Semiconductor Employment in the United States

According to the Bureau of Labor Statistics, the semiconductor/electronic components industry lost 15.3% of their total jobs since December 2007 (see chart below). That’s three times more than finance and insurance industries, and in the range of furniture and textiles, two low-tech, labor intensive industries that have been racing to Asia for several years. This dramatic employment decline reflects a catastrophic failure of public policy and a historic abdication of responsibility by elected leaders. While Washington debates the need for million dollar bonuses on Wall Street, a trillion dollar overhaul of the health care,industry, and yearly farm subsidies in the tens-of-billions, the global high tech industry is happy to move anywhere they are wanted, nurtured and welcome.

Increasingly that is not the US, and the situation is getting worse, not better.

When honest observers look at the reasons for high tech’s flight offshore, it will be hard to discount the fact that semiconductor, Internet and computer industries rank near the bottom of the list in political campaign contributions. Securities traders, health care professionals, lawyers, insurance companies, and real estate are all in the Top 10 in campaign contributions. Computers/Internet ranks 37, right after railroads and Beer/Wine/Liquor (there is no separate category for semiconductors).

One of the issues that showcase the total disrespect and criminal neglect of high technology by elected officials is the failure to reform of the H-1B visa process. Foreign born nationals who receive their science and engineering degrees in the US should not be forced to leave the country upon graduation. SEMI goes to Congress every year and no one—not one staffer, not one representative—will argue against expanding the number H-1B visas for US graduates of science and engineering. Yet the bills can’t get out of Committee, and can’t get a vote.

The impact on US high technology has been devastating. The US has been skimming the best and brightest minds from across the globe, and prospering because of it. Between 1980 and 2000, the percentage of Ph.D. scientists and engineers employed in the United States who were born abroad increased from 24% to 37%. The current percentage of Ph.D. physicists is about 45%; for engineers, the figure is over 50%. One fourth of the engineering faculty members at U.S. universities were born abroad. Between 1990 and 2004, over one third of Nobel Prizes in the United States were awarded to foreign-born scientists. One third of all U.S. Ph.D.s in science and engineering are now awarded to foreign born graduate students. Today, the number of applications for H-1B visas exceeds the “quota” by at least three times. Foreign born engineering and science graduates now expect to find jobs outside of the US upon graduation.

In the recent past, the arguments for high technology centered on the benefits of economic growth, the proliferation of high paying jobs, and national security. Today, the need for a healthy high tech industry increasingly involves global warming and energy security. Here, semiconductors and semiconductor technology are the principal means to replace fossil fuels and create energy independence. Faster, better, and cheaper microprocessors have a direct and immense impact on energy efficiency. The Bureau of Economic Analysis (2007) reports that while the economy as a whole increased energy use by 13 percent over the period 1997 through 2007, the semiconductor industry actually cut energy use by half over that same period.

According to the American Council of Energy Efficiency Economy, the cumulative net electricity bill savings enabled by semiconductors might exceed $1.2 trillion through 2030, supporting some 935,000 more jobs while substantially reducing 700 million metric tons of carbon emissions.

Much of the same technology that made the US number one in semiconductors is also used in photovoltaic and solid state lighting, technologies essential to our energy future.. Rather than leveraging this technology heritage into leadership positions in these critical industries, the US has squandered its lead and is barely a participant in either of these of high growth sectors.

It is astounding that we allow our elected leaders to reap millions of campaign contributions sustaining 18th century industries when the opportunities and benefits in semiconductors and high tech can yield economic growth, quality jobs, energy efficiencies, and cost effective renewable energy for decades to come. Politicians need to be made accountable for economic policies that moves billions into corporate farms, gangster banking and profiteering health care, while it forces ingenuity, innovation and well-earned prosperity overseas.

SEMICON West 09

Historic Milestone? Only Time Will Tell

It was an exciting day today as over 130 leaders from the semiconductor and solar industry packed a small room in the Intercontinental hotel to talk about a possible solar technology roadmap along the lines of the ITRS. The meeting was jointly arranged by the DOE and SEMI PV Group about 10 days ago. The PV Roadmap Workshop sold out in about 2 hours after the initial announcement email. We had about 100 on the waiting list.

The crowd was a mix of semiconductor veterans who have played leading roles in the ITRS process, and skeptical solar industry technologists who questioned how their competitors, academics and other “outsiders” could help them in their race towards grid parity and IPO glory. There were a lot of old timers from the early days of the chip business, and young solar hot shots at the height of their careers who plan to save the world and get rich in the process--exactly the kind of mix of people you hope for, and worry about, when we co-located Intersolar and SEMICON West.

It was hard to anticipate which way the meeting would go. Cell and module makers are still in their early phase of the industry where many believe they enjoy competitive advantage in manufacturing. It’s hard for many current industry leaders to fully understand the benefits of pre-competitive collaboration when they are already outperforming their competitors. Before the crash in October, they could sell whatever they could make. The industry prides itself on a long history of conversion and efficiency improvements, yet the productivity learning curve industry is unimpressive at best (about the same as shipbuilding and machine tools, pretty crappy really).

And PV is nothing like chips. Without the unifying paradigm of the process node, what would drive a technology roadmap? And how would the US DOE drive it, knowing the Germans, Japanese and Chinese would have to be a part of it for it to be effective. Was everyone there just looking for Obama stimulus funds?

All those concerns quickly evaporated. It was a great meeting.

Everyone got a quick update on the technology roadmap efforts in Japan, Europe and the US (EPIA and NEDO/METI from Japan). They saw how these were a mix of R&D efforts, industry advocacy and promotion and not an attempt to coordinate private capital and private ingenuity to achieve accelerated, common objectives.

They also got a fine update on the ITRS itself: how it works, what is applicable to PV and what isn’t, how thin film and crystalline might be able to co-exist under a single framework.

Breakout sessions dove into the details: materials, factory integration, thin film and wafer, cells and modules. We struggled with silicon concepts—wafer, square, or ribbons. We struggled with substrates—how thin, how hard, how flexible, how long. Could this diversity be assembled into a roadmap? Are we too early, too late?

As the breakout sessions reconvened, the question was asked, “Do you think a International Technology Roadmap process for solar was needed?” and nearly everyone raised their hand, high. No one argued against it. I had the feeling that most folks in the room understood the opportunities in a technology roadmap, and the complex, daunting challenges and barriers ahead. This will not be an easy. I sensed that everyone knew a PV technology roadmap will be different than the ITRS, but that the ideas, processes and symbols of ITRS would be the guide.

I don’t think I was alone in feeling that an important step was taken for the industry and for the world. History Being Made? Only Time Will Tell.

Solar Can Initiate a Manufacturing Renaissance in the US

After decades operating under misguided notions of globalization, the global credit crisis and financial collapse has grimly and assuredly dashed the notion that the US economy could prosper strictly as a service economy without a strong manufacturing sector. Countries need to make tangible products for a healthy, robust economy to sustain middle class jobs. Unfortunately, the demise of GM and Chrysler characterize the bleak state of manufacturing in the US. Will solar be similar to automobiles or semiconductors with manufacturing overwhelmingly centered in Asia

The Obama administration’s stimulus package offers the hope of a new era of “green” jobs. But just how realistic are these expectations for a boon in high-pay, high-value jobs in clean and green tech? While the US might still be able to out-innovate the world, won’t manufacturing jobs gravitate to low-cost, low-wage locations in Asia like they do in semiconductors, consumer electronics, and many other industries? China already leads the world in PV cell production. How can the US compete?

The fact is, solar photovoltaic (PV) energy is an excellent job-creator, but will require smart policies to significantly benefit both US employment and fossil fuel reduction. Many observers have concluded that solar energy is the most efficient and efficient job creator among all energy alternatives. Every step in the value chain—from the development, manufacturing, sale, support and installation of solar panels--require smart, well educated, well-paid people. EPIA estimates that 10 jobs are created per MW in manufacturing. By 2030, solar energy is estimated to create as many as 10 million jobs, but how many of these will be in the US; and how many in manufacturing?

