Interesting company. A home town perspective:
chicagotribune.com
STRANGE BREW SMOOTHS WAY FOR CABOT
SLURRY CRUCIAL FOR POLISHING COMPUTER CHIPS
By Jon Van
Tribune staff reporter
March 28, 2001
To most of us, making computer chips appears more like magic than technology--and that perception lingers even when the process is explained. Rather than intoning "abracadabra" over a steaming brew, the people at Aurora-based Cabot Microelectronics Corp. invoke knowledge based upon years of research. But the process still bears a spooky kinship to alchemy.
Cabot Microelectronics purifies water, mixes it with chemicals and abrasives, and then ships the slurry to integrated circuit fabricators such as Intel Corp., which rubs the slurry on silicon wafers in the process of becoming chips. The more advanced the chips, the more times they are rubbed with slurry.
There are, of course, good reasons to do this: Chipmakers want to ensure that each layer in a chip is absolutely flat and blemish-free. But the notion of polishing a processed semiconductor wafer with a chemical slurry--similar to a liquid sandpaper--was once considered impossible, or nearly so.
"The very idea of it once frightened a lot of people in microelectronics," said Angus Rockett, a professor of material science and engineering at the University of Illinois in Urbana-Champaign. "`You're going to grind on the surface of my wafer? I don't think so.' A lot of people thought you couldn't do that without destroying the wafer."
But as chipmakers saw the need to pack transistors more densely into multilayered chips, they embraced a polishing technique called chemical mechanical planarization or CMP. About two decades ago, IBM Corp. pioneered the technology, working with a Boston-based chemical firm called Cabot Corp.
After years of working with IBM, Cabot created a separate unit to develop CMP technology. Last year, it spun off that unit as Cabot Microelectronics, which went public in April.
Today, Cabot Microelectronics makes about 10 different kinds of slurries, with more being developed. It employs about 400 and has manufacturing plants in the U.S., Europe and Japan.
The firm enjoys a close relationship with semiconductor fabricators, which share some aspects of their new products with Cabot so it can develop the appropriate slurries. Cabot Microelectronics maintains its own clean room chip fabrication facility for research and development on new slurries.
A wafer of silicon, which may be the size of a small pizza, is worth $30 unprocessed and is nearly as fragile as an eggshell. Once it's processed and covered with dozens or hundreds of integrated circuits, the wafer may be worth $30,000 to $100,000.
Polishing these wafers, especially in their later stages, becomes a delicate process that can make failure very dear, so fabricators put a high premium on reliability.
"It makes them nervous if we put a label on a container in the wrong spot," said Matthew Neville, Cabot Microelectronics chief executive, only partly in jest. "Once a fabricator gets his chip yield from a process up in the high 90 percentages, he doesn't want to change anything. He just wants that process to work exactly the same way every time."
The chipmaker's desire to avoid surprises, along with continuing development of new slurries to meet new needs, helps to protect Cabot Microelectronics' 80 percent share of the semiconductor slurry business, Neville said. Since slurry accounts for less than 1 percent of wafer processing costs, fabricators are unlikely to shop around and risk surprises.
There are solid economic reasons why chip fabricators put so much store in boosting their wafer production yield, said Gerold Neudeck, a professor of electrical engineering at Purdue University, who himself makes chips for research purposes.
"The processing costs are identical for everybody," Neudeck said. "If you're getting a 50 percent yield, and your competitor is getting 90 percent, yield is everything. He's going to make money, and you're not.
"The IBMs and Intels are always working to fine-tune things to raise their chip yield."
Because CMP has become a vital step in fabricating denser and more complex integrated circuits, Cabot Microelectronics has found a "sweet spot" in the chip industry with its slurries, said Sue Billat, an analyst with Robertson Stephens, who is based in Palo Alto, Calif.
"The shift from aluminum wiring on the circuit to copper increases the number of fabrication steps using CMP," Billat said. "Even in a declining semiconductor market, Cabot's revenues are growing."
First-quarter revenues, released in January, show nearly a 100 percent increase, to $68.6 million, while net income surged to $14.4 million.
Yet, like a number of tech stocks, Cabot's shares have been on a roller coaster.
Shares, priced at $22 when Cabot went public a year ago, surged as high as $100 in February before dropping into the $40 range after Cabot warned that the current downturn in semiconductors would slow its growth.
Enthusiastic investors were disappointed that even Cabot Microelectronics isn't immune to sector woes, Billat said.
"The chip industry is cyclical," she said. "You have to manage for that, and they are aware of that."
Cabot Microelectronics' parent spun it off as an independent firm because that was the only way to realize the value of the growth potential of CMP technology, said Neville. The firm chose to locate in the Chicago region because of excellent transportation and a desirable quality of life, he said.
"We looked at Silicon Valley," Neville said, "but it's too expensive and too crowded. Also, by locating in Aurora, we don't get the job-hopping you see in Silicon Valley, where a 20 percent turnover in the workforce is typical. Things are more stable here."
Shares of Cabot Microelectronics closed Tuesday at $50.09, up 5.3 percent, or $2.53, on the Nasdaq stock market. |
