Europe risks being left behind in the move to the next step up in wafer size if it does not address problems caused by the geographically dispersed nature of its electronics industry and the European Union’s complex rules on state subsidies.
A group of companies that specialise in making IC production equipment led by the industry group SEMI Europe are pushing for greater support for Europe-wide funding for at least one volume fab able to run 450mm but so far have failed to carry the three largest European chipmakers with them, who favour staying on 200mm and 300mm lines in the short to medium term or who have largely outsourced their manufacturing to Asia.
The danger with the wait and see strategy said Malcolm Penn, president of the analyst firm Future Horizons that has co-authored a report on 450mm manufacturing for the European Commission: “If Europe does not embrace 450mm, Europe is history.”
Luc van den hove, president of the Belgian research institute IMEC, said at the International Strategy Symposium Europe he agreed with Penn. He said the institute is pressing ahead with the building of a pilot plant to test out new equipment that should start operation in 2015. Van den hove told E&T that funding is being organised and in the hope that the EU and member states will match the level of investment that is being put into the world's first 450mm pilot in Albany, New York.
Although even a pilot line could make a volume of chips that is equivalent to one of today’s 300mm production fabs this would not do enough to secure Europe’s position according to parts of the report written by analysts Decision and Future Horizons that have been released by the European Commission. The commission has yet to publish the report in full, which it received in mid-February. In a presentation at ISS Europe, Willy van Puymbroeck, head of the nanoelectronics units in the Information Society Directorate General (DG) showed that the economic impact of having just a pilot line would be dwarfed by the decision of a company such as Intel or Globalfoundries, which already have advanced plants in the region, building a full production plant or if a consortium of local companies decided to build a joint facility.
Paulo Gargini, director of technology strategy for Intel, said the decision of where to set up Intel’s third 450mm fab – the first two will be in Oregon and Arizona – will largely depend on what incentives it can attract and could be Ireland, Israel or China. In practice, these incentives would likely to be worth close to 20 per cent of the cost of the fab, estimated to be roughly $8bn in total.
“450mm is probably the last step in wafer scaling. It will determine where semiconductor manufacturing happens worldwide. 450mm is a game-changing event,” van Puymbroeck claimed.
The problem for winning support for 450mm production in Europe is that the local chipmakers’ share of worldwide production has declined in recent years as they have shifted to greater use of foundries, which are based primarily in southeast Asia. Alain Astier, vice president at Franco-Italian chipmaker STMicroelectronics, said the company has no current plan to move beyond 300mm.
“Our IDMs have not being doing that well over the last five years but we do have a strong materials industry and a growing fabless community. The absolute number of jobs among the fabless companies is small but in the materials and equipment suppliers it adds up to more than 100,000 jobs,” said van den hove.
A further obstacle to winning government support for 450mm production is a lack of job creation from the fab itself compared with the level of investment needed.
“A 450mm facility will be fully automated so employment there is not that great,” said van den hove. “But we have to make these complicated, sophisticated tools for the fab: those will generate more employment than a full 450mm megafab. Equipment and materials are our strengths and they are where we should invest.”
Although local volume production would be expected to increase job creation among the equipment makers, this would not necessarily benefit the country that provided the incentive for building the plant, Penn noted. It may prove difficult to sell to the electorate the concept of tax incentives and subsidies for a chipmaker such as Intel to expand its operations in Ireland when the European toolmakers who would benefit indirectly are largely headquartered in The Netherlands and Germany.
Under the current EU financing rules, such large subsidies already would be ruled out by DG Competition. However, a lobbying effort by high-technology companies is underway to relax the rules to stop such large plants being attracted to China and the US which do not have such strict policies on corporate incentives.