One of the primary reasons why, unlike semiconductors, solar can be efficiently and practically made in the US are the simple fact that solar photovoltaic panels are large and heavy. While based on the same technology as semiconductors, solar panels benefit enormously from being manufactured close to their customers. The cost of shipping and installing a PV panel today is as much as 40% of the total cost, growing to 60% by 2020. Germany enjoys a healthy manufacturing base in solar and we saw significant investment in Spain as they established tariff incentives. Every analyst agrees that US will become of most of the biggest consumers of solar energy in the world and the natural advantages of manufacturing close to the customer base favors US-based cell and module production.

Another factor that can to lead to job creation is that the future PV industry leaders will be technology leaders and the US leads the world in The US leads the world in innovation and technology. While much of the world leaders in PV production are based in China and Europe, the vast amount venture capital, patents, and future innovations in solar probably reside in the US. North American companies raised $5.9 billion in “clean tech” venture capital in 2008 accounting for close to 70% of the world investment total. Nearly 100 new cell and module companies have been formed in the US. Bridging the gap between innovation and production—or between “invented in the USA” and “Made in the USA”—should be the chief concerns of policy makers at the local, State, and Federal levels.
America’s manufacturing renaissance in solar energy will also require a large, healthy, innovative supply chain of cell manufacturers, equipment, and materials suppliers. With a head start by European and Chinese suppliers, that US-based supply chain necessary for world leadership and job creation is currently behind, but catching up quickly. Among cell and module manufacturers, First Solar and SunPower are among the world leaders today, and new firms such as Solyndra have interesting prospects for continued growth. Many of the emerging technologies in solar in printed and organic technologies, III-V compounds and DSS are based in the US. And, equipment and materials suppliers such as Applied Materials, Hemlock, DuPont, and KLA-Tencor that helped create the most successful chip industry are also based in the US.

The dynamics that led the chip industry to move production to Asia don’t have to be repeated in solar. While American innovations in notebook computers, digital music players, mobile phones, and advanced semiconductors are today all manufactured in Asia. solar PV can be different. Because of the importance of shipping costs, automation and technology, the emergent solar industry can keep the manufacturing jobs in the US--with the right programs, policies and vision in place.

SEMI PV Group Global Advocacy Efforts

SEMI has never been more engaged in public policy efforts, in more countries, in the past 6-months than it has in the 38 years of its existence. The majority of these efforts have been directed through our PV Group at the dynamic solar energy policies emerging in many regions.

The global photovoltaic solar landscape is comprised of many countries making significant contributions towards reducing the world’s reliance on fossil fuels. Many of these countries are contributing to the supply side of PV power--contributing cells, modules, equipment and materials--and a few countries are making a major contribution to the demand-side, deploying PV systems to generate clean, renewable energy in both on-grid and off-grid applications. In addition to tackling supply side issues involving equipment, materials and feedstock, the PV Group has also addressed the demand side with several recent public policy efforts in China, India, Taiwan and the US to expand the market for solar power.

In May, the SEMI PV Group released the white paper, “China’s Solar Future,” a preliminary report containing specific recommendations for a China photovoltaic (PV) policy roadmap. As the world’s fastest growing developing country, China faces a rapidly increasing demand for energy and the country has also been building a massive PV industry representing all facets of the supply chain, from polysilicon feedstock, ingots and wafers to cells and modules. Virtually all of this PV production has been exported. The report recommends an accelerated adoption of PV generated electric power in China to reach global average level of PV power generation by 2014.

Under the direction and guidance of the Taiwan PV Advisory Committee, the SEMI PV Group urged the swift passage of the Renewable Energy Act to increase the adoption of solar power in Taiwan. The plan is designed to increase demand for solar power, as well as boost research and development and support the development of the island’s green energy industries. In meetings widely covered by the Taiwan press, the PV Advisory Committee met with several legislators and government officials to advance the PV policy agenda.

In April, the PV Group Advisory Committee in India announced an outline and vision for the Indian solar market, including growth opportunities, potential socio-economic development benefits, the current market situation, and India public policy needs. The white paper entitled, “The Solar PV Landscape in India – An Industry Perspective,” suggests that India can play a leading role in the global photovoltaic and solar industry. The paper was developed by India PV Advisory Committee, represented by industry leaders from all sectors of the solar PV supply chain. The report was released by Mr. K. Subramanya, CEO, Tata BP Solar at a special briefing for the media, and included strong demands for policies to increase solar deployment in the country.

In the United States, SEMI and the PV Group actively worked to include several innovation-oriented elements of the American Recovery and Reinvestment Act (H.R. 1). The stimulus package included significant funding increases for key science agencies, including the National Science Foundation, the National Institutes for Standards and Technology and the Department of Energy. The bill also emphasized alternative energy with numerous provisions and new spending intended to increase government use of alternative energies, spur development of the domestic market and create “green” jobs. These provisions include the creation of a new manufacturing tax credit, a temporary loan guarantee program, a new DOE program that will provide grants as an alterative to the investment tax credit, and increased federal procurement. SEMI PV group is currently working closely with Congress on the upcoming energy bill.

In response to member needs and under the direction of PV Group Advisory Councils around the world, the SEMI PV Group will continue to advocate, collaborate and facilitate solutions to both demand and supply side issues in the global solar marketplace.

Join us for the World Premiere of 'MEMS: Making Micro Machines'

World premiere of 'MEMS: Making Micro Machines' at SEMICON West

A film by Silicon Run Productions, funded by the NSF, MIG, SEMI and others

Hosted by MEMS Industry Group (MIG)
Wednesday, Jul 15, 2009 (1:00 PM to 1:55 PM) at Moscone Center North, SEMI Theater

SEMICON West Update

With the industry in the midst of the worst slump of its history, many people are asking me, “What’s happening with SEMICON West?”

It’s not an easy question to answer. From a programs perspective, I think it will be the best West in a decade. We have more content and more original, high quality content that we’ve had in many years. In addition to the TechXPOTS which will be better this year, we have much stronger partner programs. The MEMS Industry Group will hold its Business Strategy Seminar, Convergent Semiconductors will hold an impressive conference on new memory technologies, and Sematech will run a 3D Interconnect Workshop. I am especially looking forward to FlexTech Alliance’s introductory and educational workshops on printed electronics. There will 2-hour Packaging and Foundry Summits, and this ITRS panel discussion will present the critical issues in the industry roadmap. For more on West and the programs, visit http://www.semiconwest.org/

But in terms of exposition space, West will be a smaller show. The floor plan has consolidated into Moscone Halls North and South and the Test and Packaging segments will no longer be located in Moscone West first floor. But Intersolar, our partner solar exposition is growing and compensating for the semiconductor decline. Intersolar now occupies all of Moscone West, tripling the size of last year’s exhibition and bringing the 2009 total floor space to approximately 120,000 net square feet –Intersolar North America 2009 now expects to accommodate around 500 exhibitors. Currently more than 400 exhibitors from 20 countries worldwide are confirmed to exhibit at Intersolar with 15,000 expected attendees anticipated

Concerning attendee registration, things are going reasonbly well for SEMICON West. Through Sunday, May 24, SEMICON registration (SEMICON-only and SEMICON + Intersolar North America) totaled 9,617, which is -22% versus the same week last year, but only -6% compared with the five year average for this week (10,223).

We added 1,423 visitors in the past week, versus 1,727 the week prior. Including the 1,055 Intersolar-only visitor registrants, total visitor registration for both events through Sunday totaled 10,672. In the past two days, even with the Memorial Day holiday, we have added over 500 new SEMICON visitors, which is ahead of our average daily pace. And Intersolar audience recruitment hasn’t kicked in yet. Last week, Intersolar distributed their first visitor promotion email, which accounted for a significant portion of the week's accelerated registration.

While the industry is mired at equipment booking levels not seen since the early 90’s, innovation continues on productivity, 22nm geometries, new materials, wafer sizing, and a host of other areas. At the same time, the MEMS, solar, high brightness LED, printed electronics and other markets are just emerging. SEMICON West is still the place to be to participate in the next waves of innovation in advanced manufacturing. As the industry and region changes, so must SEMICON West and we’re committed to evolving the show in new ways. If you have any ideas or comments, please let me know.

