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A view on self-confidence

Semicon Europa 2004 in Munich – The equipment industry recovers
A view on self-confidence

How can a show shrink and be as upbeat in outlook and mood as Semicon Europa 2004 turned out to be? Because its exhibitors and attendees are fiercely upbeat about the state of the industry. Here are the numbers: compared to 2003, which was pretty tough and slow, total booth count contracted to 1,720 from 1,948, and primary and co-exhibitors decreased to 900 from 956. Attendee figures weren’t out at press time but the three-day event partly started out as a quiet affair, although traffic picked up considerably. In the end, it appeared as though almost everybody from the wide world of equipment industry had been there.

So what was the relaxed atmosphere with the happy faces all about? Quite simple: the good times are back – at least for a while, say 2004 through 2005 and into 2006. “We have recovered nicely from the perfect storm,” Walter Rössger, president of Semi Europe said quoting a phrase that Semi CEO Stan Myers had used to describe the then miserly state of the industry. But even in the full swing of the current upturn, Rössger added a little caveat, “We are still in fairly rough waters here in Europe”. But that is not related to the cyclical nature of the industry, but rather to the structural setup of its European presence.

So, this year’s Semicon, for the sixth time in Munich, not only reflected the state of the industry in Europe and worldwide – it also demonstrated the changing role of the industry in relation to its main customers, the semiconductor device makers. Enormously swelling outlays for R&D and the heavy burden of developing tightly specified manufacturing technologies into widely applicable, highly productive solutions – this is the situation the equipment and materials industry is confronted with. And it won’t get easier over time. As George Chamillard, Teradyne CEO and chairman of the Semi board of directors, joked, “The chips are stacked against us”. During the downturn in 2001/2003, the IC test industry collectively invested $2.5bn in R&D, equal to 30% of sales for that period. “Obviously, this is unsustainable,” said Chamillard.
What we have done wrong until now?
In tune with these difficult issues, Semicon has become less a traditional fair, displaying and announcing novel or updated products and services but, as Rössger says, “more like an information platform”. Within this very compact, very high-caliber, very capital-intensive industry, every customer knows every vendor, and every exhibitor knows almost every attendee. It’s an inner-circle game that could not be missed. Technology development, guided by roadmaps, marches lock-step across the globe. In terms of products and technologies, there is almost nothing new to be displayed or announced to the tightly knit community of users and marketers walking the aisles and converging in conference sessions and standards meetings. This is, if you will, the ‚conditio sine qua non‘ of the capital equipment industry. Or, as one exhibitor calls it, “Were a customer to enter our booth whom we haven’t met yet, we would have to ask ourselves what we have done wrong until now”.
So, what then is the purpose of an exhibition like this? Just to get together. Read the latest trends. Get market briefings. Feed the rumor mill. Hop on, or off, the job carousel. Watch the competition assembled in one convenient spot. Appraise the latest developments. Work the kinks out of standard developments. In the case of Semicon: attend some of its proven fixtures, i.e. the MEMS and test conferences, and the Fab Managers Forum (this year held in Grenoble, next year coming to Dresden, one of Europe’s hot spots of semiconductor manufacturing). In a word, Semicon in Munich shows where the industry is going in regard to the EU and its outreach to the wider so-called EMEA (Europe, Middle East, Africa – the typical off-shore view of Europe and what’s around).
Ramping up of 300-mm lines
At any rate, the overall outlook seems promising. “There is plenty of growth in all sectors of the industry,” Myers says – finally sounding a thoroughly upbeat note after three years of blood, sweat and tears. For equipment makers that have made it through the squeeze, the market will grow to $30.6bn in 2004, up from $22bn in 2003. (Growth in Europe about 40%, from 2.5bn to 3.6bn.) For materials vendors there will be a smaller climb to $25.6bn worldwide in 2004, up from $23bn in 2003. 2005 and 2006 are expected to lower this initial peak leading to solid and steady growth – nothing of the hysterical pitch of 2000, which marked the peak of the new-economy bubble and lead us into the abyss.
The reappearing upturn is caused by the newly-fanned market growth in semiconductor devices which caters to the world’s consumers‘ continued appetite for portable communications gadgets and PCs. Market demand will make the semiconductors device industry grow to $224bn in 2006, up from $166bn in 2003, and to about $276bn in the year 2008, Semi predicts. “This year, device sales are expected to increase by 19%,” Myers believes. The deep recession, a roller-coaster adventure and brutal shakeout, is over. Myers: “I have never seen a roller-coaster ride like this before in any other industry over the last three years”.
On reason for the renewed confidence, Semi’s president underlines, is the ramping-up of 300-mm fabs. “Which has been talked about now for more than ten years”. And, looking like a miracle, Europe has been shaping up to be second at the forefront of the new-generation wafers, ever since its major semiconductor makers decided to pick up the tab for the large-wafer technology to position themselves better and establish regional high-tech clusters. Of the currently installed global 300-mm capacity, Semi reports, Europe is holding a 22% stake, far behind Asia Pacific with large 57%. But before that combined piece of Japan and the U.S., Europe’s current 300-mm wafer advance is based on the strengths of STM at Crolles/France and Catania/Italy, of Intel in Ireland and of AMD at Dresden. And take a few other significant commitments from Infineon and Philips, besides national and pan-European research initiatives such as Imec and Minatec.
Mature regions primarily affected
