7/19/2017 EE Times - Megatrends Drive 200mm Fab Renaissance

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Megatrends Drive 200mm Fab Renaissance

Mike Noonen
7/14/2017 02:31 PM EDT The past year has
1 comments post a comment seen a resurgent
Tweet Share 309 interest in 200mm
fabrication. In this
paper, I will discuss
why this is and answer the question, "Can 200mm fabs have a profitable future?"

Strategies to Maximize More than Moore Foundry Growth and Profitability

I will also share some of my ideas to maximize profitable growth for mature More than
Moore foundries. These ideas were shaped by my experience at Globalfoundries and
managing several fabless companies.

Why the renewed interest in 200mm?

From my experience at Globalfoundries, I realized that leading edge process technology was
becoming less and less affordable. This shaped my Law of Process Scaling Economics.

Simply put, as transistor scaling advances, development costs climb dramatically, decreasing
the number of customers who can afford the technology. These costs are well understood
and documented such as fab construction, semi equipment, triple & quadruple patterning,
etc. Less understood and recognized are the costs of intellectual property such as cores,
memory, interconnect and the associated validation costs.

As a result, IBS estimates the product revenue required to justify a leading-edge design will
skyrocket from greater than $300 million for 28nm to billions of dollars at 10nm.

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7/19/2017 EE Times - Megatrends Drive 200mm Fab Renaissance

While development costs have been climbing, another megatrend has emerged to make
leading edge economics even more challenging. For most of the semiconductor industrys
history there has been a single market driver.

In the 1950s, it was military and aerospace;

The 60s, mainframe computing;
The 70s, minicomputers;
The 80s, personal computers;
The 90s, networking;
During the past 15 years, mobile has been the main driver.

However, for the first time, semiconductor growth is now not driven by just one main end
market. Todays market is driven by the Internet of Things, which is not a single market but a
myriad of diverse end markets and applications.

IoT is really the siliconization of everything. Most of these devices will have a modest
volume in comparison to the market drivers of the past. Very few IoT products will have 1
billion unit or even a 100 million unit potential. Rather, this is an age of 10,000 different
devices which might sell 100,000 units. As a result, there are few devices that have the
volume to justify the most advanced technology. IBS estimates that there will only be a
handful of IoT products that will sell more than 10 million units in the year 2020.

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7/19/2017 EE Times - Megatrends Drive 200mm Fab Renaissance

Clearly, there is a disconnect between the IoT market driver and leading-edge costs.

But happily, many IoT devices are predominately analog or mixed-signal and do not require
nor benefit from the most advanced technology. They are the More than Moore functions
such as sensors, power, human interface or RF. These functions do not scale downward and
do not like the lower thresholds or currents in the most advanced nodes. For this reason,
130nm had the largest number of design starts in 2015; 2x the next nearest node, 180nm
While other nodes are climbing, such as 65nm, 40nm and 28nm, for the next several years,
130nm will remain the most popular technology.

(Source: IBS, SEMI, GSA)

During this transition to IoT as a major driver of semiconductor growth, the number of 200mm
fabs decreased substantially. In 2007, there were 199 200mm fabs worldwide and by 2015
this had dropped to just 178. There were two major reasons for this decrease:

1. The continuing shift by many semiconductor companies from an integrated device

manufacturer (IDM) model to a fabless/fablitefoundry model.
2. The unprecedented number of industry mergers and acquisitions. Many of these deals
either assumed a fabless model or a consolidation of captive manufacturing to reduce

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7/19/2017 EE Times - Megatrends Drive 200mm Fab Renaissance
operating expenses.

The low point in number of 200mm fabs worldwide came in 2015. This resulted in many
foundries reporting their 200mm capacity being 100 percent utilized and on allocation
throughout 2015 and 2016.

NEXT PAGE: 200mm Making a Comeback

Between now and 2020 several new fabs will be opened or 150mm fabs will be upgraded. By
2020, SEMI forecasts 191 200mm fabs in production worldwide.