SEMI Members Essential to a Sustainable World

I was thrilled and proud to see the recent report that confirmed that semiconductors are at the vanguard of the world’s most significant steps to reduce fossil fuel consumption and mitigate climate change. The report by the American Council for an Energy Efficiency Economy (ACEEE) claims a significant relationship between economy-wide productivity growth and the use of semiconductor-based technologies. Since 1990, the United States has expanded its economic output by nearly 62 percent but the demand for energy has grown by less than 20 percent during the same period. The report claims that this decoupling of economic growth and energy consumption is a function of increased energy productivity— primarily achieved through semiconductor technologies. Faster, better and cheaper microprocessors, computers, and telecommunications equipment have accelerated both the adoption of these technologies and their growing networked use. This, in turn, has ignited changes in the way that we manufacture products, conduct business, and maintain social activities.

And of course, I believe that technical achievements in manufacturing equipment and materials are the primary drivers for the proliferation semiconductors. Semiconductors have been around for decades. What has made them faster, cheaper and better are the manufacturing efficiencies delivered by SEMI members that have made Moore’s Law a self fulfilling prophecy. By enabling a miraculous 4,000,000X reduction in cost since 1975, no other industry has had such a positive and wide ranging contribution to world energy efficiency and no other industry is expected to contribute more to fossil fuel reduction in the coming decades.

The report states: “Compared to the technologies available in 1976, we estimate that the entire family of semiconductor-enabled technologies generated a net savings of about 775 billion kilowatt-hours (kWh) of electricity in the year 2006 alone … [H]ad we expanded the size and scope of the U.S. economy based on 1976 technologies, it appears that the U.S. would be using about 20 percent more electricity than actually consumed in 2006.”

What the report doesn’t state is that semiconductor technology—or to be more precise, manufacturing technology—is also displacing fossil fuels by enabling the production of solar PV, solid state lighting and fuel cells. Some estimates predict that by the year 2030, PV systems could be generating approximately 2,600 TWh of electricity around the world, enough to satisfy the electricity needs of almost 14% of the world’s population. In environmental terms, it would reduce annual CO2 emissions by 1.6 billion tons, equivalent to the output from 450 coal-fired power plants. Today, virtually every mass-produced PV cell in the world is made with equipment and materials from SEMI member companies.

Solid state lighting produced by high brightness LEDs (typically GaN/InGaN chips) is another critical component of the future energy equation. It is estimated that 22% of the nation’s electricity is used for commercial lighting, equivalent to 8% of the nation’s total energy and approximately 130 million tons of carbon emitted into our atmosphere. The Department of Energy (DOE) estimates that an efficient solid state lighting technology could save the U.S. about 620 billion kilowatt-hours per year (or approximately 50-70 power plants) by the year 2025. Like solar cells and semiconductors, the equipment and materials used to make solid state lighting are developed and made by SEMI member companies. Without continued developments by SEMI member companies, white LEDS won't reach the cost targets necessary to diplace conventional lighting.

Almost every solution contemplated to solve our energy problems are enabled by semiconductor technology made faster, better and cheaper by SEMI member companies. Many of these of solutions are just now being developed, such as nanotechnology fuel cells and energy harvesting chips that are powered by kinetic energy. Smart grid technologies enable a more cost-effective deployment of decentralized but cleaner renewable energy resources— such as solar panels and wind turbines. These “green” technologies are also enabled by a variety of semiconductor technologies, including sensors to measure temperature or other variables; communications chips to receive and transmit data; memory chips to store the information; and power management chips to adjust energy loads.

The importance of SEMI member companies can’t be overstated. Without their manufacturing expertise, developments in the lab can’t be commercialized for widespread use. Without their achievements, the gigawatts needed in solar and the double digit economic productivity increases can’t be realized. Without their contributions, the only equation that works in our energy future is one that requires drastically lower lifestyles, radically reduced economic progress, and an end to developmental progress in Asia, Africa and elsewhere. Fortunately, the companies that comprise SEMI are marshaling some of the most brilliant and ingenious people from around the world to address the planet’s most critical problems.

The Value of Exhibiitng in a Downturn

“We need the continued visibility so that clients know you are still there and potential clients don’t think you have gone under.”

“Less people, but more authority to purchase.”

“The decrease in attendance has lent to increase in quality and size of prospects who do engage.”

“Not being at the show leaves people to wonder if we are still in business.”

“(We exhibit in a downturn to) gain additional market share in this economy and try to outlast the competition.”

“For increased exposure with new customers. Renew relationships with existing customers.”

“Maintaining our company profile of strength and consistency, so when the market strengthens we are the first choice.”

“(There are) fewer attendees, but typically they are high quality decision-makers.”

These are the opinions of real exhibitors. They continue to see trade shows as an important investment in new business and enhanced profitability. Particularly in the semiconductor industry, trade shows remain the most cost effective marketing medium and sales tool available today.

Passive marketing through advertising, web, and arming sales people with brochures and Powerpoint presentations won’t change customer perceptions and behavior. To effectively influence people, effective marketers know that you need to imprint your key messages on customers through interaction and engagement. Sales calls and meetings can’t deliver these effective environments because customers control the situation and will discount—if not actively fight—your attempts to differentiate your products from your competitors. Customers already have a supplier opinion and ranking and won’t believe your key messages and sales people. They won’t read your brochures and webpage and will resist all your efforts to position your new unique product features and technology. They will try to drive all sales meetings to a commoditized price and delivery conclusion.

Trade shows gives marketers the most effective way to differentiate their companies and products, and change customer perception and behavior. You control the environment in a trade show engagement and your sales messages have the supercharged credibility of 3 dimensional authority, underscored by demonstrated corporate commitment. They allow you to accelerate the sales cycle in measurable ways.

These are tough times, but they don’t change the way people learn, customers behave, or how good marketers differentiate their products for greater share and higher margin.

SEMI High Tech U Coverage

A Tale of Two Cities

I had the pleasure of hearing interesting perspectives on the industry dynamics and synergies of two of the world’s largest technology clusters: Silicon Valley and Dresden, Saxony.

At the Silicon Valley Lunch Forum on April 23, Art Zafiropoulo, Chairman and CEO, Ultratech Inc. gave a nice talk on the history and future of Silicon Valley. Like many observers, he traces the Valley’s tech origins to the founding of Stanford and the invention of the oscilloscope in the famed garage by Hewlett and Packard. With the founding of Fairchild Semiconductor, tech DNA started spreading, duplicating and intermingling. The Valley enjoyed a unique mix of geography, higher ed, specialized expertise, and eventually money that served as a magnet for innovators like Art the world over. A critical mass was established that kept the Valley in the forefront of the computer revolution, the communications revolution and the Internet revolution. He contrasted collaborative, flexible, open Silicon Valley culture with the insular and vertically integrated approach taken in Massachusetts along the Rt. 128 corridor and many parts of the world.

Art still sees the Valley as a center of innovation, but not manufacturing. The region still enjoys the output from best educated people in the world, but suffers from a variety of economic ills generated by the high tax, high spend policies of the State and national government.

Dresden, Germany is one of the great economic success stories in Europe. While only recently behind the “curtain,” Dresden is now home to the most dynamic high tech cluster in Europe (Don’t forget Grenoble, France).

While many people know in chips know Dresden and Saxony as the EU home of Infinion, AMD and Qimonda, its also the center of the world in photovoltaics. We recently a visit from Dagmar Vogt, CEO of Vogt Group, and Harold Bender, VP of Applied’s solar business in Europe who painted a compelling picture on why SEMI needs to be centered in the Saxony-Berlin region. Many of the same dynamics that accelerated Silicon Valley are present in the Dresden region.

The Dresden-centered solar industry encompasses nearly all of Saxony, including Leipzip and Thalheim, which many now call Solar Valley due to the many solar firms located there, including Q-Cells. Actually the region extends beyond Saxony to include Berlin, Arnstadt, and Alzenau. There’s competition between cities, but also synergy and internetworking. Like Silicon Valley, the area enjoys tremendous education and R&D resources from the University of Halle, Helmholtz Centre Berlin for Materials and Energy (HZB). IMEC, Fraunhofer ISE, and EU institutions like the European Renewable Energy Council (EREC).

