To cut fab costs, Applied offers to manage spare parts, system maintenance
A service of Semiconductor Business News, CMP Media Inc.
Story posted 8:30 a.m. EST/5:30 a.m., PST, 7/13/99
SAN FRANCISCO -- Applied Materials Inc. is attempting to change the rules of customer support in chip-processing equipment by offering a couple of new programs that take over system maintenance, reduce the cost of spare-parts inventories, and provide a guaranteed price-per-wafer-processed for service labor and non-consumable materials.
Applied's Total Support Package outsources system maintenance to the equipment supplier's own service teams. With the package, fabs will no longer need to keep service-related parts in inventory for Applied tools. The Total Parts Management package is an option that turns spare-part ownership and management over to Applied Materials, which charges for its parts only when they are used.
The Santa Clara, Calif.-based equipment giant rolled out the two programs during Semicon West '99 here this week, promising that its new "Total Service Solutions" packages will give wafer fabs a guaranteed way to lower overall operating costs, improve system productivity, and reduce parts inventory management costs for Applied equipment.
About 23% of wafer fab operating costs are related to indirect labor and materials, said David N.K. Wang, senior vice president and a member of the Office of the President at Applied. Those indirect costs cover such things as spare parts and labor involved in maintaining, repairing and re-qualifying fab gear, he said.
Applied's Total Parts Management program is expected to save fabs about $35 in spare-part inventory costs for every $100 in parts costs.
"With this new business model for parts and service management, we can optimize equipment performance while significantly lowering its long-term cost of operation," Wang said.
Under the Total Service Solutions, about 10 Applied Materials' customers in 17 locations around the world have recognized improved equipment performance with typical cost reductions of 15-30%, according to the Santa Clara, Calif., company.
"A typical fab carriers thousands of separate parts to support its systems," noted Vinod Mahendroo, president of Applied's Installed Base Support Services. "Inventory management, including carrying costs--logistics planning and administration--costs most customers about 35 cents for ever dollar of inventory. The TPM [Total Parts Management] program eliminates these expenses as well as the headaches for managing part revisions."
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