If all this is good news, it is going to last at least through 2005 and 2006. Through 2004, the equipment vendors will have to feed a European market volume of $3.6bn. Wafer processing, due to strategic investment, will take the lion’s share with close to $3bn, testing will generate $500m, and assembly and packaging equipment will see sales of $180m. Next year, the European market is expected to rise further by about 11% to top out at $4.1bn. The frontend will reach $3.4bn, test $540m and assembly $210m. Then, in 2006, according to Semi, markets will fall back by 10% to a total of $3.8bn. One area of calm in the swings of the market is materials. They will see a rather modest growth of 4% per annum, rising from $2.7bn in 2003 to $2.8bn this year to $3bn in 2006. “It is a far more steady growth, because it is not tied to equipment revenue but to equipment volume”.
Another sub-market with its own intricate dynamics is the test industry – being in a stressed-out state. When Georges Chamilliard looked back in horror at the past three years, he has seen the situation that ATE sales averaged $3bn per year, and of that volume 30% was spent on R&D. This cannot continue. Two major issues, he states, have caused this conundrum. First, there was a market and not a technology recession. On the contrary, the accelerated system-on-chip (SoC) integration has increased test complexity dramatically. Today, more testing of higher unit volumes is needed than ever before. Second, the value gained by the user through converting to SoC solutions, encapsulates subtleties in testing that require ever growing investments in the R&D of test systems. “The burden of integration has fallen on our customers. This primarily affects the mature industrial regions where value creation has been located traditionally”.
A similar alarm, albeit more softly, is sounded by Hermann Jacobs, VP of Power Logics at Infineon. “My company spends roughly $ 1.1bn per year on R&D. That’s a real challenge”. But no reason for pessimism, Jacobs trusts, at least not in the perspective of an IDM (integrated device manufacturer). “We have some excellent research centers in Europe, such as IMEC”. Furthermore, “The European framework has prepared us well for the challenges ahead”. Cooperation on a global scale, Jacobs believes, is the answer to exploding costs. Still remaining is the specific European quality of differing cultures and languages, which is not really a drawback – it has trained us in thoroughly thinking quite distinctively.
A view on European self-confidence
Anyway, it’s interesting to hear some self-assured statements in the usually grim discourse on European industrialization issues as far as high technology is concerned. “This is news for me too,” said Franz Richter, president and CEO of Suss Microtech, and president of Semi’s European Advisory Board. “Who would have expected more than 20% of 300-mm capacity being located right here in Europe?” “Consequently”, he admits, “we must show more self-confidence. Development takes place over here, production as well. We could play a much larger role in all of this”. And there is no reason for him to doubt in realizing this goal. Except that European firms have entered the semiconductor bandwagon late und hesitant since the beginning of the 80s – and had, therefore, to bridge a gap in manufacturing technology and expertise, but not so in application. By and large, Semicon this year met Richter’s expectations. “Due to our focusing on the essential markets for packaging and MEMS, our customers come here to view the latest technologies”. The current EU expansion, he says, will launch huge new markets. “Semicon Europa is the show at the right time in the right place”.
But Semi’s policy of requiring a non-refundable down payment from prospective exhibitors a year ahead of the show is raising eyebrows here and there. “Are Semi’s financial resources really that thin?” asks a PR and marketing specialist rhetorically in behalf of some of his clients. Fully content with the setup of the show and how it went this year, is Stefan Siml of distributor and manufacturing service provider htt. “We are satisfied with visitor turnout. Semicon is the right place for us because we are into frontend, probing and test, where we represent more than 50 vendors”. Another leading equipment representative, Rolf Enders of Macrotron Scientific Engineering, underlines its presence on the fair ground. “We have become part of the Schmidt Group/Hong Kong, and have to now regroup our business in regard to new product lines and to our own X-ray products. Semicon provides the viable platform to communicate this to the public”. Dr. Tresky, founder and CEO of a specialist bonder firm, is also confident about Semicon. “We designed a workstation to take off glued advanced packages from substrates, a highly critical procedure, and see now very high interest from the industry. We believe it’s the first of its kind in the market, and Semicon is the right location to showcase such a unique solution”.
That’s a position Tim Hilbert of Feinmetall fully concurs with. “The response is thoroughly positive. Our visitors are not just from Europe but from overseas as well, the U.S. and Asia. The fair has appeal outside of Europe too”. The company presented wafer-probing cards with an 80µm pitch and feels well positioned there. Launching the flip-chip platform 8800FC, Datacon was prominently present. “It’s a new generation”, Joachim Pajonk underlines, “with all-new hardware, software and mechanics”.
Equally upbeat about the show and Europe’s economic climate is Charles Vath, VP at ASM Technology, Singapore. “We are here to meet our European customers‘ decision makers, who we don’t see at any other shows”. Vath ventures a familiar comment on trade fair logistics. “There are too many Semicons all around the world and all through the year. Add Productronica to that. That’s a million dollars of equipment on the road all year long”. This year, however, he thinks, this concern is swallowed up by the expansive mood. “We haven’t seen a customer worry about a downturn. They are all upbeat – especially our customers from Germany”.
Werner Schulz/Gerhard B. Wolski
EPP EUROPE 402
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Titelbild EPP EUROPE Electronics Production and Test 11
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11.2023
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