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To: Zeev Hed who wrote (50666)	3/7/2000 4:30:00 PM
From: DJBEINO	Read Replies (1) \| Respond to of 53903

Silicon wafer suppliers continue to warn of shortages in 2000 By Nadya Anscombe and Yoshiko Hara EE Times (03/07/00, 08:49:48 AM EDT) MARSEILLE, France -- Vendors of raw 8-inch silicon wafers, whipsawed by the rapid fluctuations in the semiconductor industry, warn that a shortage of the disks could grip the chip industry as early as this year. Suppliers and analysts cite price drops and losses from a recession followed by the current upswing in business as reasons for a likely shortfall. They also pointed to an uncertain shift to 300-mm substrates and higher demand for new, but low-yielding wafers as signs a shortage could hit before the end of 2000. "All silicon wafer manufacturers are financially not well at the moment, and we expect a 200-mm wafer supply shortage in 2000," said Albrecht Mozer, member of the executive board at German wafer supplier Wacker Siltronic AG. Mozer spoke at the European Industry Strategy Symposium organized here last week by Semiconductor Equipment and Materials International. Earlier this year, industry managers were told wafer prices could rise because of tighter supplies of substrate materials (see Jan. 12 story). Mozer told delegates at the European meeting that the industry has to "get back to reasonable sales prices, otherwise investments in the future [of 200-mm and 300-mm wafers] cannot be justified. We have so far had no success in raising 200-mm prices. We don't just need a couple of percent increase." He said the increase "will have to be much higher." In Tokyo, Takaie Yoshizumi, vice president of Sumitomo Metal Industries Ltd. and acting chairman of the Silicon Committee at the Japan Society of New Metal said, "If the demand for wafers increases at this pace, wafer shortages could emerge late this year because low wafer prices . . . do not allow us to invest to increase production." The group includes eight wafer makers who produce as much as 90% of the world supply. Takashi Ogawa, principal analyst of the Japanese semiconductor group at Dataquest under Gartner Group Japan K.K, also supported the view. "If there are no efforts toward production increases, the supply and demand of wafers will be fairly touch-and-go" this year, he said. The worldwide 8-inch wafer production capacity was 3.8 million wafers per month in December, and inched up to 3.9 million wafers, according to one third-party survey. But as semiconductor makers move to finer geometries they are demanding more high-qualitywafers such as defectless and epitaxial wafers, which are produced at lower yields. As wafer demand and prices rise, Japan's eight wafer manufacturers improve their revenue in fiscal '99 but none is out of the red yet, Yoshizumi said. "Having been in the red for two straight years makes it impossible for us to invest in production increases," Yoshizumi said. "What is worse, wafer manufacturers cut down the employees in late 1998 when the business was [in the] worst [shape]. Making full use of existing lines, we are making efforts to ramp up production, but it seems to be quite difficult to build new lines." The eight wafer makers lost about $52 million in fiscal 1998. Though losses were greatly cut in fiscal '99, they are still in the two-digit range, it is estimated. Encouraged by the brisk market, some manufacturers have started or are considering 300-mm wafer-based fabrication. But they acknowledge that the investment will be huge. "Unless wafer pricing returns to normal levels," Dataquest's Ogawa said, "they cannot work on new, high-performance wafers." Mozer said that since 1998, 200-mm wafer prices have not even covered the cost of running the suppliers' wafer-making facilities, and that "prices must increase substantially" if wafer suppliers are to break even. Mozer also criticized the chip-making industry for delaying moves to manufacture on 300-mm wafers. "Silicon wafer suppliers invested heavily in 1996/97 in 300-mm capacity, and this has sat idle for many years." Materials analyst Dan Rose, president of Rose Associates in Silicon Valley, said, "The uptake of 300-mm wafers was originally planned for 1996/97, and delay has . . .increased demand for 200-mm wafers." semibiznews.com