However, even with this increase in new fab construction and upgrades, the total worldwide
200mm capacity in 2020 will only reach the same level as 2008. It is a reasonable conclusion
that utilization will be very high throughout this period.

To summarize, 200mm fabs have experienced a resurgence because:

Leading-edge costs have skyrocketed

For the first time, the semiconductor is not driven by one market, but rather a collection
of markets: IoT
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Most IoT devices will not have enough volume to justify advanced technology
Luckily, most IoT devices do not need nor benefit from advanced nodes
As a result, 180nm, 130, and 65nm design starts are strong and are expected to stay
strong for many years
There has been a decrease in 200mm fabs since 2007
Capacity has increased slightly due to improved efficiency
Several new 200mm fabs will open over the next several years
But by 2019 capacity will only be back at 2007 level
Therefore, the existing 200mm fabs will see strong demand and utilization for the next
several years

Given the current and on-going demand for 200mm capacity, what are some strategies
to maximize profitability and drive growth? Here are several ideas that I have used to
drive foundry profitability and growth. Most of these ideas are underpinned by very wise
advice from Bill Davidows excellent book, High Technology Marketing, to have well defined,
defensible target markets with whole products.

Use Modular Platforms to Reduce Complexity and Lower Breakeven Utilization

Many foundry operations, especially those with that were previously captive operations, have
accumulated a large and diverse menu of process flows. This is understandable as new
processes were added for a new product development or new flows were developed to
support second source customers. One fab I know had more than 10,000 different process
flows! While a wide product offering is sometimes good, too many flows have huge
drawbacks:

Only a handful of process flows are responsible for most wafer starts. As a result,
these flows get the learning and quickly reach a consistent entitlement yield. The other
processes and flows that are run less often, have much less learning, longer cycles of
learning and as a result, lower, unpredictable yield.
In addition, the PDKs for these processes are typically not well documented making
them difficult for a new or external designer (if the fab was previously captive) to use.
Plus, having many processes also means there is equipment that is rarely used,
making breakeven utilization difficult to achieve even at the top of the semi cycle. The
same fab that had 10,000 process recipes also had a 98 percent breakeven utilization
(due to many rarely used and stranded tools).

The solution is to create modular process platforms from the most widely used or common
denominator process flows. A baseline 180 or 130nm bulk CMOS process might have a
baseline LDNMOS platform with modules for various process and feature options such as:

Zener diodes
MIM Cap
Poly Resistors
High Voltage LDMOS
Ultra-Low Leakage CMOS

The diagram below shows an example of the very successful BCDLite Platform and modules
from Globalfoundries.

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A modular platform enables a better understanding of costs and how to optimally price to
maximize value. A bonus of this effort will identify the most widely used tools and potential
capacity and cycle time bottlenecks.

NEXT PAGE: Differentiate to Add Value

Differentiate to Add Value to First / Sole Source Customers

Many foundries only offer generic compatible processes to attract second source business.
Others have depended almost entirely on second source or even third source customers. At
best, this fab-filler strategy is a way to win wafer starts at the top of the semiconductor cycle
and off load first source foundries at capacity. However, for todays 200mm process
technologies and designs this is a losing game plan for the following reasons:

Revenue per layer and wafer will always be lower than what the first source enjoys;
As soon as demand slows the first source gets the starts and the second source is cut
off and left with an empty fab;
Many IoT analog, mixed-signal and RF designs do not have enough volume to require
a second source;
Technical specifications make bringing up a second source less attractive or maybe
impossible to impact a market window.

A much better approach is to build differentiation and value-added features on top of

baseline processes. These features could be non-volatile memory, higher voltage, improved
circuit protection, new FET materials, etc. These differentiated features allow designers to
have the best of both worlds: a baseline process that is easy to design with plus capabilities
that make the designers product more valuable. Every designer is looking for an edge that
will give them a competitive advantage. The fabless designer wants the same advantage that
a designer from an IDM such as TI or Linear Tech has enjoyed for decades. Sometime these
features are co-developed and exclusive to one customer, sometimes they are organically
developed. Either way, they will attract customers at a higher margin. This extra top and
bottom line impact is especially important for fabs that dont have the CAPEX to expand
wafer start capacity to grow revenue.

