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WHEN THE CHIPS
One of the ways semiconductor pro ducers are cutting costs is by reducing their use of "consumables," particularly
the expensive high-purity chemicals used in the preparing, cleaning, and etching of silicon and other semicon ductor materials. Until recently, the semiconductor in dustry trend had been toward raising electronic chemical purity by decreasing contamination to the parts-per-trillion lev el. Purity was pursued on the assumption that any foreign matter could damage the integrity of the tiny semiconductors and Michael McCoy as photoresist strippers. "Big compa other electronic parts that the chemicals nies are deciding if they really need to are used to make. C&EN Northeast News Bureau However, according to Robert N. be in the semiconductor business." he global semiconductor industry The restructuring, LaCasse notes, in Castellano, president of Information is gradually coming out of a sharp cludes changes such as the merger of Network, a New Tripoli, Pa.-based con downturn that plagued it during the Hyundai and LG semiconductor sulting firm to the electronics industry, 1998 and much of 1999. The recovery is businesses in South Korea, the spin-off semiconductor makers are beginning to good news, but for the chemical compa of Siemens' semiconductor business to question the need for ever-higher chem nies that supply semiconductor makers form Infineon, the spin-off of Rockwell ical purity. 'They are asking, 'Do we re with crucial raw materials, life after the International's semiconductor business ally need the greater purity that we've been supposing in the past? downturn just isn't the same. Show me a study that proves it,' " Global semiconductor sales fell Castellano says. 8% last year to $125 billion, accord ing to the Semiconductor Industry He says this scrutiny is emerg Association, San Jose, Calif., as the ing because, during the downturn, Asian economic crisis and general purchasing managers at electron market softness took their toll. ics firms started to become more The situation was even more dire involved in the process of choos among suppliers of equipment ing chemicals, rather than merely and materials to the semiconduc following the dictates of engineers tor industry, with 1998 sales plum who are likely to recommend the meting 21% to $21.8 billion, ac best product on the market, re cording to Semiconductor Equip gardless of its cost. ment & Materials International Mark McClear, worldwide mar (SEMI), Mountain View, Calif. keting director for electronics at the industrial gases firm Praxair, ac In contrast, this year is turning knowledges this shift in mind-set. up nicely. After a slow start, world "Electronicsfirmsare reevaluating wide semiconductor sales in 1999 purity," he says. "In the past, manu are expected to end 12% higher facturers tried to be as clean as they than last year, and equipment and could be because the science materials sales should grow by 9%. wasn't fully understood." Even rosier forecasts are being Technicians coat wafers In AZ Electronic Materials9 made for 2000 and beyond. Quantifying adequate purity testing clean room In Its Somervllle, ΝJ., facility. However, although the down still isn't easy, but McClear says turn may be mostly behind the industry, as Conextant, National Semiconductor's electronics companies are narrowing in it has precipitated significant ownership exit from the personal computer chip on it by starting with the highest purity changes and consolidation among semi business, and the outsourcing of semi process chemicals and then backing off conductor producers. Perhaps even conductor production by companies purity until they reach the level that more important to electronic chemical such as Motorola and Lucent to manu does the job without compromising suppliers, the downturn also spurred a re facturing "foundries" in Asia. yields. 'They are calling it 'just clean newed emphasis on reining in semicon Squeezing the semiconductor indus enough,' " he says. ductor chip manufacturing costs. McClear points out that this trend try at the same time, LaCasse adds, are 'The semiconductor industry is go personal computer and electronics prices isn't universal and that very high purity ing through a major restructuring," says that keep on falling. "At the end of the chemicals are still in demand. "There James LaCasse, vice president and gen day, there's a lot of cost pressure," he are older electronics plants where puri eral manager of Arch Chemicals' semi says. "Semiconductor makers are very ty requirements are going down, but conductor photopolymers business in good at engineering and looking for effi there are also very new ones that don't Quonset Point, R.I., a producer of pho ciencies, and they have had to do this to want to risk yields with low purity," he toresists and ancillary chemicals such the extreme." says. Likewise, companies are more
ARE DOWN
Semiconductor makers are squeezing costs out of their plants, and electronic chemical suppliers are feeling it
T
NOVEMBER 22,1999 C&EN
21