While Silicon Valley is less of a manufacturing center, Saxony enjoys many advantages as a manufacturing center including low rents and wages.

What distinguishes both areas, however, is the synergies, the intermingling of smart people from business, industry and finance that makes both regions go. It is not the guided centralization that you see at Hsinchu Science and Technology Industrial Park in Taiwan or Shanghai, Pudong, but the informal dynamics of different industries and specialties combining to accelerate progress. SEMI tries to leverage this dynamic wherever we can when creating and developing expositions and conferences. We know that it’s what you plan and expect from a program that generates delight and the “a-ha’ moment, it’s the unexpected that frequently comes from outside your immediate industry and specialty that spurs innovation.

(Phot: Dresden Messe)

450 Now, Are You Kidding Me?

The International Sematech Manufacturing Initiative (ISMI) 450 mm wafer program announced in April equipment performance metrics (EPMs) for nearly 30 tool types. The EPMs were developed from supplier feedback obtained in two 450 mm equipment workshops, and ISMI has said they will be refined further

Beginning later this year, ISMI says the 450 mm program will put together an equipment demonstration line to process 450 mm single-crystal test wafers at 32 nm design rules. ISMI or speculation claims that Intel Corp, Samsung and TSMC will fund the project pilot lines capable of 22 nm processing by 2012.

ISMI reportedly claims that test wafer equipment development and demonstrations are on track starting by the middle of 2009 and that prototype 450 mm equipment is being developed now at various supplier sites. It is also claimed volume production could occur as early as 2014 or 2015.

Out of respect and timing, SEMI is not making public statements about the ISMI announcements, but the idea that they are spending time and money on 450 when the entire industry is suffering historical and unprecedented challenges is beyond me. Both Samsung and TSMC are shedding employees and nearly all the chip makers, as well as the the entire supply chain, are in intensive care. Nobody can afford R&D work on advanced scaling, much less wafer transition. Fab capacity is at historical lows and ISMI is spending money on 450? Are you telling me that ISMI members like Global Foundries, TI, UMC, National, Qimonda, Micron, and Toshiba want to see their precious membership dues being spent on 450? Does ISMI really want to publicly celebrate their efforts in 450 at this particular time, when any membership dues are probably controversial? During these tough times, how can the majority of ISMI members support 450 programs, at the expense of more broadly beneficial initiatives such as equipment productivity, energy conservation, and other areas that are immediately relevant to the industry's bottom line? This has got to seriously rankle a broad swatch of ISMI membership.

Revisiting the Depression

When the Depression hit, there were two cereal companies--Kellogg and Post. When consumer demand dived, Post did the predictable thing: it reduced sales, marketing and product development expenses. But Kellogg doubled its ad budget, moved aggressively into radio advertising, and heavily pushed its new cereal, Rice Krispies. By 1933, in the worst of the depression, Kellogg’s profits had risen almost thirty per cent and it had become the industry's leader.

In this nifty article from the New Yorker, James Surowieki also reminds us how Chrysler overcame Ford in the 1930's with a big brand push behind Plymouth, and how Kraft bet big on Miracle Whip. And remember, in 2000-2001 with the dot com crash and when 9/11 paralyzed the world, the iPod and Xbox were introduced, and the Pocket PC made their big push to overtake Palm. When others try to save their way of out of bad time, winners compete with new products, new ideas, and new plans. When others try to survive to fight another day, leaders make their own history.

New at SEMICON West—Extreme Electronics

Last week we announced Extreme Electronics--a “show-within-the-show" that features exhibits, online and onsite networking events, and a series of mini conferences focusing on emerging market opportunities in printed and flexible electronics, MEMS, high brightness LEDS, nanoelectronics, and other areas.

EE was created to give extra visibility to emerging markets and applications for semiconductor manufacturing technology. SEMICON West always has benefited from exhibitors and program content in emerging markets, but this year we wanted to make it the center of attention this year--not because traditional markets are so dismal—but because these areas represent distinct communities with distinct needs and requirements. Many of the exhibitors that specialize in these areas felt lost at SEMICON West and they wanted to dedicated marketing, advertising and email outreach activities dedicated to these smaller, but growing, niches. SEMICON West is already the biggest manufacturing show in the world for MEMS, high brightness LEDS, PV, nano, and probably printed electronics, but it didn’t feel like it to both attendees and exhibitors. Hopefully, this new approach will better serve these important, emerging areas.

One of the reasons why West has been successful in these markets is the critical mass of suppliers and buyers already in attendance. Last year West attracted over 4000 R&D engineers, 4500 manufacturing and production managers, and over 6000 senior executives from the world’s leading companies—many of whom are also entering new markets like MEMS, printed electronics and solid state lighting. Because many of the technologies and products needed in these applications are also used in conventional semiconductor manufacturing, a critical mass of exhibitors also are already participating.

We are also trying to jump start an online community in these areas that can serve buyers and suppliers throughout the year. We are utilizing the SemiNeedle social networking site to establish groups and engage in real-time discussions about technology and business issues related to these emerging markets. The discussion groups may be accessed via the SEMICON West website at www.semiconwest.org.

Extreme Electronics will be located on the SEMICON West show floor in North Hall at Moscone Center. All SEMICON West 2009 registered attendees may attend Extreme Electronics sessions and participate in the online Extreme Electronics communities for free. For more information about Extreme Electronics at SEMICON West 2009, please visit www.semiconwest.org.

SEMICON and SOLARCON China 2009

New Killer Apps for 2010 and Beyond

What are the hot new future applications that will help drive semiconductor manufacturing volumes in the upturn? What are the killer apps that will drive the market like the Internet, mobile phones and ipods? Here’s my take on a few (its a wireless world):

Ultra wideband- UWB is a radio technology that can be used at very low energy levels for short-range high-bandwidth communications such as Personal Area Networks (PANS), sensor networks, and cable replacements for audio video, printing and other applications. At least a dozen mainly venture-backed companies have been pursuing UWB for uses such as wireless USB links on consumer and computer gear. To date, relatively high prices as well as performance and regulatory hurdles have limited the market for the wireless links. We want this market to take off; we know it someday will. But when? With the recent demise of a couple of the early leaders, the jury is still out on UWB.


Zigbee- ZigBee is a low-cost, low-power, wireless mesh networking standard for wireless control and monitoring applications. The low power-usage allows longer life with smaller batteries, and the mesh networking provides high reliability and larger range. The initial markets for the ZigBee Alliance include consumer electronics, energy management, home automation, building automation and industrial automation. The technology is intended to be simpler and less expensive than Bluetooth. ZigBee chip vendors such as TI, Freescale and Ember typically sell integrated radios and microcontrollers with between 60K and 128K flash memory. The standard, and the chips that support it, will probably play a critical role in the Smart Grid deployment, as well as related home automation products. Zigbee has a broad range of applications and looks like it has some momentum. Looks like a winner to me.

NFC- Another interesting short-wave wireless technology is Near Field Communications (NFC). NFC seems to have evolved from RFID and will be an enabling technology for mobile payment systems. Operating at 13.56 MHz and transferring data at up to 424 Kbits/second, communication between two NFC-compatible devices occurs when they are brought within four centimeters of one another. Because the transmission range is so short, NFC-enabled transactions are inherently secure and intuitively safe.

NFC can be used with a variety of devices, from mobile phones that enable payment or transfer information to digital cameras that send their photos to a TV set with just a touch. The possibilities are endless, and NFC is sure to take the complexities out of today’s increasingly sophisticated consumer devices and make them simpler to use. Mobile payment systems make sense, but until I see they them widely used in places like Singapore, Hong Kong or Helsinki, I wouldn’t bet on them in the short term.

Cloud Computing--The concept of Cloud Computing received a fair amount of talk at SEMICON Japan by folks like Terry Higashi and Takeo Hoshino of METI. The concept revolves around Internet-based services, large server farms and ‘software as a service.” While it might the drive the need for better chips to enable lower power computing, I don’t see it driving volumes. The trends toward connecting everything to the net—including refrigerators, ATMs, industrial machinery, security cameras, etc.—is already in full swing. I don’t see it providing a step function increase in chip volumes, but it will fuel a more accommodating world for Netbooks and Internet appliances.