Go Beyond Outsourced Manufacturing FLEX has evolved their business from contract
manufacturing to what they call sketch to scale." This describes their strategy to engage
early with customers to co-define and co-design products. This creates new value for FLEXs
customers and in turn, FLEX. This early engagement also pulls in time to revenue. FLEXs
ambition is to have more than 40 percent of their 2020 revenue driven by sketch to scale
engagements. If contract manufacturing can evolve like this, mature foundries certainly can
as well. Foundry and fabless semiconductor engagement should start well before the
traditional GDSII handoff. It should start early at the sketch or inspiration phase to identify
process innovations and features that will add value to the customers product and create
loyalty and margin for the foundry. It should continue to the scale or production phase with
devices engineered with yield and testability in mind. This early engagement requires an
investment in designers and process engineers who can translate customer requirements
into PDKs and process modules. This is a modest investment that will pay top and bottom
benefits for many years.

Make Service a Differentiation

I have never met a design manager or engineering vice president who was not eager to get
prototypes back as soon as possible. This is especially true of designers who previously
enjoyed fast cycle times from captive fabs. A hand carry, half-day per mask layer, is not
uncommon for a captive fab. Many foundries have neglected this point and as a result fab
out dates are missed and shuttles are unpredictable or rarely run. This is a squandered
opportunity as service can be a differentiator. Reliable cycle times and dependable shuttle
programs are very attractive and are important elements of a strong customer design
relationship. Upgrades to the standard services such as hot lots and quick turn packaging
can be monetized to increase revenue.

Make It Easy to Design

Most foundries have not paid enough attention to the needs of customer designers. They
have viewed PDKs and IP as a necessary evil when design support can be a relatively low-
cost way to differentiate their offering and attract new customers. Anything that can reduce
complexity and make it easier to design will both attract and retain first and sole sourced
customers. Some examples are well documented PDKs, verified models, characterized test
chips, robust IP for license, well defined and supported tool chain. At Globalfoundries, I
brought in Lou Hutter Consulting who analyzed our PDKs and support. They made multiple,
cost effective recommendations to quickly improve the customer design experience.

NEXT PAGE: Embrace New Business Models

Embrace New Business Models

The recent GSA whitepaper, Charting a New Course for Semiconductors outlines an
industry in transition and proposes several strategies to maximize the enormous yet broad

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and varied IoT semiconductor opportunity. These tactics are very relevant to 200mm
foundries. They are:

Open Source Semiconductors: One way to drive growth in semiconductors is found in

the software industrys adoption of open source. Linux and Android are just two
examples of how open source software was a catalyst for tremendous growth. Open
source hardware has emerged with Arduino and Raspberry Pi platforms as high-
volume success stories. Why not open source semiconductors? The RISC-V initiative
out of University of California, Berkeley, has gained a wide following. It will be a strong
open source IP option with economics that encourage differentiation and innovation.
Reconfigurable Chips: Non-volatile memory (NVM) IP can be a valuable tool to meet
the needs of IoT devices but without profit killing design cost and complexity.
Traditional analog and mixed-signal has been one mask set for every part number.
Clever use of Anti-fuse and eFLASH NVM enables that one design, one mask set to
be configured by the developer or end customer into many unique designs. This
dramatically changes the economics to meet the varied needs of IoT devices. It also
has an enormous impact on supply chain and prototype and production cycle time by
bringing FPGA convenience to analog and mixed-signal. In addition, NVM adds value
thru enhanced security and added analog functionality such as active calibration and
trim.
Downstream Revenue Sources: IoT solutions are an integration of hardware, software
and services. NVM based IoT devices can be used to unlock new features or services
downstream and post the initial sale. This has the potential to provide additional
revenue streams for all the product stakeholders.

