Sumitomo adds U.S. plant to GaAs materials expansion plans
By Paul Kallender
EE Times
(12/20/00 07:04 a.m. PST)
HILLSBORO, Ore. -- With an eye on rapidly expanding demand for gallium-arsenide integrated circuits, Sumitomo Electric Industries Ltd. last week broke ground on its latest compound semiconductor facility, and its first in the United States.
SEI's $20 million plant here will initially focus on laser marking, edge grinding, polishing, cleaning, packaging and shipping 150-mm (5-inch) gallium arsenide (GaAs) wafers from ingots made at another new Sumitomo factory in Kobe, Japan. The latter 12,000 square meter factory, built by the Sumiden Semiconductor Materials subsidiary of SEI, is slated for operation in July 2001.
Set to reach a production volume of 20,000 wafers a month in 2002, the Hillsborough fab will be the final piece in SEI's $170 million, four-site expansion of its compound wafer business, which also includes new facilities in Taiwan and Yokohama, Japan, said Mikio Morioka, vice president of Sumitomo Electric U.S.A.'s Electronic Materials Group.
SEI regards its compound semiconductor materials operations as a strategic part of its North American business, which comprises 50% of the company's total market, said Morioka. The company has concentrated its epitaxial wafer process technologies on the mobile/wireless base station market, offering customers a GaAs MESFET process menu based on both ion-implantation and epitaxial device technologies. Now SEI is making the quadruple-barreled investment in response to an "extraordinary increase" in the demand for GaAs products in the wireless communication industry.
A typical mobile handset can contain six or seven GaAs chips used for high-speed switching or as power amplifiers and low noise amplifiers. SEI estimates the worldwide market for handsets at 400 million units in 2000, growing to 600 million units in 2001. SEI expects GaAs-based power amplifiers will be used in place of silicon devices in handsets, because newer handsets require better linearity and low voltage. To support these requirements, GaAs devices have moved to epitaxial-based devices, Morioka said.
At the same time, improved device performance for next-generation wireless communication is driving GaAs device migration to epitaxial-based devices, such as HBTs and PHEMTs. SEI's semi-insulating GaAs wafers are ideal for epitaxial usage because of their lower defect densities and lower residual strains, said Morioka.
Through the 1980s and 1990s, before it moved to epitaxial wafers, SEI had relied on 2- to 6-inch wafers from its facility in Osaka, Japan, company officials said. With that plant at full capacity and with an industry-wide trend to convert to larger wafers, the new investments now give SEI a chance to move more of its production to the more cost-efficient 6-inch process, and to put a plant nearer customers. Most of SEI's 4-inch equipment is convertible to 6-inch production, and SEI continues to add both 4-and 6-inch capacity.
SEI's investment is clearly intended to take advantage of the growing market for 6-inch gallium arsenide wafers, said analyst George Bechtel, who monitors the GaAs market as director, wireless program, for Strategies Unlimited in Mountain View, Calf. "The real growth is in the 6-inch market," he said. "It's quite a big move for them."
Over 75% of GaAs production currently ends up in mobile telephones, Bechtel said. Meanwhile, consumption of the GaAs devices rose over 50% in unit volume in 2000 over 1999, Bechtel said.
Unlike silicon, the GaAs market does not generally follow cycles of shortage, oversupply and glut, industry analysts said. Nevertheless, demand for mobile telephones may suffer due to a slowdown in the U.S. economy and to a continued weakness in the value of the Euro to the United States dollar, said Bechtel. Strategies Unlimited predicts demand for GaAs chips will rise from about $3.6 billion in 2000 to $4.3 billion in 2001, and to $4.8 billion in 2002, Bechtel said.
In terms of volume, measured in thousands of square inches, the merchant and captive market for epitaxial GaAs wafers is due to rise from 3,080 in 1999 to 12,871 in 2004, according to Stephen Entwistle, an analyst with Strategy Analytics in Luton, U.K.
SEI hasn't yet disclosed plans to begin indium phosphide production as part of a second round of investment in line with an expected increase in demand from the optical communications sector, said Morioka. Indium phosphide-based broadband optical receivers, laser drivers and low-noise amplifiers are being increasingly used in fiber optics applications, said Bechtel.
"Forty-gigabit fiber optics will be the big, hot, killer app for indium phosphide," he said.
A major factor in locating the GaAs fab in Hillsborough is Sumitomo's need to be near its customers, said analyst Entwistle. Substrate buyers have stated that developing a close working relationship with an epitaxial vendor is a critical success factor in manufacturing epitaxial-based devices such as HBTs and HEMTs. Rapid technical support is a specific factor in this relationship, Entwistle said.
Aside from producing wafers, the Hillsborough site will also become headquarters of a new sales network with offices in New York and San Francisco, according to SEI officials.
"SEI is committed to building its GaAs epitaxial substrate business in the North American market," Entwistle said. "Physical presence in country will be key to this. It's clear that SEI needs to stay close to North American customers to serve more conveniently and efficiently," Entwistle said. |