WIMAX- According to Infonetics Research, combined worldwide equipment revenues were up only 3% from Q1'2008 to $402 million, and we assume they went into the crapper in Q4. Before the financial collapse, Infonetics predicted that by 2011, 110 million users of WiMAX technologies are forecasted. The WiMAX Forum now claims there are over 400 WiMAX networks deployed in over 130 countries. Developing countries have been the engine for WiMAX market growth, with Central and Eastern Europe, the Middle East and Africa, Central and Latin America, and parts of the Asia Pacific being hot-beds of activity. Intel is the current leader in chipsets, but there are nearly 20 companies are now producing baseband chip-sets for mobile WiMAX and there are probably 15 suppliers of WiMAX radio transceiver chips (Forward Concepts). That bodes well for easy adoption by handset makers and network managers. Bandwidth-makes-sense. Count on WiMAX for a nice contribution in chip volumes over the next 5 years.

Other more familiar applications that will drive semiconductor volumes in the future will be solid state drives, Wi-Fi (see a lot of upside), mobiles phones (both high end and low end), and handheld electronics like ipods (more video) and ebooks. The real driver though will be general economic health, especially in developing regions.

What's New at SEMICON West

Interesting Text-to-Speech application from Xtranormal

From the Cultural Revolution to the Solar Revolution

Samuel Yang, Vice General Manager of JA Solar was among the recent speakers at this week’s SOLARCON China and he told an interesting story about how people during China’s Cultural Revolution survived and adapted during times of great stress. He told the story to reflect on today’s difficult economic situation. During this time, education was disdained; professionals and academics were sent to re-education camps to learn the values of the collective commune. Families adapted by learning to educate their children at home, often in secret. When times changed, the country was stronger, having instilled a broad based, grounded respect for knowledge and educational achievement.

Drawing parallels to today, he said that now is the time to focus on internal strengths. He said that individual companies can’t control the macroeconomic environment, they can only adapt to opportunities all around them. He used another uniquely-Chinese example to make his point by describing how the mythical Chinese warrior may lose a battle, but will retreat to the mountains to develop his skills for a triumphant return.

The most common mantra in the West for dealing with the global recession is the oft-quoted remarks by Craig Barrett at Intel: “Every time you have a recession, you try to save your way out. Never works. You have to invest your way out of a recession.”

Every culture, every individual, every business is dealing with the economic crisis in different ways, some effectively, some less so.

There are many personal and organizational responses to the catastrophic recession: work harder, focus on core competencies, diversify, learn new skills, customer-focus, cut costs, etc. These common responses are certainly valid and rational. They can be accompanied with elaborate details, complete with project schedules, pert charts, balance sheets, business scenarios, and action plans. What they often lack though, is passion.

The semiconductor industry was built on passion. Pioneers of the industry knew they were building the Information Age. They knew they were part of a unique time in the human story, comparable to the Renaissance, the Reformation, the Industrial Age, the Age of Democracy. There was greatness all around them and they knew they were making history.

This passion was the foundation of SEMI. It drew leaders together, not just through mutual business interest and shared objectives, but through the shared experience of extraordinary times, accomplishing remarkable achievements that extended beyond themselves, their companies, even their industry, and impacting the entire human experience.

Much of this passion, this knowledge of greatness, is leaving the industry. The Information Age is nearly 30 years old. A new generation of leaders is desperately trying to survive. A common perception exists that even when the rebound occurs, the industry will never be the same. As the industry association, SEMI could never be more valuable, more effective, better staffed, better managed, more global than today, but the binding emotional spark of an earlier era, the shared reward of participating in a historical era, is distant and cloudy.

But a new age is upon us where great genius, great urgency, great opportunity, and great need are dawning. Solar energy will remake the world, maybe even save it. Unsubsidized grid parity is fast approaching and will occur in most regions of the world by the end of the decade. By 2050, solar power could deliver over 50% of the world’s electricity, bringing light, heat and hope to billions of people currently without grid connected power. It is the leading solution that could protect the world from devastating climate change.

It is a mission every bit as an important, worthwhile, life affirming, and valuable as that which drove the semiconductor industry and the Information Age. It is this generation’s call to greatness.

Not all SEMI members currently participate in the solar industry, but many are extending their knowledge of wafer processing and thin film manufacturing to PV. Many are asking the association to take a leadership position in PV, to address both the shared business interests of the industry, as well as provide the emotional connections of joining a monumental global challenge. They are asking us to invest scarce resources into PV and transition away from semiconductors to the emerging opportunities and overwhelming demands of the nascent solar industry. These are difficult, gut-wrenching decisions for SEMI, not without enormous risk. These same risks are being faced by many SEMI members who are peering into the future of semiconductors and are uncertain and fearful of the shape of what they dimly see.

Especially during these trying times, individuals and companies have to make difficult decisions. Sometimes the right decision is to work harder, work smarter, retrench, right-size, and retreat into the mountains to save yourself for future battles. Yet greatness doesn’t retrench. It seeks to change the world in ways that few can foresee. The founders of the semiconductor industry knew this. The leaders of the next great epoch in science and technology know this as well.

Dow Corning Rocks

Event Marketing in 2009: Challenges, Changes and Opportunities

I had the fortunate opportunity to participate in a panel discussion on the state of the events business, hosted by the International Association of Exhibitions and Events (IAEE). The title of the two-hour discussion was Event Marketing in 2009: Challenges, Changes and Opportunities and was focused on the economy’s impact of on the event industry and how exhibit, event and show managers were responding.

It was a timely topic and I really enjoyed to opportunity to discuss SEMI plans and my own personal feelings about what I see as a radical shift in the events industry. Joining me on the panel were event superstars representing a diverse cross section of perspectives and industries.

- Sandra Toms-LaPedis, AVP/ GM RSA Conference (information security industry)
- Scott Schenker, VP Client Services George P Johnson (global leader in event marketing; top auto show and corporate events marketer)
- Debra Rosencrance, VP Meetings and Exhibits for American Academy of Opthalmology

In terms of how SEMI was responding, I reiterated my mantra that I have been droning on about with exhibitors, suppliers, employees, wife, kids…
Our response to dead economy is in 5 key areas:

• Diversification into solal
• Increased emphasis on new and emerging markets, both industry (solid state lighting, printed electronics, MEMS, nano and others) and geographically (Russia, India, China)
• Focus on global sales coordination and efficiency (we have reorganized to realigned our sales and outreach team to work faster, smarter and more as a team)
• Forming mutually rewarding partnerships with other events and associations (Synergy!)
• A relentless commitment to lowering the total cost to exhibit for our members and customers

This last point on cost reduction efforts was my main point and something I wanted to shake up the room with. I told the audience that I was representing thousands of exhibitors who were under enormous pressure to improve show ROI in this economy and that SEMI was totally committed to helping exhibitors reduce the total cost of exhibitors. In pursuit of this, we are going to our hotels, service contractors, facilities, shipping companies, and our own operations and telling them the world has changed, you must reduce your price to our exhibitors. We are doing this on a worldwide basis and we are not being nice about it. We are being successful.

We even welcomed anyone who could partner with us to pressure the city and Moscone Center to gain concessions from the unions. I believe that now is the time to seek real change with the labor situation in San Fran and press for rationality in rates and process.

This is also a critical time in the careers of many exhibit and event managers. Every recession seems to hit marketing budgets first, especially trade shows. And when trade shows are canceled, exhibit managers and trade show coordinators are often the first to get laid off. I have seen this up close and personal for nearly 30 years and it’s a killing zone right out there today. You don’t see too many old timers in this business; they get crushed, weeded out.

Young, talented people often get their start through event marketing. They develop skills, professional expertise, they benchmark leaders, understand best practices and learn how to integrate events to an integrated marketing system. And then the recession gets them. When the shows go, they follow. They are seen as chained to their medium, not to their businesses. They know more about laminates and event lighting than they do about their products and customers. Trade shows are a cruel business and people who aren’t grounded in business fundamentals and prepared for other roles, functions and responsibilities will eventually get caught when times go sour. And they always go sour, sometime.