Develop a Well-balanced Customer Portfolio

A profitable business should seek out and develop a well-balanced customer portfolio.
Usually a foundry will focus on one segment: traditional fabless and fablite semiconductor
companies. While these should be at the core of any business plan, the market forces and
market drivers highlighted above open new customer segment possibilities. A balanced
customer portfolio will also be less susceptible to a market downturn and underutilization.
Countercyclical markets and customer segments will ease any semiconductor cycle
fluctuations.

For example, systems companies such as Amazon (Lab126), Huawei, Apple, Xiaomi are
designing their own semiconductors. While they have been primarily focused on SoCs, they
will most likely start to take on power, connectivity, and sensors as well. Another segment
that is underserved is defense, especially Trusted Foundry in the United States. Many
defense contractors have closed their internal fabs or have not invested in recent years. This
has created a gap between demand and qualified suppliers. Finally, there are many
innovative start-ups that have been unable to attract funding and many times, the attention of
traditional foundries. By engaging early and selecting the ones that have the most promising
innovation, these companies become sole sourced customers at a very low cost of
engagement. Often, they are acquired by larger semiconductor and systems companies who
almost always maintain the existing foundry relationship.

NEXT PAGE: Going Beyond Silicon

Use 2.5 & 3D to Drive Cost Effective Integration & Time to Market
If very few products will have the volume and business potential to justify leading edge
process costs, does that mean Moores Law is over? I do not believe so as Moores Law is
about cost not just technology. Packaging has become a very attractive way to drive
integration without facing the tremendous cost of monolithic leading-edge integration. Multi-
die 2.5 and 3D packaging offer a well-defined path to integrate multiple functions. This
approach has the dual benefits of each function being fabricated in the optimal process
technology and a very fast time to market. For example, a Bluetooth radio and MCU system
in package project I worked on went from concept to prototypes in 60 days rather than the 18
months estimated for a monolithic design. Mature More than Moore foundries can partner
with test and assembly providers as well as leading edge foundries to provide a menu of
solutions. Also, worth exploring are innovative start-ups such as zGlue, who have developed
a programmable packaging interconnect ideal for multi-die IoT devices.

Wide Bandgap, the 200mm Leading Edge

Finally, there are emerging technologies and markets where 200mm is the state of the art.
One example is wide bandgap technologies such as gallium nitride, silicon carbide and even
diamond. These technologies have the potential to dramatically change the power and RF
markets. What has been missing is a foundry ecosystem and economies of scale for wide
bandgap. Early entrants have been vertically integrated, with small diameter wafers (100mm,
150mm) and margin killing yields. This is set to change with new technologies from
companies such as Quora Technology. Quora has developed substrate technology that
enables high yield 200mm gallium nitride today. Advances like this will accelerate wide
bandgap adoption and create new and lasting 200mm demand.

Conclusions

There are several conclusions that can be made:

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IoT will be a strong market driver for many years to come;
Most IoT devices cant afford nor do they need leading edge technologies 200mm
capacity will be tight for the next 3+ years;
Therefore, the existing 200mm fabs will see strong demand and utilization for the next
several years.

There are many ways a 200mm fab can differentiate to maximize revenue and margin

Going beyond silicon with Wide Bandgap foundry will expand the market for 200mm;
Evolving past outsourced manufacturing will build tighter first and sole source
customers;
Reduce complexity and monetize differentiated design experience and service levels;
Multi-die 2.5 and 3D Packaging can cost effectively drive Moores Law economics with
More than Moore functionality;
New business models such as open source IP and reconfigurable chips can unlock
value and create new revenue sources;
Stick to Well defined, defensible target markets with whole products.

Mike Noonen is an advisor to the most innovative semiconductor and IoT companies such
as Quora Technology, Maja Systems, Mythic and SiFive. He also currently leads sales and
business development at Silego Technology, the configurable mixed-signal pioneer.
Previously, Noonen was CEO at Ambiq Micro, Chairman of Silicon Catalyst & Socle, EVP at
Globalfoundries and NXP. In 2012, he was elected to the Global Semiconductor Alliance
Board of Directors. Noonen has also held executive roles at National Semiconductor, Cisco
Systems and 8x8. He holds a BSEE from Colorado State University and was named the
College of Engineering Distinguished Alumni.

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