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•Silicon wafer suppliers squeezed
•EPA looks at PFOS for photoresists

Though semiconductor materials and manufacturing equipment are often treated as a single market segment, the two actually behave very differently. Manufacturing equipment purchases depend on fab construction and upgrades. Materials purchases depend on IC unit volume, and therefore tend to be less cyclical. Despite the gloomy outlook for manufacturing equipment purchases in 2001, Elizabeth Schumann, director of industry research and statistics for SEMI, expects healthy growth in the materials segment. In a presentation at last week's SEMI Industry Strategy Symposium (Pebble Beach, California, USA), she suggested that shortages and supplier allocations are possible in several areas.

Silicon wafer suppliers squeezed
Silicon wafers are probably the least healthy materials market. Wafer average selling prices ended 2000 20% below their level in early 1995, even as higher value products such as larger wafers and epitaxial wafers accounted for a larger share of the total. Silicon revenues peaked in 1996, and only returned to that level in 2000, Schumann said.

Jim Ellis, president and CEO of Wacker Siltronic Corp., noted that advances which reduce costs for semiconductor manufacturers often increase costs for wafer suppliers. Tighter design rules, for example, require tighter wafer specifications while reducing wafer area demand. Larger wafer sizes reduce ingot yield because the end cones of the silicon ingot become proportionally larger.

At the same time, Ellis said, IC manufacturers issue different wafer specifications for different products, reducing the potential economies of scale. Though Wacker Siltronic produces more than 1.5 million wafer slices/month, on the average only 1500 wafers are produced per specification. To reduce costs for silicon manufacturers, and eventually for the entire supply chain, he suggested further standardization of wafer specifications and argued that customer requirements should focus on the end product, rather than, as currently, specifying the production site or equipment.

In 1999, Ellis said, many silicon wafer manufacturers lost money, despite operating near full capacity. Profitability remained low in 2000, holding capacity investment down despite increasing wafer demand. One equipment company executive suggested that much of the pain felt by wafer suppliers is self-inflicted, however, noting that losing money while operating at full capacity is often a sign of either poor management or deliberate dumping.

Schumann expects total silicon area to grow at a compound annual growth rate (CAGR) of 9.7% between now and 2003, with silicon revenue growing at a CAGR of 11.3% in the same period. The 300 mm wafer size should account for 10% of total area by 2004, Schumann said. She doesn't expect significant 300 mm volume until 2002.

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EPA looks at PFOS for photoresists
Meanwhile, the photoresist segment is faced with three different exposure wavelengths (248 nm, 193 nm, and 157 nm), each requiring a different resist chemistry. No consensus resin platform has yet emerged for 193 nm lithography, which means that the 193 nm resist process will not be ready for initial 0.13 micron production. As 248 nm lithography extends beyond its expected lifetime, the window for 193 nm and 157 nm resist suppliers to recover development costs shrinks.

Chemically amplified photoresists in general are also threatened by government regulation, as Aimee Bordeaux, director of SEMI's environmental health and saftey division, explained. Perfluorooctanyl sulfonates (PFOS) are a critical component of these photoresists. PFOS is also used in 3M's surface treatment products for clothing, upholstery, and carpets. The US Environmental Protection Agency (EPA) is concerned that PFOS may be a bioaccumulative toxin, and, apparently unaware of the photoresist application, agreed with 3M to phase out production of the compounds. In October, 2000, the EPA proposed a "significant new use" rule for PFOS, which would require manufacturers and importers to notify the EPA 90 days before using the chemical.

Bordeaux explained that the new regulation would create significant testing and reporting requirements for resist manufacturers. SEMI, along with the Semiconductor Industry Association, Sematech, and other industry organizations, commented on the proposed regulation in December, asking for either an exception to the rule for lithography applications, an exception based on quantity, or a determination that photoresist is not a new use for PFOS and is therefore exempt from the regulation. The EPA plans to hold a public meeting on the issue in late January or early February, but has not yet set a date. Bordeaux suggests that interested parties check the Federal Register for more information.

In other materials segments, trends that emerged in 2000 are likely to hold through 2001. Hydroxylamine-based resist removers are still in short supply after last June's explosion at Nissin Chemical: New capacity for the chemical should become available in the next few quarters.

NF₃ demand is growing at more than 100% per year, Schumann said, as it replaces C₂F₆ and other PFCs for chamber cleaning applications. Air Products, BOC, and other gas suppliers have announced significant expansions to meet the demand.

Tantalum metal remains in short supply due to rapid growth in demand for tantalum capacitors. Schumann said that Ta mines are increasing production, and the shortage should ease in the next year or two. In the meantime, Ta scrap from customers will be an important source for suppliers in 2001.