So, I hoped to share some of those observations and practices with this great group of committed professionals. I hope it helped someone. It made me feel better.

Partnerships: Now More Than Ever

One of the most effective and efficient ways to serve SEMI members is to work with other member organizations and associations. It can be effective because other associations can deliver real benefits to SEMI members, such as program content, research reports, technical insights and initiatives, and other valuable services. It can be efficient because SEMI staff can work with one partner, and impact an entire segment of members sharing the common interest. Identifying potential partners and finding common purpose is a critical area that SEMI needs to excel at.

SEMI is a very wide-ranging industry association that spans numerous technologies, industry segments, countries, and professional societies. We are wide but very thin. Many professional and industry organizations are very deep, but narrow in their geographic and technology reach. This reflective harmony provides a natural basis on which to work with many organizations in a win-win relationship. Our reach compliments their depth. By working together, we can both achieve goals that we could not separately.

SEMI works with dozens of industry organizations, media companies, research firms, and technical societies. Our relationship is often based on cross promotion; SEMI promotes a partner's event or organization in exchange for promotion or support of SEMI events and services. Many partners provide technical guidance on SEMI program content at conferences and expositions and some partners offer member discounts on their products.

A recent partnership with the MEMS Industry Group is a good example. Currently SEMI places MIG events on our calendar and is promoting MEMS Marketplace, an online portal that will serve as a matchmaker for companies in the entire MEMS supply chain, in our newsletter. In exchange, MIG will promote SEMICON West to their membership and provide guidance on TechXPOT program content. We have several other industry partners at SEMICON West, including Si2, IMAPS, MEPTEC, International Engineering Consortium, Southwest Test, BITS, OIDA, and more. We partner with IEEE on the Advanced Semiconductor Manufacturing Conference, and we should do more them. In PV, we work with EPIA, JPEA, ITRI, SEIA, and many renewable energy organizations.

Sometimes SEMI will partner with a private event organizer like Solar Promotions to put on Intersolar, or with a market research company such as Yole Developpment, when we are confident it will benefit SEMI members.

The driving motivation behind these mutually rewarding agreements is member value; if helping another organization achieve their goals, even with a potentially competitive event, helps SEMI members, that we should find a way to work together.

If there is an organization that you think SEMI should work with, please let us know and we’ll do our best to find a common ground in advancing member value.

Equipment Bookings Lowest Levels Since 1991

North America-based manufacturers of semiconductor equipment posted $285.6 million in orders in January 2009 (three-month average basis). The bookings figure is about 51 percent less than the final December 2008 level of $579.1 million, and about 75 percent less than the $1.14 billion in orders posted in January 2008.

Bookings are at the lowest levels since 1991.

Sheeeesh, 1991!

Can you remember 1991? It was two years before Marc Andresson developed the MOSIAC browser. The World Wide Web as we know it wasn’t even developed. Few people knew what a modem was. Windows and SoundBlaster and Netscape hadn’t been released.

In cell phones, GSM, or 2G technology had just been invented. No one had ever sent a text message before. the Microtack flip phone was $3000 bucks.

1991. Oh man.

Obama Signs Semiconductor Industry Bailout

February 20, 2009, WASHINGTON, D.C.— Racing to reverse the country’s economic spiral and decline in technology leadership, President Barack Obama signed the $5 billion semiconductor industry support plan. The plan would provide semiconductor manufacturers tax and other incentives for locating and expanding chip fabs in the US.

So what’s the most surprising aspect to this faked news? The idea that Congress has the semiconductor industry on their radar or that they could understand and agree upon a plan that would stem the tide of technology outsourcing?

A number like $5 billion (Intel will spend a total of $7 billion on capital expenses in the US this year) could have enormous impact. Even though the recent stimulus bill had $30 billion for a smart power grid and energy efficiency measures, $20 billion in tax incentives for renewable energy, $19 billion to accelerate digitizing health records, and even $7 billion to provide broadband to underserved communities, it still seems shocking that Congress would give $5 billion to semiconductor manufacturing.

Internet access, digital TV, Green, roads and sewers, state government all get a piece.

Semiconductors…zilch, nada, zed.

Reducing the Cost to Participate in SEMICONS

The global recession and semiconductor industry shutdown has created enormous pressure on SEMICON exhibitors. Virtually every mid-to-large SEMI member has announced layoffs and is experiencing severe financial crisis.

In response to these pressures, SEMI is working hard on aggressive cost cutting and value-enhancements to our shows. Because booth space costs often represent only one dollar in four of the total cost to exhibit, effective show management requires us to work closely (beg, negotiate, hammer, etc.) contractors, facilities, hotels, shipping firms—even exhibit managers—to affect the total cost of participating in SEMI events. For every event in every region, we are looking at across-the-board solutions to reduce exhibiting cost, including making the necessary improvements to our own cost structure to enable stable, if not reduced booth space prices, for 2010 and beyond.

Here are some of the some of the current efforts to reduce costs to exhibitors:

• Renegotiated service contractor and subcontractors contract at SEMICON West resulting in up to 10% savings for many exhibitors
• Moved SEMICON Europa location to Dresden for lower exhibitor costs and higher quality attendance. Service contractor costs have been reduced by as much 50% and hotel rates 30% less
• Developed and introduced low cost turnkey exhibit booth, and executive meeting suite options for West, Europa, China and Singapore
• Conducted exhibitor training sessions on lower cost exhibiting for SEMICON West
• Added new buyers through SOLARCON co-located events in China, Korea and Singapore. Exploring other co-location and partnership options to add audience value and reduce costs
• Went out for bid on international shipping and selected new vendor with lower rates
• Aggressively renegotiating facility contracts for 2010 in West, Singapore, Japan, Taiwan and China

I promise you increased efforts on cost reduction will continue. I firmly believe that the global economic crisis is particularly affecting the trade show industry, shifting the balance of power back to show organizers like SEMI. In a buyers market, we should be able to work with other organizers to pull back labor rates, contractor services, hotel rates, and facilities costs. We plan to actively partnering with other shows and industries to see if something can be collectively done to pull back the total cost to exhibit in every region where we operate.

Great expositions are the product of great collaborations between exhibitors and show managers, and during this time, it is imperative that SEMI wield as much power, influence and ingenuity to help our member exhibitors. As an association, we take our role as representative for exhibitors very seriously and we are working night and day to make SEMICONS the best possible value they can be.

Craig Barrett on the recession

SEMICON Korea

Halleluiah. SEMICON Korea was a successful show, achieving both attendee registration expectations and exhibitor satisfaction ratings based on preliminary results (we will have official results and more quantifiable satisfaction ratings at a later date).

During these economic times, this wasn’t a certain outcome. With industry cap spending paralyzed, and the memory market in atrophy, we didn’t know what to expect with attendance in Korea. As you might expect, companies are slashing marketing budgets and exhibitor cancellations are occurring at industry events worldwide. Compounding the normal economic dread, rumors of a Samsung reorganization had us all fearing that no one who show up.

But exhibitor cancellations didn’t really materialize in Korea. The show didn’t pick up the normally late registering marginal exhibitor, but the core exhibitors still came and showed their best stuff. Final results: 460 exhibitors, occupying 1300 booths.

Total visitors topped 23,000, a little more than last year. The crowds were as you expect, the right people came, exhibitors saw who they wanted to, and there was that typical SEMICON energy of folks working the show with purpose. Of course, spending isn’t happening and this makes people glum, but exhibitors had good attitudes and often expressed reasonable expectations for brighter times just around the corner.

Part of the good attendance was the added draw of PV products and services with the inaugural SOLARCON Korea. This co-located PV event featured 100 booths and a complete 2-day conference. Korea is a sleeping giant in the PV world, with strong government incentive fuelling local demand, and emerging equipment, materials, cell and module powerhouses serving the export market.

SEMICON Korea is also unique in that it features a strong solid state lighting segment, drawing additional synergies for this related industry.

