Novellus sees bright future after waning memory capex, but no solar flare

by Ed Korczynski, Senior Technical Editor, Solid State Technology

Unit demand for ICs has been increasing at 10.3% CAGR since 1984, and now that we’re on a relatively steep part of the curve, the absolute amount of overcapacity in a given cycle can more quickly aborbed Novellus execs suggested, In a Tuesday analyst/press event at SEMICON West to discuss the company’s 2Q07 quarterly results. Though the consensus by most analysts is that fab capex investments will be relatively flat in 2007, Novellus projects that 17 new 300mm fabs will start accepting equipment in 2008, which adds to the 55 total fabs which will add capacity in 2008 for a total of ~700k WSPM capacity addition. In comparison, ~600k WSPM of 300mm capacity were added in 2006. Memory fabs are in the last phases of capacity additions for 200mm fabs, squeezing the last profits out of depreciated lines.

Novellus claims it has received orders for over 50 of its Vector Express systems to date, just three months after the tool was released in April, citing capital-productivity advantages versus Applied Materials’ Producer systems. With DRAM and FLASH megafabs now planned with >100k WSPM capacities, there is serious demand for very high-throughput tools. The Vector Extreme clusters three Vector Express chambers around a dual-end-effecter handler (see figure, below) to process up to 250 wafers/hr for thin films, and provide what Novellus says is 2x the throughput vs. a Triple-Producer configuration. The result is a hypothetical 40% reduction in the number of PECVD tools needed to sustain such a megafab.

Novellus said its 2Q profits rose roughly 9% to $57.3M — its slowest in four quarters — on ~5% higher revenues of $416.3M, though slightly better than expected. Orders evaporated, though, dropping >19% Q-Q TO $332.2M, with a similar slide predicted for 3Q (shipments, meanwhile, rose ~12% Q-Q to $436.4M). Novellus blames the current slowdown on capacity issues at NAND flash fabs, and estimates that overcapacity will be solved in 1-2 quarters. “You’ll see 2008 at the transition year for copper metallization for memory,” commented Tom Caulfield, EVP of sales and marketing, adding that 2007 is the year for most advanced memory fabs to begin pilot production using copper interconnects.

“The best NAND flash is already using copper, so that horse is already out of the barn,” explained Rick Hill, CEO. “If you want to compete on NAND flash you’ll need copper,” he said, adding that those firms that want to maintain fungible capacity in NAND flash will have to “bring DRAM along.”

Prefacing his comments with the disclaimer that he’s “often wrong; never in doubt,” Hill commented on the solar energy manufacturing market for which his company has no current position, though its biggest competitor (Applied again) has been vocal about its prospects. “I think everyone accepts that the solar market is not economically sound,” Hill said, adding some colorful vocal analysis of his own — quipping that solar panels are “a bit ugly” and “a status symbol,” targeting a customer base that’s “maybe some people in Beverly Hills,” for whom it’s great to “have them on the head of your Prius.” more promise in power-reducing LED lighting to replace incandescent bulbs, he suggested. “The economics are such that you’ve got to wait a long time to get a pay back and consumers are pretty fickle,” he cautioned, but ” it’s getting close to being a market that could be very, very significant and one that we like.”

Hill also see sour grapes in the ALD market due to alleged issues with adhesion and film quality, which he says motivates investment into new PVD technology as a stop-gap. Novellus’ investments into ALD have generally targeted interconnect applications, and they now tout an IONX extension of their hollow cathode magnetron (HCM) PVD that extends the plasma region to the wafer surface for more re-sputtering to more thoroughly cover sidewalls in copper barrier/seed deposition applications. — E.K.


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