Interesting short term story that could indicate a general negative supply trend. Regards, Mark
Disaster Could Endanger Chip Industry
Japanese plant explosion crimps supply of hydroxylamine
By Paul Kallender
Will we soon be living with loss, or coping with chemical dependency? Six weeks after Nisshin Chemical's plant blew up in Japan, interrupting the world's main source of hydroxylamine free base (HA), U.S. resellers disagree about the severity of the shortfall, while chipmakers say they can manage, even under allocation.
Allocation of this solvent, vital to photoresist stripping, could begin as soon as this week, according to Jerry Coder, president of Hayward, Calif.-based EKC Technology Inc. One of the two major domestic HA suppliers, EKC is working closely with its customers to requalify their production processes so they can use HA produced by BASF AG of Ludwigshafen, Germany. With the loss of Nisshin's estimated 5,500 metric-ton-per-year capacity, BASF last week leapt into the breach, announcing it would attempt to ramp up its production to a 24-hour, seven-days-a-week basis capable of creating 4,000 metric tons a year.
But lack of the solvent presents suppliers and the semiconductor industry with big headaches. Requalifying production processes to BASF's product, similar but not identical to Nisshin's, is at hand. More serious, however, is addressing the longer-term shortfall, estimated at about 2,000 to 2,500 metric tons.
EKC said it is working hard conducting both chemical analyses and functional testing of the BASF product. A chemical analysis looks at impurities and heavy ion quantities that can impair the solvent's usefulness. The BASF assays indicate BASF's HA is "fairly comparable," said Coder.
"The real critical element is that the customers take anything from three months to a year to requalify. They are being very understanding," he said, adding that EKC's first priority was maintaining supplies to current customers.
Industry analysts aren't sounding an HA alarm just yet, but agreed that the most immediate question surrounding HA is the requalification of BASF's chemical.
"The potential of the loss of (HA) could, you know, create a serious problem … But I think the industry has always in the past found a get-around," said Dean Freeman, principal analyst at GartnerGroup Inc.'s Dataquest division. Freeman said that most companies who had talked to Dataquest on the issue said they had two months' supply. He shares industry confidence that even a severely restricted supply will not impact production.
While EKC suggested allocation is inevitable, the company's principal competitor, Dublin, Ohio-based Ashland-ACT said such a move represents "a worst-case scenario" for HA suppliers and users, according to Ashland's business unit director Bob Rohlfing.
"The worst situation would be if there is one volume of supply and another for industry demand … We're doing all we can to work with our customers to avoid disaster," he said.
Both EKC and Ashland-ASH declined to list their customers in the HA market that analysts say is worth between $225 and $300 million globally. EKC said it supplies HA to most of the "household names." Manufacturers also declined to name their suppliers.
Will Chipmakers Cope?
"It's a big problem but it's a manageable problem," said Elizabeth Schumann, senior analyst at Semiconductor Equipment & Materials International (SEMI). While problematical, she agreed with industry consensus opinion that, at least for the time being, lack of the chemical would not halt production.
Major semiconductor manufacturers are confident that, allocation or not, HA supply problems will not immediately affect production, although officials declined to discuss details or possible cost impacts. "We really believe we have everything under control … we've been in constant contact with suppliers," said Chris Rongone, Dallas-based Texas Instruments spokesman. TI relies on multiple suppliers and undisclosed inventory, both of which means the company could cope with shortages, "though other manufacturers may be in a different position," she said.
Intel isn't dismissing the potential for problems involved with an HA shortage. Howard High, spokesman for Santa Clara, Calif.'s Intel Corp., did not play down the difficulties of requalifying. "You still have to do a complete reverification, and that takes time … It can have a very significant impact and ramifications. It's not a step that is taken lightly," he said.
Dry strip company Mattson Technology Inc. suggested an HA shortage would not be completely disastrous. "If a serious shortage develops it could be painful but not devastating," said Bernie Wood, director of corporate marketing for Fremont, Calif.- based Mattson. He didn't rule out possible HA price hikes, or increased production costs arising from retooling production processes away from the solvent. Mattson calculates that the cost per wafer of the stripping process varies between $1.25 and $2, "which is a lot of money if you are producing 40,000 a month," Wood noted.
In Japan, the disaster made headline news, and that had at least NEC Corp. of Tokyo scrambling to assess the impact. "We knew about it within two hours of the explosion," said Aston Bridgman, NEC spokesman. Both NEC and Fujitsu Ltd. said the supply problem would not interfere with their production schedules. Fujitsu has a four-month inventory and doesn't believe there will be a significant impact on its operations, said spokesman Bob Pomeroy.
"However, taking into consideration tighter supply … we will continue to study possible alternative(s) to prevent disruptions in the future," Pomeroy added.
In the long term, the disaster at Nisshin is forcing a re-examination of photoresist stripping practices. Only too aware of the dangers of relying on one supplier, both EKC and Ashland had been talking to BASF for at least a year before the disaster, said both companies. In addition, semiconductor manufacturers are now exploring "a full range of options," including switching away from HA, said Ashland's Rohlfing.
"Instead of being off the radar screen, it's now one of the areas to watch," added Intel's High. |