For SEMI and many of our exhibitors, SEMICON Korea was seen as a potential bellweather for industry events in 2009, specifically: would buyers come during these difficult times? Fortunately for our exhibitors, the answer is yes. In fact, we may see regional SEMICON events benefiting from the restrictions on international travel. And, there’s always the interplay between money to spend and time to spend it. When orders are booming, some people are too busy to attend events; when demand swoons, they have plenty of time, but no money to spend.

A Solar Farm in your hands

Five Reasons to Exhibit During A Recession

One of the most prominent quotes in our industry during this recession is by Craig Barrett who said last September, "You can't save your way out of a recession, you have to invest your way out."

This is true for marketing as it is for any other functional area. Successful companies move forward, during good times and bad. They differentiate, they compete, they showcase their committment, strength and vision. They work to create and influence the future, not fall victims to it.

And for many companies, marketing in the semiconductor industry involves exhibiting at a SEMICON event. There's just not that many alternative mediums, mechanisms and tools out there to influence customers. For many companies, exhibiting is hard during this nuclear winter. Everyone is cutting cost costs and cutting staff and ROI in trade shows can be elusive. But the same reasons you exhibit in good times are at present during tough times. Sometime they are even more present. Here's my five top reasons to exhibit during a recession:

1. Now more than ever, companies need to differentiate their products and company in the marketplace to protect their margins and market share. The industry is consolidating and customers are looking for suppliers that provide meaningful, long-term benefits that other companies can’t match.

2. Now more than ever, suppliers need to prove they are sustainable and can survive these tough times. Companies need to demonstrate their R&D and product roadmaps are not being sacrificed to cost cutting. Customers have never been skeptical about suppliers’ schedules, capabilities, financial viability, and commitment to the semiconductor industry.

3. Now more than ever, companies need to compete aggressively to win 2009 and 2010 sales opportunities. Numerous studies have shown that companies that continue to invest in marketing during recessions gain market share.

4. Now more than ever, suppliers need to collaborate with their customers to position their products for the eventual upturn. Customers are responding to the downturn by thoroughly examining their processes, products and key vendors. Active, credible, engaged participants in the customer planning process will be the big winners in the next upturn.

5. Now more than ever, companies need to be efficient and effective in their marketing and new product introduction plans to achieve meaningful results. In the semiconductor industry, companies that utilize integrated marketing programs that combine pre-show communications, event-based marketing and product introductions, and post-show messaging and strategic sales follow-through will ramp up sales faster and more efficiently than companies who have gutted their marketing and sales support programs.

Heard at ISS

Demand is being destroyed on a very large scale.

The US Dollar- The best looking horse in the glue factory

This too shall pass.

When the bottom falls out, the impact can be both real and psychological...it can be both cyclical & generational...Do pre‐crisis assumptions still hold?

We are bullish on stocks... semicaps should lead recovery

Moore’s Law doesn’t apply in analog and it hasn’t hurt prosperity.

I am very optimistic about where we are going.

Things will get worse, could get a lot worse

Start each day with a smile and get it over with.

You can’t save your way out of a recession, you have to invest out of it.

The semiconductor suicide hot line is open.

Demand is only deferred, not destroyed.

Do not let a crisis go unused. This is our moment!

The economy accelerates trends.

Option #1: Wait around for the next “killer” app.
Option #2: Create the tools to enable innovation.

Real men build power plants

Favorite Slide:

300 mm Prime: Now More Than Ever

Worldwide semiconductor manufacturing equipment sales have declined to levels not seen since 2003 and the industry anticipates a second year of double-digit decline in 2009. According to the year-end edition of the SEMI Capital Equipment Forecast, sales of wafer processing equipment are expected to decline by about 28 percent in 2008 to $22.95 billion, and drop another 21 percent in 2009 to $17.91.

Gartner predicts total equipment spending in 2008 will reach US$31.1 billion (down 30.6% from 2007) and fall 31.7 % in 2009 to $21.2 billion. iSupply forecasts capital spending by chip makers on equipment will decline to $35.2 billion in 2009, down 17.6 percent from 2008, the lowest level of spending since 2003. The outlook for 2010 is uncertain at best.

Under these market conditions, chip makers are looking for practical improvements in fab productivity and focused on overcoming enormous challenges in keeping pace with Moore’s Law. Equipment manufacturers are simply trying to survive and channeling scarce R&D dollars into new product and technology solutions that customers will buy.

To address these industry priorities, SEMI formed the Global Equipment Suppliers Group (GESG) to address critical technology and business issues that affect the semiconductor industry. The initial focus of the GESG was to support of the industry wide effort on 300 mm Prime, a broad set of product, process and technology initiatives designed to enhance 300 mm fab productivity.

The SEMI Board of Directors also commissioned a the Equipment Productivity Working Group (EPWG) to address 450 mm wafer transition and work with ISMI on various studies, as well as performing independent analysis and surveys of critical technology roadmap issues. The mission of these two special interest groups is to maintain a forum for equipment suppliers to address issues facing the industry and to develop an organized global voice to influence technology roadmaps, device maker and foundry planning, supply chain collaboration, and related issues.

In 2007, the International SEMATECH Manufacturing Initiative (ISMI) announced its 300mm Next Generation Factory (NGF) Program to support the industry’s need for lower costs and reduced cycle time in 300mm wafer manufacturing. The ISMI 300mm NGF Program promised to take a wider look at 300mm productivity with a broader set of initiatives with some of the work transportable to older 200mm and 150mm factories.

Initial projects comprising the 300mm NGF Program included First Wafer Delay/Setup Reduction, Predictive, Preventative Maintenance (PPM), Equipment Data Quality, and
Fab-wide EDA proliferation.

Since the ISMI NGF announcement and the formation of the EPWG and GESG, considerable time, money and attention has been devoted to the economic viability and justifications for a next generation wafer size. In June of 2008, EPWG released a report that analyzed the economics of 450 mm wafer transition. Among the report’s conclusions were that the semiconductor business today is consumer-driven, and needs to be capable of handling short-run, rapid-change products with very short cycle times were paramount. The report also concluded that reduced cost for 300 mm wafer processing was driven by the use of factory automation, advanced process control systems, and mini-environments (FOUPs).

Current market conditions reinforce these conclusions and call for a renewed efforts to advance industry-wide productivity solutions under the current 300 mm Prime and Next Generation Fab framework. Much of the resources placed on 450 mm wafer transition have detracted from the 300 Prime efforts that could have widespread benefits throughout the industry. Agile fabs and cost reduction are what the industry needs today, not expensive gambles on wafer size that transition that further threaten Moore’s law and the economic viability of the global semiconductor industry. This is what we are spending time and attention on in SEMICON programs; it's what the industry needs to be focused on in our limited opportunities for pre-competitive, and cusotmer-supplier, collaborations.

For more information, see the SEMI website at www.semi.org/productivity

Trade Shows and the Recession

Take a look around you. The industry is in the worst depression in history. After a dismal 2008, capital spending will be down 20-30% in 2009 and 2010 seems a lot a farther than 365 days away. Customers are consolidating and new fabs are not getting built. Top tier suppliers are dropping employees by the busload. Fab capacity is rising. Companies are going under; careers are being lost.

So, what you should do with your marketing and trade show budget? Cut it to the bone right? Save money, save people. Hunker down and live to fight to another day, right?

Not so fast.

Professor John Quelch of Harvard Business School says in an article, “How to Market in a Recession”:

“This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times….”

The fact is the market doesn’t care about the macro business environment. Buyers are people just like you and me who make decisions and form opinions based on the same criteria they always use. During a recession, they may not have as much money to spend, but they are still forming judgments about you and your competitors. When they do buy, their judgments and opinions will be used to pick winners and losers. They will form these opinions based upon your sales pitch, your data sheets, your reputation, your product positioning, your pricing, and a lot of other things. They will form these opinions with or without trade shows. Some of the factors you can control and some you can’t.

During tough times, you can exclusively rely upon your great products and technologies and assume your customer will use the exact feature/benefit calculations as your product planning team. You can rely upon your sales people and assume they are better than your competitors. Who needs marketing? It’s a recession and we can’t afford it.

But smart business people know that products without marketing are commodities without margins. You better be the low cost producer or go home.