business likely to experiment with the purity of cleaning gases and chemicals than with products such as silane or tetraethylorthosilicate that become part of the finished semiconductor. Unfortunately for suppliers of electronic chemicals, their customers aren't only cutting use of the most expensive chemicals; because of continual miniaturization, they require smaller amounts of chemicals overall to make each individual semiconductor. Castellano explains that even in years of lower dollar sales, such as 1998, semiconductor production volumes generally rise. This should translate into higher consumption of chemicals used to make the chips, but last year, manufacturers implemented miniaturization advances that significantly increased the number of semiconductors they could squeeze onto an 8-inch silicon wafer. This meant that less silicon was consumed overall— and fewer chemicals were needed to process this silicon. "Roughly speaking, semiconductor producers made 10% more chips but used 10% less silicon," Castellano says. This miniaturization— known as die shrink—is an ongoing process, he adds, but 1998's improvement was notable for its extent. The cumulative impact of these pressures on electronic chemical makers has been severe. Figures from Arch Chemicals, the one electronic chemical maker that discloses sales and profits, speak for themselves. Arch reported $228 million in microelectronic chemical sales in 1998, down from $243 million in 1997, and the unit posted a $4.1 million loss last year, compared with profits of $9.5 million in 1997 and $16.9 million in 1996. Arch's performance is particularly telling because the company is a leading player in both photoresists and process chemicals, two of the most important electronic chemical segments. The situation is improving in 1999, but slowly. In the third quarter, Arch's microelectronics businessfinallybeat the prior year's sales, but it still reported a loss of $1.5 million. The company notes that its process chemical unit, with a loss of $3.1 million for the quarter on sales of $16.7 million, is pulling down results for the microelectronics division overall. Indeed, Arch told financial analysts recently that the process chemical portion is undergoing a "strategic review" to determine whether it fits within the 22
NOVEMBER 22,1999 C&EN
According to Cook, equipment sales figures indicate that semiconductor makers are some months away from adding new lines and even further away from building new fabs. The upshot for Ashland, which completed its 1999fiscalyear at the end of September, is that "sales are only marginally up—almost flat," Cook says. The news is more positive from companies involved in reactive chemicals and gases that are used in the most advanced semiconductors. Bob Kouk, vice president of market development at Air liquide Electronics, notes that sales of specialty gases such as nitrogen trifluoride, tetrafluoromethane, and hexafluoroethane are growing at double-digit rates. Air Products & Chemicals, for its part, has been rapidly expanding nitrogen trifluoride and tungsten hexafluoride capacity in response to growth in multilayered chips. While the electronics industry responded to its downturn with several consolidating moves, surprisingly, the electronic chemical industry hasn't followed suit in Marklewlcz (left) nearly as significant a way. and Cook Probably the biggest consolithe semiconductor industry did not fully dator has been Rohm and Haas, which earlier this year acquired the electronic chemmaterialize." If chip sales are expected to be up 12% ical maker LeaRonal and the specialty this year, why is the chemical business chemicalfirmMorton International, which lagging? For starters, Greg Markiewicz, has an electronic chemical business. Both director of sales and marketing for Clari- of thesefirms,however, were mostly in ant's AZ unit, notes that the 12% sales chemicals for printed circuit boards, a gain doesn't necessarily translate into a more mature electronics segment that similar gain in production volume, be- doesn't experience the ups and downs that cause pricing in the volatile semiconduc- the semiconductor industry does. tor segment plays a big role in determinThe other big consolidation is the oning sales figures. Markiewicz expects going acquisition and split-up of British AZ's business to strengthen next year. industrial gasesfirmBOC by its French Charles W. Cook Jr., vice president and American rivals Air Liquide and Air and general manager of Ashland Special- Products. Although this move will imty Chemical's electronic chemical divi- pact BOC's business in gases for elecsion, adds that chemical companies feel tronics—the business, like the compathe impact of a semiconductor downturn ny, is expected to be split largely on geoquickly, because it manifests itself in the graphic lines—the move was prompted closure of older and less profitable chip by a desire for overall industrial gas confabrication facilities—known as fabs— solidation and not specifically by the which suddenly stop buying chemicals. electronics downturn. 'When this happens, the deductions from Gases plus chemicals sales are pretty clear," Cook says. Rather than outright acquisition and On the upswing, however, semiconductor makers respond byfirstadding in- consolidation, many suppliers to the cremental production at existing fabs, a electronics industry are responding to process that adds chemical volume, but the downturn—and the evolving needs slowly. Cook says chemical makers won't of their customers—with an array of allireally benefit from the current upturn un- ances that range from links between til new fabs are built, or new production producers of gases and process chemilines are added to existing ones, requir- cals to tie-ups between materials compaing significant charges of new chemicals. nies and fab equipment suppliers. microelectronics portfolio. Without process chemicals, Arch's third-quarter microelectronics sales increased 6% and profits improved significantly. Clariant, which produces photoresists and related chemicals through its AZ Electronic Materials unit, had a similar take on 1999 through the third quarter. It reported a 7% drop in nine-month sales in itsfinechemicals division, which also includes life sciences intermediates. In the U.S., Clariant said recently, "the hopedfor upswing for photoresists in
