f i r m bega n t r a ck i ng operational fab sales in 2001. Despite this, we saw resurgence in interest in used operational fabs in the second half of 2018, which has led to multiple sales being announced or closing in 2019. The market has seen a high level of fab transaction activity in 2019, with five high- caliber assets sold, highlighted by ON Semiconductor’s $430 million purchase of GLOBALFOUNDR I ES’ 300mm fab located in East Fishkill, NY. 2018 was an anomaly, with no operational fab transactions being bought or sold. Typically, there are between four and eight fab transactions in a year. The lack of supply and high demand for 200mm equipment, facilities, and capacity continues. New operational 200mm fabs will go for a premium. According to a presentation conducted by Infineon at SEMI’s 2018 ITPC conference in Hawaii, another nine 200mm fabs are needed to meet the needs of power applications such as automotive and next- generation handhelds, to name just a few ( Figure 1 ). To cope with rising chip development costs, many semiconductor companies are turning to consolidation. In 2018, the 10 largest companies combined accounted for $193.6 billion of total sales in the semiconductor industry, or more than 40% of the total market (Gartner). The top 25 companies are projected to grow around T GUEST EDITORIAL Figure 1: Fab transactions over the last 8 years. SOURCE: ATREG, Inc., 2019 Table 1: Number of transactions and their value between 2017 and 2019. SOURCE: Stifel, includes announced and closed transactions.