Intel, Motorola moving to larger semiconductor wafers
(New throughout; adds analyst, executive comments)
By Duncan Martell
PALO ALTO, Calif., June 9 (Reuters) - Intel Corp. on Wednesday made the
long-awaited move to using larger silicon wafers in producing its
computer chips, allowing it to cut costs by about 30 percent per
semiconductor.
The world's largest chipmaker (Nasdaq:INTC - news) will begin using the
dinner-plate-sized wafers in high volume in early 2002 using
next-generation copper technology. Currently, the industry uses wafers
that are roughly the diameter of a salad plate, or about 8 inches (200
millimeters) across.
Moving to the larger wafers is a massive undertaking for the industry,
requiring millions of dollars of research and development by
chip-equipment makers such as Applied Materials Inc. and others. But the
much-anticipated move had been put on the back burner because of the
Asian economic crisis, which erupted in July 1997 when Thailand devalued
its currency.
Now, though, Intel said that the newer, multimillion dollar equipment is
ready and it expects to start ordering the machines during the next
several months.
By moving to the larger wafers, the 31-year-old chipmaker, which had
1998 revenues of $26.3 billion, gets more chips per wafer and that cuts
its costs.
This would result in lower prices for chips sold to computer makers and
other high-tech firms.
''While your wafer costs do go up with the larger wafers, you get
significantly more (chips) per wafer, so the economics are pretty
positive,'' said analyst Mark Edelstone at Morgan Stanley Dean Witter in
San Francisco.
Analysts also expect that Intel's move will jump-start a migration to
the newer technology. Already, chip- and cell-phone-maker Motorola Inc.
(NYSE:MOT - news) is underway with its move to the 12-inch-diameter (300
millimeter) wafers. Taiwan Semiconductor Manufacturing Co. said in late
May that it would have a 12-inch wafer plant on line in 2000.
''Everybody has to do this, but it's a question of when do you have to
cough up the money,'' said analyst Daniel Niles at BancBoston Robertson
Stephens in San Francisco.
The news helped Intel and chip-equipment stocks rally. Intel stock
climbed $1.31 to $53 on the Nasdaq, while Applied (Nasdaq:AMAT - news)
added $1.50 to $63.31, Lam Research Corp. (Nasdaq:LRCX - news) rose
$2.13 to $34 and KLA-Tencor Corp. (Nasdaq:KLAC - news) advanced $3.56
$53.
On May 18, when Applied -- the largest maker of chip-making equipment --
reported second-quarter earnings, it said it would pare spending on
300-millimeter technology until customers expressed an interest in the
new machines.
That time appears to have come.
''It's been obvious for some time that 300-millimeter will be a good
cost reduction for our products,'' said Michael Splinter, head of
Intel's technology and manufacturing group. ''The question has been when
will the equipment be ready.''
The larger wafer represents more than a doubling of the surface of the
current wafer, allowing for 2.4 times more die, or chip, per wafer. It
expects to begin volume production using the larger wafers about a year
after it begins chip production using 0.13 micron technology on the
now-standard wafers.
''This will certainly help revenues at the chip-equipment companies,''
said Sue Billat, an analyst at BancBoston Robertson Stephens. ''The
timing is good.''
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More Quotes
and News:
•Applied Materials Inc (Nasdaq:AMAT - news)•Intel Corp (Nasdaq:INTC -
news)•KLA Tencor Corp (Nasdaq:KLAC - news)•Lam Research Corp (Nasdaq:
LRCX - news)•Motorola Inc (NYSE:MOT - news)
Related News Categories: US Market News
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