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Several of these alliances were an nounced this year. In April, Praxair and the electronic chemical division of Ger many's Merck KgaA unveiled a partner ship to provide high-purity gases and chemicals, along with related equip ment and services, to the worldwide semiconductor industry. The alliance combines the sales, product lines, and organization of each company to create what they call thefirstone-source mate rials supplier to the $2.7 billion gases and chemicals market. That same month, Arch and Air Li quide teamed up to form an alliance in which each will promote the other's com plementary electronics industry services in addition to the ones they offer individu ally. Thesefirmsare following the lead of Air Products and AlliedSignal's specialty Colloidal Silica dispersed in organic solvent. chemicals business, which last year Type Si02% Dispersant E& formed their own version of a gases-andMT-ST 30 Methanol 12 MA-ST-S 30 Methanol chemicals combination. 9 IPA-ST 30 Isopropanol 12 In fact, the only major electronic IPA-ST-S 30 Isopropanol 9 chemical company not involved in such EG-ST 20 Ethyleneglycol 12 an alliance is Ashland, generally consid NPC-ST-30 30 Ethyleneglycol12 ered to be one of the world's largest wetmono-n-propylether MEK-ST 30 Methyl ethyl ketone 12 chemicals suppliers. MIBK-ST 30 Methyl isobutyl ke 12 Cook is well aware of what his com tone petitors are doing, but he says Ashland DMAC-ST 20 Ν,Ν-Dimethyl 12 has decided to wait and watch the com acetamide petitive landscape for a while. "It's not Available product is much more. yet clear to me where the bottom-line economic merits of that type of alliance lie," he says. "We would consider one if we found the right opportunity, but we're not going to pursue it just to keep up with the latest trend." For the time being, Cook says, Ash land will stick with smaller, targeted alli ances, such as the one it has with FMC Type Si02% Dispersant to sell FMC's high-purity hydrogen per 20 ST-UP Water oxide to the semiconductor industry 20 MA-ST-UP Methanol and a separate alliance with Detrex of chain molecules of silica. Ashtabula, Ohio, to sell its pure hydro 5-20nm in width chloric acid to the electronics market. 40-300nm in length For Praxair's McClear, on the other ST-0 negatively charged small hand, the new alliance with Merck has particle sol (ca. 12nm), not very tangible benefits. Although Air including anion and cation Products and Air Liquide are bigger in without stabilizing ion electronic-grade gases than Praxair, For prompt reply, please contact directly by fax now: and Ashland and Olin are close rivals to Merck in electronic chemicals, McClear NISSAN CHEMICAL INDUSTRIES, LTD. Chemicals Division says the Praxair-Merck combination is the leading overall supplier of gases and Tokyo Head Office: Phone:03-3296-8065 Telefax:03-3296-8360 chemicals. He says the two firms complement Houston Office: Contact person: Sam Kondo and M. Matsumura each other geographically as well, with Phone: 713-532-4745 Telefax: 713-532-0363 Praxair's strength in the Americas and Merck's in Europe and Asia. Soon after Dusseldorf Office: Contact person: H.Masuda Phone: 0211-363591 Telefax:0211-162243 the sales alliance was formed, Praxair and Merck followed up with a comple http://www.snowtex.com mentary R&D alliance that, according to
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NOVEMBER 22,1999 C&EN
Cylinder changeout area at Air Products' Hometown, Pa., specialty gas production facility
McClear, allows the firms to combine gases and chemicals in research to solve customers' problems. The gases-and-chemicals alliances are just one example of a web of servic es being conceived by materials suppli ers. The stated aim of these new offer ings is to streamline and simplify the procurement process for semiconduc tor producers that are building new plants or operating existing ones; how ever, some executives admit that in creasing gas and chemical sales is an equally important goal. The most basic of these services, dat ing back to the mid-1980s, is the han dling and disposal of process chemicals and gases known as total chemical man agement or total gas management. Gas or chemical management is offered by several of the major materialsfirms,in cluding Praxair, Ashland, Arch, Air Li quide, and Merck. Ashland's Cook notes that his com pany's chemical management service is run separatelyfromthe chemical supply business. Although increased chemical sales are always welcomed, he says, the chemical management unit isn't obligat ed to use Ashland products. 'Their obli gation is to the performance of the cus tomer's system, independent of the chemicals that are in it," he explains. Others, however, are more blunt. Jo seph Stockunas, Air Products' worldwide marketing manager for electronics, ac knowledges that the strategy for Air Prod ucts' Megasys gas and chemical manage-
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business ment system is to "pull through as much gas and chemical business as we can." On the other hand, he points out that the typi cal fab consumes as many as 35 gases and 30 chemicals, so no one gas or chemical company can supply all of its needs. Recently, the range of services being packaged by gas and chemical compa nies has become more encompassing. In July, Air Products and the Kinetics Group, a subsidiary of U.S. Filter, formed Trimega Electronics, a 50-50 joint ven ture based in Santa Clara, Calif., that is in tended to be a "complete turnkey solu tions provider" for all the critical materi als and systems needed to build a new fab or retrofit an existing one. According to Stockunas, the venture wraps into one package many of the components a new fab needs to get go ing. From Air Products, these include gases, chemicals that Air Products makes, chemicals it obtains from the venture with AlliedSignal, and the Megasys system for managing gases and chemicals at the fab. Kinetics, mean while, brings experience in installing gas and chemical delivery systems, ul