Marketing is the active process of differentiating your products in ways that are understandable and meaningful to your customers. Sales people alone can’t deliver differentiation. Technology alone can’t deliver differentiation and neither can company reputation. Smart companies that invest in product differentiation are also usually the ones who make sure they are telling their customers about the value of the diffentiation in creative, compelling and convincing ways. Usually this means more than a Powerpoint sale spitch and email price negotiation. That;s how you sell salt, not advanced technology.

So what’s the best way to deliver meaningful, margin-creating, share-building differentiation in this industry?

Don’t know. It depends on the product, the company and customer.

But I do know what happens to trade shows during a recession?

The weak competitors fall away. Good firms exhibit and pick up business.

SEMICON Japan

I am writing from Day 2 of SEMICON Japan and it’s a beautiful day with Mt Fuji out my window. You would hardly notice there is world economic crisis going on.

While the industry slump is omnipresent, the aisles are packed and some encouraging news about the economic rebound has been heard in a few, isolated places. During the Market Symposium, both iSupply and Bill McClean of IC Insights were optimistic that the eventual rebound will start mid 2009. This outlook was shared by Masashi Marumachi, Corp SVP at Toshiba and Frank Huang, Chairman of Powerchip. McClean is especially optimistic on the second half recovery start, seeing low oil prices, coordinated global economic stimulus, low inventories, and historical precedents as solid indicators. This is considerably better outlook than some doomsayers who suggest the upturn won’t occur until 2010.

Some data on SEMICON Japan:
1476 exhibitors (1548 in 2008, a record year)
4450 booths (down from 4602 in 2008, again a record)

Several exhibitors have reduced expenses by limiting the number of tools exhibited and many exhibitors have reduced staff attendance (especially international exhibitors).

Still too early too predict visitor attendance. Probably down 10%. Web traffic is up 25%; maybe folks who aren’t here are vicariously attending through the Internet.

While the business climate has dampened the mood, innovation is on the move with many product announcements, especially TSV, mask making, flip chip, metrology.
SI featured a few.

As always, the Semiconductor Technology Symposium has diverse and outstanding content. All key segments of the industry are covered with full-day and half day programs. This is enabled by a great facility at Makuhari (deep content requires lots of rooms) and the great contributions from the active participation of many committees.

What I am most proud of in the programs is how they draw upon what you should know, what you need to know, and what you what you like to know but don’t have leading edge understanding of the most advanced scientific and engineering concepts in the world today.

What you should know is best illustrated by the outstanding keynotes on sustainability and the industry’s role in combating climate change.

What you need to know are the latest products and solutions that can be used to solve real production and design challenges in today’s fabs.

And what you would like to know is how the winners of the 15th annual STS Awards for outstanding technical presentations will affect your company and business.

This combination of industry advocacy, updates on the latest advances in equipment and material solutions, and advanced peer-reviewed technical papers is the mix we try to achieve to at every SEMICON. While most SEMICONs do not feature peer review technical papers, they do try to present the “what’s next” topics, developments and ideas that are just over the horizon. It’s this combination that make SEMICON so unique in the exposition world and so central to our industry.

Applied Materials Silicon Valley Turkey Trot

Please join me for a fun run on Thanksgiving Day at the annual Silicon Valley Turkey Trot, sponsored Applied Materials.

Start times for the 10K and 5K races are 9:00am. Proceeds go to local charities.

To make it easier to participate, I will reimburse you for registration fees (lust let me know ahead of time). In addition, if you can run the 10K faster than 50 minutes, I will donate $50 to your favorite charity.

For more information, http://svturkeytrot.com/

UPDATE 11/29/2008: Despite spending Wednesday touring wineries with my family in Napa Valley, I woke up early Thursday and ran a 48:36 in the 10K. It was obviously a very slow field, becuase this placed me 8th in my age group (0ver 100 runners) and about 220 out 2500 runners. I've run faster, but never placed this high in a big 10K. Like I said, weak field.

Launching a New Event Brand :SOLARCON

The growth and importance of PV manufacturing has driven the need for SEMI to create a new event brand: SOLARCON. Each of the SOLARCON events in Korea, China, and Singapore will be co-located with existing SEMICON events in the regions. Each of these events had a prominent PV exhibitor and attendee base and strong program this year, and exhibitors were near-universal in the support for continued growth in the PV area.

In co-locating with SEMICON, SOLARCON will leverage the existing visitor and show infrastructure, allowing exhibiting companies serving the photovoltaic and microelectronics markets to reach both communities without needing multiple exhibits in multiple events. The co-location strategy also continues SEMI's commitment to grow existing shows and partnerships while reducing the proliferation of new stand-alone events.
The thinking behind the branding was that PV is a distinct and separate community from semiconductors and it needed its own identity. While manufacturing leaders understand the synergy between PV and chip making—and do not want more events to dilute the audience--the PV industry is too diverse and large to feel entirely comfortable depending on a “semi-com”. While increasingly the PV industry is being populated with veterans from the chip industry, they also attract many young engineers who have no relationship SEMI and SEMICONs.

The name SOLARCON is an obvious “frankenword” combining solar with the CON from SEMICON. The result is a hoped-for brand extension that provides security and stature, with the necessary identification with solar industry. It seems like a simple and easy name, but we struggled with considering many alternatives and whether to focus on PV rather than solar.

The new name will allow us to better target and differentiate our exhibitor and attendee marketing and program development.

The new events and dates announced are:

SOLARCON Korea, January 20–22, 2009, COEX, Seoul, Korea
SOLARCON China, March 17–19, 2009, SNIEC, Shanghai, China
SOLARCON Singapore, May 20–22, 2009, Suntec Exhibiton Centre, Singapore

The SOLARCON events in Korea, China, and Singapore join other SEMI and PV Group-sponsored and supported PV events including PV Japan, Intersolar (Munich), and Intersolar North America, the latter co-located with SEMICON West in San Francisco.

We have just announced a new president and office and India, so you might see the announcement of SOLARCON India very shortly.

SEMICON Europa

Exhibitor feedback was surprisingly good at this year's Europa. Key customers were attendance and and Programs's attendance equalled last year. Despite the economic climate, most exhibitors said the show performed well for them. AMD's announcement and special supplier forum was a big success.



Great Europa slide show, here.

MEMS Ingenuity

I was at the International MEMS/MST Forum all day yesterday and the one fact that jumped out at me was that approximately 250 MEMS companies make less than $35 million dollars. This industry has a long tail.

MEMS is a technology that represents an enormous amount of creativity and manufacturing ingenuity. There is a spirit entreneurialism at work that reminds you of the early days of the PC and the dot.com era. People have ideas and dreams and skills and they believe they can make a difference. They believe they can be the first to see a need and work out the engineering and get on the cost curve and beat the big guys. The industry isn’t yet about scale, it’s about cleverness and taking on risk. While the market numbers are still dominated by the big LDP and printer apps from TI and HP, the MEMS business is still characterized by one-off devices where someone sees a better a way to marry a sensor with a microprocessor and do it better than companies with thousands of engineers and tons of capital.

The process of creating a device seems to be often one of basement creativity and engineering on-the-fly. First you have the application: integrating pressure, temperature, motion and other inputs with a control system for an automobile, a cell phone, a camera or one of the hundreds of other devices that interact with people and an analog world. Everyone who uses a cell phone or power tool or industrial device could probably think of ways to marry functions among parts or create new features or functionality. Then there is the real tough engineering of developing a faster-better-smaller-cheaper package with a dependability and robustness that can attract a big customer. Getting the first products to market seem to entail a whole lot of trial and error—devising new manufacturing methods and packaging techniques that need to be customized by the device, by the process and by the fab. Testing the part often requires that development of an entirely new testing protocol and specially designed equipment. You don’t do this stuff on computers and with formulas. You need to get your fingers dirty.

There will be a shakeout in the market and many of these small companies will be overwhelmed by economics, competition, fate, bad luck. And new processes, design tools, processing equipment and test systems will make the market more efficient, more standardized, more about scale and optimization. But while MEMS have been around for a while, it’s still a business characterized by dreamers and doers and hands-on engineering and that’s a good thing.