Lead times extend for lithography, low-k, track equipment
By Mark LaPedus
Silicon Strategies
10/02/2003, 9:55 AM ET
SAN JOSE -- After making deep cuts amid the current IC downturn, chip-equipment makers now face their worst nightmare: many vendors have been hit with a new wave of orders, but they cannot react and have extended their product lead times for customers.
Select suppliers of semiconductor equipment not only are struggling to ship their tools, but the overall industry has cut its total production capacity to the point that the worldwide fab-tool business can only expand by up to 30 percent next year, according to VLSI Research Inc., a market research firm in Santa Clara, Calif.
While chip makers are sympathetic towards their tool vendors, they are becoming frustrated with the lead times times for gear. "Certain equipment lead times are long," confirmed Richard Chang, president and chief executive of Chinese silicon foundry startup Semiconductor Manufacturing International Corp. (SMIC) of Shanghai.
Chang said SMIC is struggling to obtain leading-edge "lithography and track" tools, although he did not elaborate. SMIC's two main lithography vendors are ASML Holding NV of the Netherlands and Canon Inc. of Japan. SMIC is in the process of expanding its 8-inch fab capacity and is looking to build three 300-mm plants (see September 30 story).
Not all tools are in short supply, especially capacity-driven machines. But lead times have suddenly extended for select, cutting-edge tools, such as low-k-enabled chemical vapor deposition (CVD) systems, 193-nm lithography scanners, and track units, said G. Dan Hutcheson, president of VLSI Research. For new orders, suppliers of 193-nm scanners are currently quoting lead times of about 15 months to 2 years, Hutcheson said. In comparison, a top-of-the-line scanner had a lead time of two-to-three years during the semiconductor boom times in the late 1990s, he said. The VLSI Research analyst was quick to point out that lithography vendors do not try to build an inventory of leading-edge systems, but rather they attempt to deploy just-in-time manufacturing systems. "It also takes a year to grow the crystals," he said, referring to the lithography-lens materials.
But there's a sudden and huge demand for leading-edge equipment and the just-in-time management systems are beginning to backfire. "It's just-in-not," Hutcheson said. "Everyone is scrambling. The lead times are beginning to stretch out, but vendors can't react to the upturn," he told Silicon Strategies.
It's a familiar scenario in the chip-equipment business. During the current--and past--downturns, fab-tool vendors have been forced to implement deep cuts and staff reductions within their key organizations, including production, service and support. Then, when an upturn emerges--and the order rates begin to flow--vendors cannot react fast enough to ship their products.
The current downturn has been especially tough on vendors. As a result of the deep cutbacks, the semiconductor-equipment industry can only grow by up to 30 percent in 2004, based on vendors' total production capacity for next year, according to Hutcheson.
Chip-equipment vendors faced a similar situation in 1993-to-1995 time frame, in which providers experienced a cyclical downturn and recovery. "The equipment makers could not respond, because they cut so much," he said.
Last month, VLSI Research lowered its forecast for the semiconductor-equipment market for 2003, but it also increased its prediction for ICs.
Worldwide equipment revenues are forecasted to reach $30.2 billion in 2003, a mere 1.8 percent increase from 2002, according to VLSI Research. Worldwide semiconductor sales are expected to hit $135.6 billion in 2003, up 12.5 percent from 2002, according to the Santa Clara-based market research firm.
In 2004, VLSI Research projects the semiconductor and fab-tool markets will grow 18 percent and 24.6 percent, respectively.
In June, VLSI Research raised its forecast in the chip-equipment market, from 5.6 percent, to 6.4 percent, in 2003 over 2002. At that time, the firm maintained its 11 percent growth forecast for ICs (see September 16 story). |