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trapure water and wastewater equip ment, and process utility systems. Praxair has its version of the turnkey provider, called Point One fab integration services. Formed in June 1998, it's intended to pro vide the semiconductor industry with a single con tact point for the integra tion of systems design, engineering, construc tion, installation, start-up, and ongoing site service. The service was upgrad ed in May when three companies involved in airhandling systems, me chanical construction, and construction design joined Praxair as alliance Stockunas partners. McClear explains that the semicon ductor fabs being built today cost around $1.5 billion. About $1 billion is spent on tools and equipment and $200 million on land and the building's physical shell. Alliances like Praxair's are targeting the remaining $300 mil
lion that is spent on air handling, gas piping, chemical systems, electrical sys tems, and other infrastructure needed to get a fab up and running. 'The traditional fab has a dozen subcontractors in stalling these things," Mc Clear says. "Its an uncoor dinated race. We believe our alliance can save weeks in construction time and a significant percentage of construc tion costs with a consoli dated planning method ology among the compa nies that are involved." Stockunas makes sim ilar claims about Air Products' alliance. "With our build-own-operate concept, we expect the customer can defer about 25% of the capital needed to install the air, water, gas, and chemical systems while gaining a 25% savings in ongoing operational costs," he says. Both executives say semiconductor manufacturers are very interested in
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their respective concepts, although they admit that big contracts have yet to be signed, in part because last year's downturn delayed many fab construction projects. McClear notes that Praxair applied the earlier version of the concept to a semiconductor gas distribution system installed at a light-emitting diode plant in Tampa, Fla. He says the broadened Point One is now actively bidding on projects in North America and Asia. At Air Products, Stockunas says Trimega is close to signing a contract in a couple of cases and expects to go public with at least one by the end of the year. Not every company is embracing the new service alliance approach. Air Liquide^ Kouk says that throughout the 1990s, hisfirmused internal growth and acquisition to build up its own portfolio of fab services such as waste management, analytical services, equipment, training, on-site chemical generation and purification, and even power and steam generation. "Air Liquide is the world's largest supplier of gases, chemicals, services, and equipment to the semiconductor industry," he says. "We've built a formidable in-house portfolio based on our customers' needs." Kouk adds that Air Liquide does maintain less formal relationships with the major semiconductor industry suppliers through its total gas and chemical management initiative, which landed three new contracts in the U.S. so far this year. "Customers all have different requirements," he says. "It's powerful to be able to mix and match services." Ashland has also stayed away from the larger construction-based alliances, limiting itself to a copromotion agreement with Semco, a Livermore, Calif., manufacturer of chemical handling equipment. As in the gases-plus-chemicals arena, Cook says he has no fundamental disagreement with the alliance concept, but cautions that an electronic chemical company must carefully define what it wants to be. "Clarity of focus is a wonderful thing," he says. Ashland's recent focus has been investment in its core high-purity chemical business, to the tune of some $60 million over the past two years. Projects include a $45 million electronic chemical plant in Pueblo, Colo., that opened about a year ago; a photoresist stripper plant near Seoul, South Korea, that started up in June; and a joint-venture electronic chemical plant in Taiwan with Taipei-based Union Petrochemical
that is currently under construction. The market downturn delayed this plant by about a year, Cook says, but it is now on target for completion in March or April. He says these investments amply demonstrate Ashland's commitment to the electronics industry. Still, Cook admits, it is tough to keep up with the demands of fast-growing customers that want new products at low prices. "Their growth is much more rapid than ours, and the opportunity for them to achieve is greater," he says. "We are successful in K^kw *' : : Vi
getting costs out of our system, but it is still a challenge to achieve a return on our investment."
Photoresists Producers of photoresists face many of the same price pressures that process chemical makers face, but they must also contend with the challenge of keeping up with constant decreases in semiconductor size. Photoresists are photosensitive polymer mixtures critical to making the tiny ^WiïiŒfëâ^îM'?'
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