Is This a Problem For CMOS?
Could on-board self-testing (a new one on me) jeopardize CMOS's future revenues? Will development costs of new generations of test equipment damage bottom lines??
Aticle by Donna Fuscaldo in today's WSJ had this to say:
<<"Up until eight years ago, processor speeds were sub-100 megahertz, and today speeds in communications and power
machines are running at 1 gigahertz levels," said Joe Jones, founder, president, and chief executive of BridegPoint
Technical Manufacturing, a outsource semiconductor test equipment company in Austin, Texas. "We have 200 megahertz
testers trying to test 1 gigahertz products."
As semiconductors get even more complex, so will their tests, said Dave Ranhoff, chief operating officer of automatic test
equipment maker Credence Systems Corp. (CMOS). As a result, he said, the testing community is worried that its
services will become more expensive than making the chips.
Apparently investors are also concerned. Credence, of Fremont, Calif., recently traded at $28.75, well off a 52-week high
of $79.39 set in May. Teradyne Inc. (TER), which reached a one-year ceiling of $115.44, also in May, was at $33.94. And
Agilent Technologies Inc. (A), which Hewlett-Packard Co. (HWP) spun off in November, was at $50.19, less than
one-third of its high of $162 reached in March.
William Blair & Co. analyst Candace TenBrink said that as chip speeds increase, test companies will have to spend more
on research and development, which could put pressure on their margins and keep earnings from beating Wall Street's
estimates.
Test companies spend an average of 10% to 12% of revenue on R&D each year. Even though most are confident that they
will be able to develop new technologies, the cost/performance question will always linger.
Still, Banc of America analyst Mark FitzGerald expressed confidence that test companies will meet this challenge. "The
question is not so much can they do it," he said, "but at what cost."
Chip makers generally budget 5% to 6% of their selling prices for testing, said Marc Loranger, semiconductor director of
marketing at Credence. Of that, about half is spent on the test equipment. As the chips get more complex it becomes
more difficult to stay within that budget, he added.
TenBrink noted that chip makers don't see testing as enhancing their products' value but rather as a "necessary evil" on
which they don't want to any more money.
Automatic semiconductor test equipment maker Teradyne recognizes the problem, said Dave Sulman, vice president of
semiconductors, but the Deerfield, Ill., company doesn't see test costs rising dramatically. "It is our hope and plans," he
said, "that the cost of test will keep pace with the cost of devices." ...
Short-Term Solutions And Self-Testing
To test chips at today's speeds, testers have to tweak existing equipment.
For the long-term, most companies, despite their fears about costs, are looking at a built-in self-test on the chip itself.
This will make the process easier and will work on future chips too fast to test with today's equipment.
The self-test concept has been around for many years but has not been commercially viable, said Ron Leckie, chief
executive of Infrastructure, a private research firm in Saratoga, Calif., that tracks the semiconductor test industry. "If you
only have 100,000 circuits on the chip you won't want to take 20% and dedicate it to a test," he said. "But now as you get
a million or 10 million circuits, the tester is almost insignificant." As a result, he said, the self-test is only as expensive
as the silicon used.
So is a built-in self-test all it will take to overcome chip testing's "speed wall?" Most test companies said the chip
designers will have to bear more responsibility.
"It's important that semiconductor companies have open and thorough dialogue with the test community," Credence
Operating Chief Ranhoff said. "Testing is still too much of an afterthought."
...
For example, Intel, as well as Credence and Teradyne, has invested in LogicVision Inc., a pre-IPO company based in
San Jose that makes test equipment and is working to address the speed hurdle.
BridgePoint's Jones said the testers and chip makers must form a consortium and spend billions of dollars to overhaul the
test industry.
Considering the cutthroat competition of the semiconductor market, most agree a consortium is not likely to happen. But
all are spending millions in R&D and are confident that the problem is just a speed bump rather than a speed wall.>>
Larry |
